Expanding Your Portfolio to Include Cryptocurrency

The finance and investment world hasn’t exactly been on the cutting edge for a while. Stocks, bonds and other investment options have been largely the same for many years, and we all knew exactly how things worked.

Then crypto arrived, and everything changed. Just when we were starting to get used to the idea of digital currency, NFTs and other digital assets hit the market.

Many people thought that Bitcoin and other cryptocurrencies would simply fade away. That hasn’t happened, and while the markets are a little more volatile at the moment, it’s still a good idea to consider them. Here’s why.

Should You Include Cryptocurrency in Your Portfolio

When it comes to investing, the most important thing is diversification. You never want to put all your eggs in one basket, whether that basket is commodities, tech stocks or something else.

Cryptocurrencies give you another way to diversify your portfolio, and because they are completely decentralized, they aren’t affected by the same things as real world investments. So it really is the ultimate diversification strategy!

Goal Based Investing

Most people have a goal when they invest – and they should! Some want to retire early, so they’re looking for aggressive strategies that will grow their investments fast. Others want to be able to give back more to their communities as their wealth grows.

Whatever your strategies and goals are, you only have to look at the returns crypto investors have made over the past few years to see that crypto is a great way to reach them. Many people have turned relatively small investments into a fortune over time.

What Are the Risks?

There is no such thing as a risk free investment. Even putting your money in the bank carries a small risk that one day, the bank itself might go bankrupt.

However, crypto is a little more volatile than many other investments, and that doesn’t always work in your favor. While you can make some very big gains very quickly, you can also lose a lot rather rapidly. So make sure you only invest what you can afford and be prepared to wait for the wave to peak again after a drop.

The other risk related to crypto is one that you probably won’t experience elsewhere – losing your keys. Because blockchain is so very secure, there’s no way to access it or even hack it without your public and private keys. So if you lose them, you will lose your investment too. You can get around this by storing your keys offline, for example in a safe or a hardware wallet, and by doing your investing through easy to use platforms that do all the complicated stuff for you.

If someone does manage to find the password and keys to your wallet and your digital assets, they can also access your account and take your crypto assets. There are several phishing scams out there designed to make this happen. So make sure you pay special attention to your security, online and off.

Finally, many people rush to buy new types of crypto as they are created – but they’re not all going to be the next Bitcoin. Always wait a little while to see what happens with new types of crypto before you sink any significant money into them.

What Are the Rewards

One of the biggest rewards of crypto is the possibility of exponential growth in the value of your investments. People who had relatively small amounts of Bitcoin just a few years ago now have many times that value, because there’s just been so much growth.

Another less often discussed benefit is that many governments aren’t sure how to deal with crypto yet, so there are lots of tax advantages and loopholes to owning, trading and selling crypto.

Crypto is also not tied to any traditional currency exchanges or any one economy, so even when global events send traditional investments tumbling, crypto is usually fine.

The other piece of good news is that these days, you don’t have to buy a full coin either. Most investment platforms and even some real world banks now allow you to buy fractions of coins directly from their apps or websites. So you can test the waters and start small, and you can see how it goes over time.

Should You Consider Purchasing NFT's?

Next on our list of things to consider when you’re thinking about getting into crypto is whether you only want to buy coin, or whether you want to have NFTs too.

An NFT is a digital asset that is backed by blockchain that verifies it’s authenticity and sometimes, it’s originality if the creator is only selling one of that particular NFT. It’s a little like owning an original painting or a first edition book, except instead of on your wall or in a library, it exists in cyberspace.

NFTs have value because of this. The Non Fungible Token that is issued for every NFT guarantees that it is original, and how many people have that particular item. NFTs also use blockchain, so there’s no way to forge them either – unlike paintings or books.

Keep an Open Mind

There are probably many people who still don’t feel comfortable with the idea of investing in assets they can’t touch or see. We’re all very used to the idea of tangible money that you can carry in your wallet, and paper stock certificates in the safe.

However, there’s no denying that the crypto and NFT markets are hot, and there’s no sign of a slow down any time soon.

So while you might still want to learn more, exercise caution and start small, it’s definitely worth exploring adding cryptocurrency and other digital assets to your portfolio. After all, even money and gold were new at one stage, and here we are, hundreds and thousands of years later, still using them.

Who knows what’s next for digital assets? But there is one thing for sure: they’re not going to disappear any time soon, and demand has never been higher.