In the investing world, nothing is guaranteed. In the rather volatile Bitcoin and cryptocurrency world, the lack of guarantees are just the beginning. It is a relatively unregulated asset class with very large swings that are subjected to major personal, corporate and governmental influences around the world all of which impact both the price of Bitcoin as well as the underlying Blockchain technology that runs the entire system.
Having said that, there are many tricks that you can use to mitigate risk or increase returns relative to other options that MintDice will recommend. Keep in mind that MintDice is not a financial advisor, that all investments have risk and to speak to a financial advisor prior to constructing a portfolio or taking any advice offered within this Bitcoin News Blog!
Diversification Is Your Friend
The most important basic concept in the investment world is Diversification. Diversification is thought of by many to be the only free lunch in economics. This, in a sense, means that more of it is only better with few trade offs for costs associated with diversification. So how can one implement this type of knowledge into their cryptocurrency portfolio? There are a few different ways:
Bitcoin ownership. While this may sound counter-intuitive, owning mostly Bitcoin will expose you to the large amount of infrastructure and projects that are going on in the Bitcoin world today. When you leave Bitcoin you are not leaving behind just the coin but all of the projects and technology that are bootstraped to Bitcoin technology as well.
Altcoins. It can be suggested to some to own altcoins. When you own altcoins, you will want to own a small mix of a variety of different coins that appear to have reasonably high liquid trading volume on multiple exchanges. You do not want to buy altcoins that you can then not trade back into Bitcoin or fiat currencies at a later point in time. Given the even higher volatile nature of Altcoins, it is suggested to own many different types and to keep this to a smaller portion of your overall cryptocurrency portfolio. MintDice recommends around 10-30%.
Traditional investments. There are many ways to expose yourself to Bitcoin and blockchain technology. One of the obvious ways is buying Bitcoin and Altcoins. But many legitimate large cap businesses are taking a bite out of Blockchain Technology and by taking some ownership in these businesses, you will indirectly gain more exposure to Bitcoin technology.
Bitcoin businesses. There are many businesses that are creating products directly tied to the Bitcoin and cryptocurrency market that are both publicly and privately funded. This will give a high correlative fiat based peg to Bitcoin and blockchain based industries.
Investing directly into cryptocurrency industries, such as Bitcoin casinos and Bitcoin stocks. MintDice offers a Bitcoin casino crowdfunded investment that allows you to capture casino profit and shares that profit with it's investors. This is one of the more legitimate ways to increase your Bitcoin holdings while maintaining Bitcoin exposure simultaneously.
The important thing with the above list is that it is not a conclusive list nor is it a bullet proof plan to win at Bitcoin markets. But proper diversification into multiple sectors both directly inside Blockchain technology and outside in traditional markets is a great step towards risk management that will boost your likelihood of making reliable returns off of cryptocurrency while not suffering too much from a worse performance side of things.
Diversify Within Crypto And Away From Crypto
It is extremely important to note that even for the most bullish fans of Bitcoin, Blockchain technology or cryptocurrency in general to not go too over zealous on these types of projects. Only a percentage of any individual's total assets should be allocated towards these types of projects. Diversification, again, is an important term to describe the best way to handle investments both on a broad scale and on a localized scale. This means that you should have your Bitcoin investments well diversified but that you should also have your investments as a whole well diversified which means owning several asset classes which are specifically not Bitcoin or cryptocurrency related projects to shield yourself from potential catastrophic failure in the future events where Blockchain technology is seen as obsolete or useless relative to newer systems, which can certainly happen.
Again, we'll note that while you should keep your portfolio diversified, it can make plenty of sense to keep some portion of your Bitcoin and cryptocurrency held within cryptocurrency casinos to generate income. MintDice offers this potential to help you grow your underlying crypto assets. This will go a long ways to helping you generate safe returns because even in a Bitcoin bear market, you may still do just fine if your underlying Bitcoin exposure is increasing organically through proper investment growth. We invite you to look at our free MintDice Casino Bitcoin Investment guide here.
Good luck and diversify your bonds, Nakamoto!