There have been some conversations recently with my friends about cryptocurrencies. I see many new friends suddenly getting interested in Crypto and wanted to give it a try. They either want to step in as an investor or they would like to involve themselves in a project with the skills they already have.
I have been telling them a few basic things about cryptocurrencies and this crypto world. Out of all the things that I tell my friends, there are three important things I tell them without fail. I would like to share them in this article.
Bitcoin is not the only cryptocurrency
There is always a misconception about Bitcoin and people incline more towards Bitcoin alone. When they start asking about cryptocurrencies, their first question is how they can purchase Bitcoin and what they can do with Bitcoin. If not Bitcoin the next question is always about Ethereum. I personally feel that it has become a very common misconception that Bitcoin and Ethereum are the two legit cryptocurrencies and only these two will grow and others are just scam.
I would like to say that Bitcoin and Ethereum are not the only projects that are involved with the concepts of Blockchain, cryptocurrencies, and decentralization. In today's world, we have so many blockchains and cryptocurrencies that are even better than Bitcoin and Ethereum. But when I say that I would also like to say that it is mandatory to have a few fragments of Bitcoin and Ethereum always in the portfolio. They both are not only popular projects but they are almost like origin coins and will never lose popularity.
Diversification of our investment
This concept is common even in the real world investment scenario and it is one of the important strategies for investors. It is not good to put all the eggs in the same basket. The same mantra applies in the crypto world as well. It is always good to explore several good crypto projects with a concrete model and invest in them.
Some people when they enter the crypto world, usually get confined to Bitcoin and Ethereum alone. I have a friend of mine who has dumped all his money only on Ethereum and Ethereum related tokens. He never listens to me if I talk about other projects. I wouldn't say it is bad especially after seeing all these Defi hypes but I would still say that diversification is the better way to go. It is always good to maintain a portfolio with at least a minimum of 20 coins.
Keep the assets in crypto wallets and not in exchanges
I wouldn't recommend having the cryptocurrencies in exchange for wallets for a long period of time unless they give some special benefits for holding it. If the intention is to hold the cryptocurrency for a very long time, it is always better to keep the asset safe in a wallet and not in exchanges. Anything can happen with the exchange wallet. It is sometimes get hacked or even exchanges can go against their policies and use customer funds for unauthorized activities.
If the intention is to have the crypto in exchanges for trading purposes, then it is okay otherwise my recommendation would be to keep it in a hardware wallet or a paper wallet. There is no harm in keeping some funds in the exchange for trading purposes. I also strongly believe that trading is the best way to grow the funds. Keeping the cryptocurrencies idle waiting for years may not end fruitful with the number of cryptocurrencies that are created every single day. May cryptocurrencies are getting listed on the exchanges every single day and many are also getting delisted. Holding for a long time worked well for Bitcoin but I cannot say for sure that it would work for other cryptocurrencies.
Posted Using LeoFinance