If I had a dollar for every email containing the words “bitcoin” or “NFT” sent to me over the last several years, I’d be richer than some of the cryptocurrency millionaires making headlines.
OK, that may be an exaggeration. However, in this industry, it’s quite difficult to distinguish between the hype and the substance.
New research demonstrates that the majority of young millionaires’ wealth is largely held in crypto, despite the claims of online “experts” that it is the “investment of a lifetime.” What’s next? The fact that Kim Kardashian is endorsing a cryptocurrency is… Oh, wait…
Further evidence of cryptocurrency’s continuous turbulence and unpredictability may be found in the market’s recent rapid decline.
In my research, I’ve discovered that financial and technology journalists, as well as investment professionals, generally believe that crypto has become a part of our life and isn’t going away.
At the same time, there’s a tonne of investment misguidance. Too many people are making financial moves out of pure excitement and speculation.
According to Georgia Lee Hussey, CEO of Modernist Financial in Portland, Oregon, “investing should be dull. “In other words, don’t get too giddy with your portfolio. That’s it.”
Journalist and author of The Revolution That Weren’t, Spencer Jakab, is not sure that we must participate in any way. “There’s no rhyme or reason to it … I’m not a fan,” he admits.
Even so, we can’t help but be a little enthralled by the prospect. Many of you have told me that you’d like to know how to get a solid foothold in this sector. How can one test the crypto waters in a methodical, methodical, and methodical way? I have some thoughts below.
Explore career options in the crypto market
Working for a cryptocurrency firm is one method to “invest” in the market. And now, there are more choices than ever. According to LinkedIn, the number of job openings in the United States associated to cryptocurrencies increased by 395 percent between 2020 and 2021. That’s nearly four times more than job listings in the broader tech business.
After spending much of her career working for conventional financial firms like TIAA and BlackRock, corporate communications executive Lauren Post was recruited to join Bakkt, an Atlanta-based digital asset platform.
Bakkt, which went public last fall, works with non-crypto companies that want to offer their clientele cryptocurrency experiences. This includes collaborating with credit card firms that provide cardholders crypto benefits, as well as teaming up with banks to assist them to integrate crypto trading with their platforms.
“I was both intrigued and slightly scared because I didn’t know much about crypto,” wrote Post in an email. “As a result, I concluded that learning about crypto was no different from learning about target date funds, fixed income, credit default swaps, or any other sector of the financial markets.
Aside from unpacking complex concepts for the general public, I’ve recognized that my skills can be used in any business and are very relevant in the cryptosphere right now.”
Take, for example, the idea of stablecoins
Not into pegging your cryptocurrency’s success to a rally prompted by an Elon Musk tweet?
A new cryptocurrency genre dubbed stablecoins bloomed in 2021, and unlike its siblings, it promised less volatility and a more direct relationship to established forms of value. Stablecoins are essential “cryptocurrency with a twist,” according to CNET’s Julian Dossett. he explains:
“A stablecoin’s value is derived from the worth of another asset, rather than an open, dispersed network of computers executing a combination of arithmetic and record-keeping. Basically speaking, a stablecoin is tied to another asset.” Many stablecoins are set to the US dollar.
Think about a stablecoin as you would chip at a poker table, adds Dossett. Instead of buying bitcoin or any other cryptocurrency directly with fiat money like the US dollar, you pay cash to buy stablecoins first — they’re available on most crypto exchanges including Coinbase — and may then swap stablecoins for other kinds of cryptocurrency.
Take part in blockchain activities
Bitcoin transactions are made possible through blockchain technology, which acts as a decentralized digital ledger. More broadly, due to its decentralization and cryptography, a blockchain can offer much-needed efficiency and security to a range of businesses from insurance to real estate, banking, and legal.
If you’re interested in learning about the crypto industry, consider checking into the blockchain. If you’re looking to grow your business or figure out how to make the most of the technology at work, this is time well spent.
I’m a believer in blockchain technology as an investment opportunity. To that end, I’ve chosen to donate a little percentage of my retirement funds to a fund called BLOK, which comprises established firms such as Square, Paypal, and Nvidia that are investing in blockchain technology.
Still, want to buy crypto? Top off at 5% and diversify
The fact that bitcoin is a new asset class doesn’t mean you should throw out tried-and-true approaches for managing your portfolio. To begin with, avoid placing a large wager on the house.
Alternative and relatively high-risk assets, such as cryptocurrencies, real estate, and startup companies, should account for no more than 5 percent of an investor’s total portfolio, say, Hussey and other financial advisors. “It is an asset class in its infancy,” adds Hussey. This market is not designed to be understood, thus we have no idea what’s going on in it.
Finally, invest in a lot of currencies. No matter how sure you may be about a particular digital coin, remember that diversification helps to limit losses over time. (You don’t want to make the same mistake as some of the early internet investors who put all their eggs in the pets.com basket.)
When it comes to gambling, even if you’re certain about a wager or think you have an advantage, Jakab advises that you don’t put all of your eggs in one basket. “To invest completely in a single category is something not even the best gamblers do.”
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