Your cryptocurrency portfolio should be as diverse as the FIFA World Cup odds. Just as the FIFA World Cup is the most diverse sporting event in the world, different cryptocurrencies operate in different ways and allow you to make money differently.
Come with us as we take a look into why you should be diversifying your cryptocurrency portfolio.
Table of Contents
What is a Cryptocurrency Portfolio?
A cryptocurrency portfolio operates in the same manner that a normal investment portfolio does. The main difference is that this portfolio would be based on cryptocurrency.
A cryptocurrency portfolio is a way to not only manage but also track the performance of each coin. Thankfully the portfolio can be hosted on cryptocurrency management software which makes keeping track easy.
Cryptocurrency: Diversifying Your Portfolio
We’ve all been told to not put all our eggs in one basket and the same can be said for cryptocurrency. By diversifying your cryptocurrency portfolio you are diversifying your ability to make money.
Different cryptocurrencies operate in different ways meaning that there is a different way of making money for each. Below we take a look at a few things that could help you not only diversify your portfolio but also yield more profits.
What is Blockchain?
Before we can have a clear understanding of how diversifying your cryptocurrency can help you we need to understand blockchain.
Blockchain operates as a type of ledger in cryptocurrency which helps to keep a record of all transactions made. When a transaction is made it adds a block to the chain thus creating a blockchain. The transactions are maintained over several different computers that are linked to the peer-to-peer method.
The Different Ways Transactions are Approved Can Make You Money
Different cryptocurrencies will approve transactions differently. It’s important to remember that there is always a chance, within these different approval methods, to make money. Below we take a look at the different approval methods and how you can make money.
Cryptocurrency Mining
Cryptocurrency mining is a great way to make money through cryptocurrency. Those that mine cryptocurrency are called virtual miners and usually operate using the proof-of-work. It’s important to note that cryptocurrency mining has two ways to make money which include crypto mining and crypto cloud mining.
Proof-of-work
Proof-of-work is used by cryptocurrency to help with verifying the accuracy of a certain transaction that is meant to be added to a blockchain. Unlike fiat currencies, cryptocurrency is decentralized meaning that no particular person or organization has control. The reason why cryptocurrency is run in a particular way, especially when it comes to transactions, is to ensure the integrity of new data joining the blockchain.
You can make money off of cryptocurrency by becoming a virtual miner. A virtual miner who helps mine cryptocurrency is awarded a certain portion of cryptocurrency once the job has been completed. It’s important to note that as a virtual miner you will be working within a group. Each miner will be compensated according to his/her work.
With cryptocurrency mining, you are also open to another avenue of making money which is called cloud mining. Cloud mining involves leasing or purchasing equipment used in cryptocurrency from a third party. This third party will be responsible for the upkeep of equipment.
When referring to cloud mining we are referring to a process of cryptocurrency mining. During this process, a remote database with shared processing power is used. This process allows virtual miners to mine cryptocurrency without worrying about the hardware.
Proof-of-stake
Proof-of-stake is an amazing way to make money off of transaction methods. With proof-of-stake, your main purpose would be staking some cryptocurrency to help approve transactions within the network. You would get a certain percentage of the cryptocurrency you have staked as compensation.
Selling and Buying
Selling and buying different cryptocurrencies can assist you greatly in wanting to make a profit from diversifying your cryptocurrency. Different cryptocurrencies increase in value at different times which leaves room for you to buy and sell different cryptocurrencies to make a profit. This could be the easiest way to make money through crypto today. This may need a lot of research as the price of cryptocurrency may be unstable.
Also Read: Top Tips To Succeed In Cryptocurrency World
