The Argument for Diversifying your Portfolio Massively! - For Long Term Investors
In this article I will cover the benefits of massively diversifying your cryptocurrency portfolio by using Bitcoin as the primary example. Then I will discuss some of the best ways to diversify your portfolio and which methods require the least amount of work (purchase and hold several coins versus dividend sharing coins like COSS or token baskets) Let's assume I had purchased 100 USD worth of Bitcoin on Jan 1, 2011. I would own about 333.33 BTC (Details below)
Yes the RollerCOSSter term was a play on the COSS token (COSS hodlers know this term all too well)
On the first day of the year 2013, Bitcoin was worth 13.30 USD (333.33 BTC would be worth 4,433.29 USD)
This year the peak price of Bitcoin was hit on December 4th 2013 and was worth around 1,147.25 USD (333.33 BTC would be worth 382,412.84 USD)
By December 31st, 2013 the price of Bitcoin had regressed back to 757.50 USD (My 333.33 BTC at this point would now be worth 252,497.48 USD)
The Big Reckoning - MtGox and more - 2014
This was the year of MtGox, you all know what it is and what it was and how it hurt Bitcoin
At the end of the suffering from this year the price of bitcoin had fallen to 309.87 USD (My 333.33 BTC would now be worth a mere 103,288.97 USD)
2015 and 2016
These were the slow years of Bitcoin so I lumped them together. I would have to be pretty strong to hold my 333.33 Bitcoin through this 2 year time period.
In December 2015 BTC was trading at 413.51 USD (My 333.33 BTC would be worth 137,835.29 USD which was a mere 36% of Bitcoins previous all time high seen on December 4th 2013)
On December 31, 2016 BTC was trading at 955.14 USD (My 333.33 BTC was worth 318,376.82 USD inching closer to its all time high)
At this point even though Bitcoin had fallen off from its previous ATH my original investment of 100 USD saw an increase of 318,376.82% (Unheard of gains ... Imagine if someone had invested 10,000 USD instead)
The Unparalleled rise and Altcoin mania - 2017
This year was special. The price of Bitcoin surged massively mid-year hitting highs of between 3 to 5000 USD
On December 17 Bitcoin hit a peak of 19,299.20 USD (My 333.33 BTC would be worth 6,433,002.336 USD)
2017 was special because we saw coins like Ethereum go from 8 USD to 700 USD, Litecoin go from 4 USD to 360 USD
Not only did the top altcoins benefit from the rise of Bitcoin but so did the small unknown coins (Sometimes referred to as dust)
Neo formally known as Antshares rose from 0.14 cents to 80 USD (Peaked at 161.55 USD in 2018) Buying 100 USD of NEO would return 115,392.86 USD at its peak in 2018
Nano formally known as Raiblocks rose from 0.009 USD to 12.38 USD (Peaked at 34.43 USD in 2018) Buying 100 USD of Nano would return 382,555 USD at its peak in 2018
The Bubble - 2018
Everyone is now classifying Bitcoin as a bubble because of the fall from 20k to the current price of 6.5k. But the truth is bitcoin is still up 6.5x (or more) since the start of 2017 and who knows maybe this is just the beginning and 333.33 BTC might be worth billions some day!
Had you got into some gem coins like Ethereum, Litecoin, Neo, Nano early on you would stand to make a lot of money and this is why diversifying into coins is extremely important, especially if this is the bottom. It is probably very risky, but as always, the greater the risk the greater the reward!
Conclusion and The Case to Diversify
The main takeaway point from this discussion was that Bitcoin's rise in the past few years has been unparalleled by any other asset class in the world. However the likelihood that you knew or even held through all the ups and downs of bitcoin from 2011 to 2018 would be slim to none (Almost like hitting a lottery)
How can someone take advantage of the cryptocurrency market and catch all star risers like Neo and Nano? Diversify! Had someone diversified in 2017 into various altcoins (10$ each in small coins or so) they would stand to gain a ton of profits at the peak in 2018.
Ways to Massively Diversify - Manual Method (Buy and Hold)
This method is straight forward, just simply buy and hold a mixed bag of big cap and small cap cryptocurrencies for the long term. Once the technology becomes more adopted and accepted, and when more people find it easy to purchase cryptocurrencies (Trust me it's not easy right now, especially in Canada where banks are blocking it everywhere) you will see decent profits.
Only issue with this method is it requires a lot of manual work from creating wallets, storing your money safely and signing up for several exchanges to get the coin you want to hold
Ways to Massively Diversify - Automatic Method (COSS)
Kucoin was an option until they changed the dividend model of their exchange to only pay dividends in more Kucoin shares.
Holding COSS tokens on the COSS exchange or on a linked external Ethereum wallet earns you weekly dividends in the form of Fees the exchange earns
Your weekly dividend contains every coin traded on the COSS exchange, this includes BTC, ETH, LTC, NEO, OMG, ICX and so many more coins
Basically by holding COSS tokens the exchange is building a very diverse portfolio in the form of many dust coins and big coins like BTC and ETH (These coins might be dust now but could potentially breakout like Neo or Nano in the long term)
This method requires minimal work from your part, just hold the COSS tokens and earn weekly dividends in hundreds of other coins.
Note the exchange is facing some known bugs at present (causing some exchange lag), but they have plans for significant improvements in the pipeline with the launch of COSS2.0 (With the market basically having bottomed this might be the best time to buy COSS)
Ways to Massively Diversify - Automatic Method (Basket ETFs)
Not too familiar with this one since it was mentioned in a comment below
But this sounds like a good way to put your money in one place and let someone else deal with the trouble of buying and holding your currencies for you (Similar idea to COSS being responsible for diversifying your portfolio)
The hope for many here in Bitcoinland is that bitcoin will one day become a significant internationally-recognized currency, trusted and used on a large scale. To that end, I would like to address one of Bitcoin's most serious but easily remedied issues (IMHO). Users of a currency want it to be stable, predictable and BORING. They don't want there to be questions regarding its future behavior or fate. Unlike day-traders and high-risk speculators, they want constancy and certainty. One of the most significant and unnecessary causes of uncertainty for Bitcoin is the "halving event". As the next halving event draws near, you can expect an explosion in the number of posts that ask or predict what will happen at the "halving". For example:
Now, perhaps you are the type of person that lives on adrenalin, and loves the roller-coaster side of bitcoin's nature; maybe you even made money from it. But if you want bitcoin to become a trusted form of value transfer, you want it to fade into the background, and be no more thought about than TCP/IP. In addition, I fear that a significant disruptive event could occur at the halving. If miners' profits are marginal immediately prior to the halving (as market forces cause them to be, if mining has achieved equilibrium), then miners will experience serious losses (as in almost 50% of operating expenses!) immediately following the halving, and this situation will continue, at least until the next difficulty adjustment (bear in mind that there is a limit on the magnitude of the change in difficulty that is permitted at each adjustment, so it may take more than one adjustment to achieve equilibrium). Profit-motivated miners may, if they are short-sighted, drop off to avoid operating losses until the difficulty readjusts and mining resumes profitability. If a significant number of miners drop off, that will impact the time it takes to arrive at the next difficulty adjustment, because new blocks will take longer to discover. In a worst-case scenario, the two weeks between difficulty adjustments could stretch to months, causing delays and swelling blocksizes. All this angst and uncertainty is unnecessary and avoidable. All it requires is a small change in the reward algorithm. Instead of reducing the reward by 50% every four years (FOUR YEARS!), the reward should be reduced in micro-steps, perhaps even on every block. In this way, there would be no "event" to cause one to worry, speculate or obsess. There are two (or more) ways in which the conversion could be handled, either of which exponentially reduces the reward, just as the current algorithm does:
transition to micro-step reward adjustment ASAP; or
perform the next 50% reward adjustment on block 420,000 as currently scheduled, but then transition to micro-step adjustments.
In either case, the coefficient is selected so that the last of the 21 million bitcoins is created at the same time it would currently be. If a fork is being seriously considered, this simple but important improvement should be made.
We started a informational BTC market website with a light 'Reddit' touch. Give us your ideas and we will implement it! (when feasible)
Hello Reddit, Since ToTheMoonGuy started his wild bullish escapade we started thinking about building our own informational BTC site about the current market. It needed to be informational but also with a light entertaining touch. Because after all following the current trend of BTC (and LTC) is a wild roller coaster ride. We build a website that presents the current BTC ATH (All Time High) and current price. We implemented BTC and LTC. On the right side we see our ToTheMoonGuy trying his best to reach the moon. On the left side you can change the currency to USD, EUR or CNY. The updating takes place every 60 seconds at the moment. Everything will be updated dynamically and the rocket will fly up (or down). At first we had the moon valued at $1000 but this was reached unexpectedly early. Therefor we changed the value to a more applicable price. We like to implement more functionalities therefor we want to let you participate. Let us know in the comments (or on /btcath) what you like to have implemented and we will (try) to release it in newer versions. The site is: btcath.com
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