Steemit Crypto Academy Contest / S5W6 - My cryptocurrency portfolio.
Greetings from @saimaqam on the last week of season 5. Today I choose to write a task about holding and staking in the cryptoacademy.
Explain in your own words what a cryptocurrency portfolio is.
Cryptoacademy portfolio is a name given to all the crypto assets that one has kept in a wallet. Depending upon the availability of funds some may have tens of coins in the wallet while others may have only few coins in their wallet. whatever be the number, it is a portfolio of that individual.
Selecting a portfolio needs experience and knowledge about crypto projects. Random allocation of funds may work sometimes but not always.
Before investing we should search for the project, monitor the progress of the project, look at the purpose and goal of the project, and find the team at work and their credibility.
We have seen that in the year 2022 projects with solid foundation like LUNA and FTX plummeted in free fall. So it is always said that crypto is a risky investment and always invest the number of funds which you are ready to lose. Therefore one has to be extra vigilant while selecting any cryptocurrency for investment purpose.
The fundamental principle behind investment in cryptocurrency is that the majority of the funds must be invested in Pioneer coins like Bitcoin, Etherium and BNB etc. Although no investment is 100% secure in the crypto ecosystem.
The risk aversion capability of the investors has also been shown to play a role while selecting portfolios. Investors with high risk-bearing nature tend to invest in projects with high volatility as these projects can swing either way and yield huge profits or even great losses.
Do you prefer a diversified portfolio or a concentrated portfolio? Explain each one.
A diversified portfolio is preferred by all investors over-concentrated portfolio. A diversified portfolio means spreading of investment into various coins whereas a concentrated portfolio refers to investment in a few coins
The reason for preference of diversified portfolio is that a diversified portfolio mitigates the risk in adverse market movements. The logic is that in a diversified portfolio if some coins are in loss others may be in gain and so the risk would be mitigated. So the gain of one side would compensate for the loss of another side.
In a concentrated portfolio we have only a few coins, so in case of any adverse market movement investors will have to bear the loss. However, the positive side of the concentrated portfolio cannot be neglected and that is seen in the favourable Movement of the market. Movement of the market in the predicted direction can result in huge gain. In diversified portfolio, it is less likely that all the coins may move in the predicted direction. So returns are also lesser in diversified portfolio.
In your portfolio do you have any crypto assets in Hodl? Explain what is Holder in cryptocurrencies.
HODL is a crypto-specific terminology for hold. HODL is a catchy acronym for hold on for dear life. Even if we don't go into the literal meaning of hodl, the general idea of the hodl is to hold for a long time. In BTC and ETH, it has been seen that people have been holding these assets for decades.
Investors generally buy coins at a lower price and hold until there is significant appreciation in the price of the coins to gain good profit. In my Portfolio, STEEM and TRX are on hold.
Currently, we are going through a bear cycle in the crypto market and so it is this time to buy coins with solid fundamentals and hold them until the arrival of the bull season. Currently, we are getting all the coins at discounted rates and there is panic in the market, so it is high time to follow SIP and hold coins for a good profit.
In your portfolio, you have some crypto assets in Staking. Explain what is Staking in cryptocurrencies.
Stacking is another feature offered by some crypto platforms where assets are locked for a specified period to earn prespecified APR. The APR generated adds to the coins staked and interest keeps on compounding. On some exchanges staking is flexible and investors can unlock their stacked funds whenever they want.
Staking is also a means of conferring mining rights on some networking which follow Proof of Stake (PoS), Delegated Proof of Stake (DPos) etc as a consensus algorithm.
Being new to this field i don't have staked coins
Which do you prefer Hodl or Staking?
I prefer holding over staking for the following reasons :
Holding doesn't involve locking of funds but it is a flexible process.
Holding can be carried out offline on hardware devices, unlike staking which is performed online.
Holding is less risky than staking as online funds are at risk of hacks.
Holding doesn't need any technical knowledge.
Good explanation from you.keep rocking.
Thank you . Trying my best .
Thank you, friend!
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Thanks
Nice post you have shared here friend. A cryptocurrency portfolio usually isn’t the same thing as an investment portfolio, since it doesn’t involve buying and selling individual stocks, bonds or other securities.
Thanks for sharing friend, and goodluck in this contest. #steem-on.
I will appreciate if you equally engage on Mine
This was a good easy read, and it explained well. Thanks!
JP
You have written well @saimaqam on the topic under consideration. You prefer holding over staking because holding can be made offline and it is less risky when compared to staking. Furthermore, holding and asset doesn't require some special knowledge to do that. I wish you success in this contest my friend.
Thanks for highlighting some key points. Wish you success too.
Wonderful portfolio