STEEMIT ENGAGEMENT CHALLENGE S5W6 - MY CRYPTOCURRENCY PORTFOLIO

Image edited on Canva

Hello to everyone in this wonderful community know as the crypto academy. I welcome you to the end of the season 5 engagement challenge that has been on the run in the steemit platform.

Today, I will be participating in this week's engagement challenge that has been brought forward by the steemit. And in respect to this community contest theme for this final quarter which is known as my cryptocurrency portfolio, I will be providing the relevant answers to the contest questions given.

So I beckon on you all to come and read my article regarding this contest as I drop my entry.

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EXPLAIN IN YOUR OWN WORD WHAT A CRYPTOCURRENCY PORTFOLIO IS?

A cryptocurrency portfolio can be regarded as the number or types of cryptocurrency you have in your possession. It can also be regarded as a total collection of various groups of assets or investments in which an investor has in his possession.

So in regard to cryptocurrency, it is the various groups of digital currency in which an investor, or a person possesses depending on his choice of investment whether the investor is either holding it or staking it.

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DO YOU PREFER A DIVERSIFIED PORTFOLIO OR A CONCENTRATED PORTFOLIO, EXPLAIN EACH?

Well to me I prefer the diversified portfolio to the concentrated portfolio because with a diversified portfolio you are sure of managing risk and reward in an efficient way.

With a diversified portfolio there is always an equilibrium or a balancing of risk and reward among the various assets in your possession. When you extend your money on different cryptocurrency assets, you will be more safer than just placing your focus on one type of cryptocurrency asset.

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WHAT IS A DIVERSIFIED PORTFOLIO?

A diversified portfolio is a particular type of portfolio in which the investor extend it tentacles by investing on different types of investment in other to strike a balance between risk and reward.

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Now, allow me to make this very clear. The reason why I am using cryptocurrency as my case study is because we are talking about cryptocurrency, allow me to digress a bit.

The word diversified portfolio is also talking about other businesses. It is a form of investing in multiple business in other to maintain the risk and reward level because this will help to curtail risk to an extent.

For example, If a trader is selling rice, beans yam, potato and noodles, he has actually diversified his income by having a diversified portfolio.

Now anyone who comes to buy rice everyday, and that same person has decided not to buy rice anymore and he or she wishes to now opt-in for noodles, the trader although will no longer sell rice to that customer and as such, that very day, he has losses the income from rice. But then he has gained an income also from selling his noodles to that customer.

Now you can see how a diversified portfolio works for investors. Since there are alternatives, it will balance the risk and reward of investment.

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WHAT IS A CONCENTRATED PORTFOLIO ?

Now a concentrated portfolio is the opposite of a diversified portfolio. A concentrated portfolio is a particular kind of investment in which a trader invest on just an a portfolio.

It is just a kind of investment which one does, placing his or her focus on just an investment and always hoping that the investment brings returns. This is a kind of investment where an investor in cryptocurrency only have but just a particular asset in his possession.

This type of investment does not strike a balance between risk and reward. If the portfolio happens to bring reward, then it rewards the investor, but if the portfolio goes down, then the investor will lose his or her money.

In concentrated portfolio, only a particular investment is considered and given high priority and as such it is dangerous and totally not advisable for one to rely on just a concentrated portfolio.

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IN YOUR PORTFOLIO DO YOU HAVE ANY CRYPTOCURRENCY IN HOLD?

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Yed I do. I have different cryptocurrency in hold and I am waiting for the price to skyrocket before I let it out for purchase. That is what I mostly do, I get cryptocurrencies at a lesser price and then I hold, waiting for their price value to depict higher highs in prices and then I quickly sell them off.

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EXPLAIN WHAT IS HOLDER IN CRYPTOCURRENCY ?

Holder in cryptocurrency can be seen as an investment which an investor does, the said investor holds large amount of cryptocurrencies. If possible, he purchases these cryptocurrencies at a lesser price and then holds them in his possession until the value of those cryptocurrencies increases, and that is how the investor makes profit as a result of holding various crypto assets.

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IN YOUR PORTFOLIO DO YOU HAVE ANY CRYPTOCURRENCY ASSET IN STAKING?

No I do not have any crupto asset in staking. Although it is a wonderful method of investment and I am currently gathering my tron asset in other to stake them by voting for certain representatives and in turn I will be rewarded gradually.

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EXPLAIN WHAT IS STAKING IN CRYPTOCURRENCY?

Staking in cryptocurrency can be seen as the process whereby an investor of a particular cryptocurrency handover or giving out his or her crypto assets in other to support a particular blockchain network and also affirms certain transactions.

This can be done with the proof of stake method of payment, and as such, it only works on blockchains that accept such method of payment. So after your stake, you get rewarded with the said cryptocurrency which was used to stake.

Just like the tronlink we normally use to store and stake our tron asset and also votes for the highest rewarding representatives which in turn we will be rewarded with some amount of tron according to the numbers of tron staked.

So that is how staking works in cryptocurrency. A user or an investor stakes his or her assets in other to support a blockchain and in turn get rewarded.

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WHICH DO YOU PREFER HOLDING OR STAKING?

To me, I prefer staking because be it that the value of the said asset rises or not your reward for staking always comes. So it doesn't have anything to do with the price of the asset be it that the price either rises or falls down.

But when one holds an asset, he or she does not stand the chance to gain extra reward if the said asset doesn't rise in price value. So it is of no use to hold an asset when there are other options to stake the asset and gain extra reward.

In a nutshell, I sincerely prefer to stake my crypto assets than to hold them.

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CONCLUSION

It has been a wonderful time with you all so far, I have explained the different types of portfolios and also gave my take on which portfolio investment I prefer, and I have also explained the different types of portfolio too.

It was nice attempting this week engagement contest, I look forward to seeing you all in season 6. Greetings.

I want to use this medium to invite the following users to drop their entry concerning the above topic, and they are, @badmus-official, @fredquantum, and @chaibertrand.