Research and Portfolio creation

This topic goes without saying. Only invest in Bitcoin (or another cryptocurrency) which you feel you have read enough about and are sold enough on its prospects.

This is relatively easy for the popular coins like Bitcoin and Ether as there are a myriad of articles featuring them online. When looking at the lower cap altcoins, which haven’t had huge amounts of exposure it can be difficult to get an idea about their potential, why they could be useful, and if they will still be around or have gone up in value in a few years.

There is a lot of information to be found on reddit, social media and youtube but keep in mind that a lot of it is people’s personal opinions and if they have already invested in a coin they are likely to be biased towards it.

Portfolio Creation

If you are new to Bitcoin or cryptocurrency in general and wish to invest in multiple tokens then it is a good idea to spread your risk by creating a planned portfolio. By portfolio I mean the type and proportion of coins you plan to buy. Here’s an example portfolio for someone who wanted to invest $5,000 into cryptocurrency:

• Bitcoin: $4000 (80%)
• Ether: $500 (10%)
• XRP: $250 (5%)
• IOTA: $250 (5%)

You need to tailor your portfolio to your own risk profile. The above portfolio puts the majority of money into Bitcoin, which due to its track record is slightly lower risk (despite still being high risk). However, Bitcoin is also thousands of dollars per coin at the moment, so your potential profit may not end up being that big. Therefore the remaining 20% is split between higher risk altcoins. These coins could easily fail, but if they go crazy like some of the more popular coins they could be huge earners. This portfolio is just one example. Feel free to put it all into smaller altcoins or put it all into Bitcoin or Ether – just be aware of portfolio risk level. In general, the coins in the top 10 on coinmarketcap are probably lower risk to invest in.