My Crypto Portfolio
There is no question that the advent of cryptocurrency is revolutionizing our understanding of the financial system, and points towards an overhaul of the way in which we transact with one another. In the world of crypto, users will be able to make use of the decentralized, peer-to-peer network to interact directly with one another, rather than through an intermediary, e.g. banks and other financial institutions.
Nevertheless, the crypto markets remain volatile. As new investors swarm to the crypto space, it is important to understand the underlying fundamentals behind the coins in which you choose to invest. However, there is one principle that remains, which is something that stock investors have long preached — diversification.
Many cryptocurrencies are designed to serve a unique purpose. For example, one of the biggest advancements that will stem from Ethereum’s ether (ETH) currency and its platform at large is the use of Smart Contracts. Check out my article on crypto vocabulary here to learn more. Others, like Enjin (ENJ), which also runs on the Ethereum network, are focused on NFTs, or non-fungible tokens, with the goal of allowing users to buy, sell, and trade digital property, art, and more in the future.
In this article, I will discuss my current crypto holdings, as well as the problem that each coin seeks to solve in the digital space. Let’s get started.
Bitcoin (BTC) ~70%
For many crypto investors, Bitcoin is their first exposure to the crypto world, and rightfully so. Bitcoin was created in the wake of the financial crisis of 2008, with the goal of fighting inflation, market manipulation, and many other issues that are rampant in our current financial system. It is the “gold standard” for many investors, who understand that, even if the underlying technology behind Bitcoin cannot compete with newer technologies, i.e. Ethereum, it is still a major improvement over fiat currency.
Due to the fact that Bitcoin is finite and runs on a distributed ledger, it is virtually impossible to manipulate the supply, which stands at 21 million. Additionally, the Bitcoin ecosystem is supported by a decentralized cohort of so-called Bitcoin miners, who utilize their own computing power to verify transactions in exchange for Bitcoin. To learn more about Bitcoin mining, click here.
As the price of Bitcoin flirts with the all-time high (ATH) of $61,000, most investors agree that the Bull Market is in full effect, and that we will almost certainly see the price break $100,000 in 2021. Furthermore, daily announcements that large institutions are investing in the cryptocurrency have reinforced the idea that Bitcoin is here to stay. As you can see, Bitcoin makes up the majority of my crypto holdings.
Ethereum (ETH) ~13%
Vitalik Buterin is the mastermind behind Ethereum, which he started at the age of 19 in his parents’ basement. It was not long before central banks across the world were inviting Buterin to speak about the future of cryptocurrency. Currently, over 3,000 projects run on Ethereum, with no signs of slowing down.
Ethereum’s platform is a game-changer in many ways, including the way in which people will receive loans and even deal in derivatives moving forward. More importantly, however, is the creation of the ERC-20 token convention, which has become the standard protocol for coins operating on the Ethereum network, and enables the use of smart contracts across the board. Moreover, Ethereum 2.0 is coming soon, which promises scalability, reduced “gas” fees (transaction costs), and the upcoming “token burn,” which will both decrease the supply of Ethereum, and reduce the rewards earned by crypto miners.
Many investors have signaled that Ethereum will reach $10,000 or more in 2021, and, for that reason, I remain bullish on ETH.
Cardano (ADA) ~4%
Cardano is seen by many as the solution to many of Ethereum’s problems, including speed and transaction costs. With former Ethereum co-founder Charles Hoskinson at the helm, ADA has become the darling of alt-coin investors. Cardano also offers users the option to stake their Cardano tokens, meaning that ADA holders will be able to earn interest on their coins, similar to how banks offer customers interest on money held in accounts.
Another feature that sets ADA apart from competitors is its adoption of the Proof-of-Stake methodology, which delegates opportunities for users to create blocks based on their holdings in Cardano — users with more coins will be higher priority to create blocks and receive monetary rewards.
Finally, Cardano’s reliance on peer-reviewed research has bolstered confidence that the underlying technology will be able to identify and counter many of the issues that face the crypto space. For these reasons, I am extremely bullish on ADA, and hope to see the price reach $5 by the end of 2021.
Litecoin (LTC) ~3%
Litecoin is another cryptocurrency that seeks to solve some of the issues with Bitcoin, most prominently the cost of transactions. Litecoin is also finite in nature, meaning that its supply cannot be manipulated nor experience hyperinflation, which is a growing concern for the USD.
With a nearly 480% increase in price over the last year, prospects for LTC remain high, and it is #9 in the world of cryptocurrency by market capitalization. Additionally, services like BlockFi offer 6.5% APY on your LTC holdings, making it an even more attractive buy. Check out my article on how to start investing in cryptocurrency to learn more about how to earn interest on your coins.
The Remaining 10%
As mentioned above, diversification is key. Here is the list of the other alt-coins that I currently hold, and a brief explanation of their goals within the crypto space.
Gemini USD (GUSD) ~3.6%
GUSD is what is known as a stablecoin, which is pegged to an outside asset, predominantly gold or USD. The fact that GUSD is directly correlated with the USD makes it a safe bet for people looking to avoid volatility in other cryptocurrencies. Moreover, interest rates on GUSD remain enticing, with BlockFi offering 8.6% APY, nearly 14 times the rate for most high-yield bank accounts.
Enjin (ENJ) ~1.2%
Enjin will be instrumental in the new world of digital assets, including artwork, property, and more. Both freelance artists and big institutions are jumping in on NFTs. Even Tony Hawk joined the space, minting a clip of himself skating — his last-ever ollie 540. If you’re a big gamer, checking out ENJ is a must.
DogeCoin (DOGE) < 1%
If you’ve seen Elon Musk’s twitter recently, then you already know about Doge. Although the coin started as a simple meme, it has grown into somewhat of a cultural phenomenon. The Dallas Mavericks recently announced that they will accept Doge as a form of payment at their stadiums. I own this mostly for fun, but once made quite a profit when Elon decided to spike the market. Some wishful thinkers believe that Doge will rise to $1 from its current valuation of ~$0.058. I’m holding regardless — diamond hands forever.
Hedera Hashgraph (HBAR) < 1%
HBAR aims to bolster protocols that will secure blockchain networks from malicious actors. This is done through HBAR’s Proof-of-Stake consensus network, meaning that a user would need at least 1/3 of the total supply of coins in order to manipulate the distributed ledger. Naturally, securing cryptocurrencies is a huge concern, and this is why I hold HBAR, which is up nearly 1000% since January.
VeChain (VET) < 1%
VeChain is one of the world’s first Blockchain-as-a-Service platforms, which strives to solve problems in Retail, Energy, and Agriculture, among other industries. With customers like BMW and PWC, VET is on its way to becoming a household name in the crypto space. One of my favorite initiatives from VET is the goal of reducing carbon emissions, which rewards users of the blockchain when they reduce their carbon footprints. VET hopes to offer a much more simplified version of the existing laws and bills that currently govern this space, making it accessible to players of all sizes.
Decentraland (MANA) < 1%
MANA is another player operating in the Gaming Industry, with its primary focus being the digitalization of virtual real estate. Through smart contracts running on Ethereum, MANA users can buy and sell this real estate in a new, virtual world. In a world moving towards Virtual Reality, having a decentralized virtual world that belongs to the users is a game-changer.
NuCypher (NU) < 1%
NuCypher seeks to secure data sharing by using blockchain to share access to databases, secret keys (SSH), and more. NU uses what they call “Dynamic Access Control” to allow data-owners to offer or revoke access to data on public networks based on predetermined criteria.
Polygon (MATIC) < 1%
MATIC, which is up nearly 300% in the last month, seeks to create interoperable blockchains. This means that, through the use of Polygon, blockchains can interact with one another, an advancement that would dramatically increase TPS (transactions-per-second) and reduce gas fees. With a 4-layer protocol, Polygon also aims to improve security of blockchains.
Algorand (ALGO) < 1%
ALGO looks to solve a number of issues, including instantaneous asset settlement and “trustless” smart contracts. These innovations will allow for decentralized marketplaces, crowdfunding, and auctions on the blockchain.
Uniswap (UNI) < 1%
As its name suggests, Uniswap allows users to exchange ERC20 tokens. The goal for Uniswap is to provide liquidity, a common shortcoming of decentralized marketplaces, using the “Constant Product Market Maker Model.” The Constant Product Market Maker Model is different from traditional asset transactions, where the marketplace connects buyers and sellers. Instead, Uniswap allows coins to be valued by the market itself. For example, when a user buys a token using Ethereum, the token supply decreases, and the supply of Ethereum increases. By using a specialized formula, x * y = k, where x is the supply of the token, y is the supply of Ethereum, and k is a constant value, a coin’s valuation can be reached solely based on supply and demand. Interesting, right?
ChainLink (LINK) < 1%
ChainLink is a “blockchain middleware” that seeks to ensure the validity of information coming from outside of a blockchain, as well as ensure that information is transferred securely. A good example is making a transaction between the “real” world and the “blockchain” world. Imagine you wanted to make a transaction between SWIFT, a provider of information concerning global transactions, and an application operating on the blockchain. LINK allows for the seamless transaction between these two parties, and solves the problem of initial points of failure along the blockchain, where transaction data can be manipulated for malicious purposes.
Phew, that was a long list! As more and more coins come to market, it is important to do the research and understand the importance of the coins that you are buying. Happy Investing!
