How to Build a Cryptocurrency Portfolio

Crypto-CurrenciesCryptocurrencies have been all the rage these days. And for good reason. I truly believe that digital currency and blockchain technology is paving the way for the future of finance and banking.

Many people, wisely, want to get in on this trend. And yes, it is still in the early stages.

The biggest obstacle into getting involved in digital currencies is obtaining them. Years ago people had to jump through hoops to get Bitcoin. These days you can get dozens, if not hundreds, of different coins through several different online brokers.

In fact, there is so much to learn and discover it can almost be overwhelming. So what I would like to do in this article is to lay out where, what, and how to add currencies to your portfolio of investments.

Choosing the Currencies

From what was once an obscure idea relegated to the corners of the internet, Bitcoin has made its way into the mainstream. In fact, I’ve seen it on the front page of the Wall Street Journal (At least in the business section). It’s been featured on CNBC, Forbes, and other financial outlets.

Years ago, Bitcoin was really the only option if you wished to delve into cryptocurrencies. Again, today, there is a plethora of options.

For starters, you should be putting the bulk of your crypto investments into either Ethereum or Bitcoin. I suggest you do your own research as to which currency best suits you, and which one you believe has the best future. Or, like me, you can purchase both.

While buying single top digital currency like Ethereum or Bitcoin will surely yield big results, it is still a good idea to diversify your portfolio. This would consist of buying several smaller coins (based on market  cap) in addition to the popular coins. This website provides a good visualization.

I would suggest buying Bitcoin and/or Ethereum  to compose about 70-90% of your portfolio. Then make up the rest with a variety of coins, perhaps 2-5 different currencies. These would include smaller, and somewhat reputable coins like Monero or Z-cash.

The benefit of diversifying your cryptocurrency portfolio is that you a.) Protect your losses by choosing to keep most of your funds in an established coin, but preferably both and b.) Set yourself up for major gains by obtaining these smaller coins which have a higher potential to return significant profits.

The Best Brokers

You can’t buy digital currencies via an online broker like E-Trade. You can only go through brokers that deal in Bitcoin and other cryptos.
While I would like to disclose my holdings, due to security concerns I will not show personal holdings, or even explicitly states which sites I use. However, you can assume the sites below I have some experience with or have vetted them (I’m just going to give a brief overview of them):

  • CoinbaseOne of the biggest players in the cryptocurrency game. Coinbase only sells Bitcoin (BTC), Ethereum (ETH), and as of recently Litecoin. You can exchange dollars for currencies which is quite convenient. The security is solid especially with their ‘vaults’ which give you an added layer of security.
  • PoloniexThis site offers a ton of options for buying cyrptocurrencies. With dozens of cyprtos you will no doubt be able to find small-cap coins that meet your needs for fulfilling the more speculative crypto investments (relative to other cryptos which are quite speculative in general!) Note that before buying any coins via Poloniex, you must already own BTC. This is because Poloniex, like many other cryptocurrency brokers, does not have a licence to deal in U.S. Dollars. Therefore, you can only buy most cryptos by purchasing them with BTC. (In my opinion, this gives BTC a ‘Petrodollar’ status among cryptocurrencies.)
  • KrakenSomewhat similar to Poloniex. The differences is that it caters more to European users and has less options that Poloniex.

When it comes to choosing brokers for cryptos that aren’t BTC or ETH do your homework to decide.

It’s Not too Late!!

One of the biggest questions people ask is: Is it too late to get into cryptocurrencies?

I asked myself this question a few months back when Ethereum had skyrocketed in to the $40+ range after having been below $10 months, and even weeks, before. The price was climbing and climbing–it was going up asymptotically as I watched the charts. At around $67 I pulled the trigger.

I put down $100 even though it was 10 times higher than when I first set eyes on it earlier this year. And guess what?

That $100 is now over $500, closing in on $600.

That money is not life changing, but it is an astounding return, unheard of in traditional markets. Moreover, losing half that $100, or even all of it wouldn’t phase me. I had nothing to lose.

Right now Ethereum is well over $300. While some may be wondering if this is too high, there’s no reason it won’t be worth thousands next year. Who knows.

As a rule of thumb I would not recommend putting more than 5% of your savings into cryptos–maybe 10% depending on your risk tolerance. But that small allocation will yield huge gains. It has for me already.I hope this advice helps. People have purchased Bitcoin via my affiliate links earlier this year and have made hundreds, if not thousands. I suggest you do the same.

When you sign-up via my affiliate link via Coinbase and purchase over $100 of BTC, both you and I will receive $10 worth of BTC free. And please, don’t feel compelled to buy any cryptos if you can’t afford it or are still skeptical. Do your research, stack some money and then get in the game!

Feel free to post any questions in the comments section below.

Click here to get $10 free in Bitcoin!


Interested in learning more about Bitcoin and cryptocurrency? Then check out these other articles I’ve written:

  1. 3 Reasons You Should Invest in Bitcoin
  2. Coinbase Review: A Safe and Easy Way to Invest in Bitcoin