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It has been an interesting journey with the beautiful community of Steemit Crypto Academy, as you have always given us quality, interesting, and educative concepts to discuss. This week's contest is another nice one titled My Cryptocurrency Portfolio by @crypto-academy

You would agree with me that Cryptocurrency portfolios have become an essential and purposeful step taken by investors seeking to invest in cryptocurrency projects/coins, given the fact that the market is usually volatile.

Let me share my understanding, views, and experience on the concept of cryptocurrency portfolio and its characteristics.

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My Understanding On What Cryptocurrency Portfolio Means

A cryptocurrency portfolio is a digital asset that holds all of your investments in cryptocurrencies, allowing you to easily track the value of your investments and also making it easy to buy and sell various coins without having to log into multiple exchanges. It's referred to as the most convenient way to invest in cryptocurrencies, as it provides easy access to a person’s entire collection of digital assets from one place.

A cryptocurrency portfolio could be the best way to diversify your investment, which means not putting all your eggs into one basket. You can create a diverse crypto portfolio and invest in several different coins at once. Some people even use cryptocurrency portfolios to obstruct the market and protect their investments from any downturns, because some coins are more volatile than others.

You would agree with me that a cryptocurrency portfolio can provide lots of benefits to investors. Given the fact that cryptocurrencies are volatile, it could be difficult to have a balanced portfolio of them, but by investing in multiple cryptocurrencies, you would avoid major losses when a particular coin takes a long bearish trend. You'll also have the opportunity to expand your knowledge of different types of coins, which will help you make wiser investments down the road.

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My Most Preferred Between Diversified And Concentrated Portfolio

Before choosing my most preferred portfolio, let me briefly discuss each of them.

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Diversified Portfolio

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A diversified portfolio is a strategy for spreading investments across several industries and sectors. This way, if one industry or sector goes down, the other will go up and balance out the losses. In the case of cryptocurrency, it refers to the strategy that allows an investor to buy various coins, with different market caps, volumes, and history, rather than just buying one particular asset.

Since a diversified portfolio is built by investing in various assets, it provides the benefit of risk reduction. But in some cases, it could take a longer period of time to produce profits when compared to a diversified portfolio because some of the many coins could go bearish and reduce your profit rates.

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Concentrated Portfolio

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As the name implies, a concentrated portfolio refers to a strategy where an investor focuses and invests on a particular asset alone. Here, an investor puts all his money into a small number of investments.
This approach can be risky because it exposes the investor to greater risk if the investments go bad, but it can also lead to higher returns if everything works out well.

Here, investors put all of their money into one asset, with the hope that it will yield a higher return than that of a diversified portfolio. In some cases, this isn't the case, as the asset could still go bearish, thereby causing major losses for the investor.

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My Most Preferred

Generally, it depends on the goal and plans of the investor, either to stay long or go short in a market. If he/she plans on staying long in the market, then I think a diversified portfolio isn't the most appropriate for that investor. But if an investor wants to invest in high-risk investments like cryptocurrency or stocks to achieve quicker profits, having a highly concentrated portfolio can be an excellent choice.

Me, I prefer the diversified portfolio, because I know how unpredictable the crypto market could get. In most cases, even a concentrated portfolio brings so much loss to investors, which means profits aren't guaranteed at all times. So why would I risk everything in one investment, when I could easily reduce the risk?

Crypto Asset In HODL on my portfolio

Yes, I equally practice this method of crypto investment, where I buy and hold an asset for as long as possible. Many people believe that the best way to make money with cryptocurrencies is to buy and hold them for the long term, but that's not the only way.

My Binance Wallet	Coins I hold here

As you can see on my Binance spot wallet, I have some cryptocurrency coins which I have been holding for months now. TRON (TRX) is currently my most accumulated and held coin since the April of 2022. FTM, CTSI, and a few others are currently among the coins am holding in my cryptocurrency portfolio.

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Explanation of Holder In Cryptocurrencies

The idea of hodl was first introduced on BitcoinTalk forum when an anonymous user, GameKyuubi, wrote the now iconic post: "I AM HOLDING, and I will NEVER sell my Bitcoins". One of the most famous proponents of this philosophy is the co-founder of Ethereum, Vitalik Buterin.

He misspelled the word "HOLD" by Typing "HODL", although the post has since been deleted, it's still widely used to encourage investors today.

This acronym stands for Hold on for Dear Life, and it refers to investors who hold onto the cryptocurrency they purchased and ride out the market’s ups and downs rather than trying to time the market or trade in and out of investments. HODLers are often criticized as being short-sighted and stubborn, but HODLing has its advantages in an increasingly volatile investment.

Crypto Asset In STAKING on my portfolio

Staking is another method I used to invest and accumulate my asset. This could be done by running a master node (a server) to just hold onto a certain coin and maintain its stake in the network (staking with their wallet). I have equally staked some of my assets into a network which is **the STEEM Wallet.

staked coins on my steemit wallet

As you can see on my Steemit wallet, I have staked some amount of steem coins on the Steem Network. By doing this I would get the vote on other users' posts, whereby getting back some percentage of the reward from the reward pool of the STEEM blockchain. Am seeking ways to increase my stake, because the higher the Staked coin, the bigger your percentage reward.

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Explanation of STAKING In Cryptocurrencies

Staking is a term for validating transactions on the blockchain. This process consumes very little energy and does not require any special expertise. It is called staking because it requires you to stake your coins as collateral, which would generate rewards if you are deemed reliable.

When you stake, you lock up your coins for a certain period of time, thereby earning interest on them. It's important to note that staking can help you save money and earn cryptocurrency at the same time.

In the world of cryptocurrency, many people like to refer to themselves as miners, but this term isn’t entirely correct. What you are doing when you mine for crypto coins is verifying transactions on the network. But when it comes to staking, it can help you achieve the same goal without having to buy expensive mining equipment, as you could even use your mobile phone or personal computer to stake and earn your interest.

My Most Preferred Between Hodl And Staking

You would agree with me that the two investment strategies could be very rewarding. Take for instance the case of holding, If Laszlo Hanyecz had held on to that 10,000 BTC which he had used to purchase two large pizzas, up until November 2021 when Bitcoin reached around $69,000, he would have gotten $690,000,000. I guess the numbers seem difficult to comprehend right? That's exactly what "holding on for dear life" really represents.

Staking, on the other hand, has generated thousands of dollars across various networks for cryptocurrency investors, as they usually get rewarded with a good percentage of the fees that were collected on all transactions that took place while they were securing the network.

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Although both strategies tend to generate financial profits, let's consider some setbacks about them that could affect investors.

For staking, the only setback I could observe is that you get greater returns when you invest bigger capital. Investors would need to put in more money to get better rewards from the network.

But in the case of holding, you would hope and watch how the charts and trends of the market move. Some investors tend to stay up all night to study charts and know what coin they would be held next on their portfolios for fear of missing out on volatile coin charts. When the price of an asset begins to drop quickly, holder begins to become nervous about their investments, because it's a risky business and there is no guarantee of price appreciation.

For me, I prefer staking over holding, given the fact that in staking I don't just make profits by hoping, and believing that my coins will be worth more in the nearest future. But instead, I make profits by setting a certain amount of my coin as collateral to earn interest on them.
This way am equally holding my asset at the same time because it would be locked in a wallet for as long as I wish to stake and generate profits.

In the nearest future when I become bigger and better in society, I would buy a lot of Steem coins, and invest them in my Steemit wallet, so that I could generate higher rewards from the reward pool for securing the network.

CONCLUSION

The value of these digital assets can change at any time, so it’s important to understand how you can use them as an effective investment strategy. A concentrated portfolio is an investment that focuses only on a particular asset, while a diversified portfolio investment spreads out across various numbers of sectors and coins.

Generally, this has been an interesting topic of discussion, and I say Kudos to the organizers of this contest. Am inviting @drhira, @mariami, and @mayberling to check out this contest.

Note: All Images are screenshots taken by me on my Binance and Steemit wallet.

Thanks for your time here.