Diversification away from Bitcoin

Diversification away from Bitcoin

Many people have heard of Bitcoin and they may already have holdings of this coin. Yet, one of the most important tenets of successful investing is to try and focus on diversification.

Keeping all of your eggs in one basket leaves you quite exposed to situations in which market movements in a volatile asset can do havoc on the value of your portfolio. Currently Bitcoin and Ethereum reached record highs but they could just as easily correct on Monday.

Hence, keeping all of your coins in only one cryptocurrency like Bitcoin can be risky from a diversification perspective.

Yet, which other coins should one invest in? Which coins can offer growth potential yet also be as secure as Bitcoin.

We will take a look at some of the most promising “Altcoins” in the space today. Altcoins are cryptocurrency that are not Bitcoin and are considered “Alternative Coins”.

Ripple

Ripple is currently in the number 4 slot in terms of market capitalisation for cryptocurrencies. This makes it a worthy contender for your money.

What is Ripple exactly and why is it different from many other cryptocoins?

Ripple is run by a large Fintech company called Ripple technologies. Unlike all of the other coins, they are not aiming to replace the banks but rather help them to harness blockchain technology to improve their services.

They are taking aim at the lucrative yet highly inefficient cross border payments business. This is currently run by the likes of Swift which handles all of these payments.

Ripple Interledger Technology

Ripple uses something called the interledger protocol to send these payments within milliseconds. From a bank account located on the other side of the world, a payment can be sent in an effortless transaction.

Moreover, the team at Ripple have been making a number of announcements recently including partnerships with American express and other large financial institutions.

The Ripple protocol works with a token called “XRP”. These tokens are held by the Ripple Company and will be used by the banks in order to manage these interledger payments.

The Ripple token is currently sitting at about 0.25 and has reached levels of 0.3 previously. It is likely to increase in the next few weeks as more Ripple announcements are made.

If you were looking for a way to trade Ripple, you would need to get yourself a broker. There are normal CFD brokers that mark to margin. If you would like to trade instruments with asymmetric payoffs such as cryptocurrency option brokers.

Bitcoin Gold

A new entrant into the cryptocurrency scene, Bitcoin gold was a fork of the original Bitcoin chain. This means that it split from Bitcoin in order to make a new Altcoin.

The drive behind Bitcoin gold was to make “Bitcoin decentralised” again. They were of the view that the hashing algorithm in use with Bitcoin (SHA-256) was easily manipulated by ASIC mining rigs.

This will mean that Bitcoin gold can be mined using Graphics Processing Units (GPUs). These are mining rigs that are available to everyone and would mean that a large group of people could be involved in mining again.

This decentralising affect will also place more faith in a system that has been dogged by large centralised mining organisations.

Bitcoin Gold Fork

Although there have been some bad headlines recently for Bitcoin gold in the way of phishing scams etc, the price has found a stabilising level of about $340 and has moved behind Ripple in coinmarketcap rankings.

If more investors start to realise the benefits of decentralised mining then Bitcoin gold is likely to rally towards the end of 2017 and into 2018.

NEO

NEO may sounds like a weird name for a cryptocurrency. Although it does sound quite Sci Fi, NEO used to be called “Antshares”. This is one of the best known Chinese cryptocurrencies.

It has also been called “China’s Ethereum”. This is because NEO also operates on a smart contract based blockchain. The cryptocurrency has indeed termed themselves the “NEO smart economy”.

Although many people would like to compare NEO to Ethereum, it has numerous other benefits in its own right. The team at NEO are looking to implement sharding technology into their blockchain.

Sharding is a concept that has been used for years in databases and is able to speed processes up markedly.

NEO smart economy solutions

NEO also, like Ethereum, would like to become a blockchain that would facilitate the development of decentralised applications (dApps). In China, there have already been 3 ICOs off of the NEO blockchain.

NEO has also had quite a wild ride over the past few days. It has gone from below $30 and almost reached its recent all-time highs of $48. This was all drive by speculation of an important announcement in the works.

One could expect that if the NEO team was able to properly work on the technology and if there were more ICOs that decided that they wanted to raise funds on the blockchain, then NEO could indeed have quite a successful run in the next few months.

NEO is available on most exchanges but one of the best to trade on is Bittrex. They are based in Seattle in the US and have a range of other pairs to trade with numerous other Altcoins.

Technology Diversification

When it comes to cryptocurrency diversification, it is important that the diversification spreads across different technologies and use cases. In this way not one particular coin is exposed.

Hence, the above cryptocurrencies were chosen based on the completely different nature of their underlying technology. Some are payment solutions, others are decentralised currencies and others a decentralised “smart economy”.

However, these coins are only a minor part of the larger cryptocurrency ecosystem. Do your research, take a look at the development team and place your trades in the most promising ecosystems.

Please follow and like us:
About Bart 7 Articles

Administrator at the Province Town coin exchange. Have been trading cryptocurrencies for a number of years. Ex developer and current cryptophile.

3 Comments

  1. Bart, between Ripple and Neo, which one would you invest in? Many people are telling me that the price on Ripple and the supply restricts how much it can rally?

    • Hi Nathan. Completely different technologies to be honest. Ripple is a bet on banking payments with swift. NEO is about smart contracts with a smart economy. Ripple may have many tokens tied up but they have a great use case and if all banks use them, the value will increase exponentially.

  2. I invested in NEO when it was first starting out. Crazy shit. I can’t imagine a currency that goes from a mere $10 up to over 47.

Leave a Reply

Your email address will not be published.


*