Crypto

For The Passive Investor, Is Hodling Still Enough?

Bitcoin -and the Altcoins that came trailing in its wake- went from being digital money for nerds to financing crime and Terrorism, and now Bitcoin is being touted as a potential safe-haven asset that could substitute gold. All this in the space of about a decade.

During that decade, Bitcoin and the other cryptocurrencies and Altcoins attracted a lot of attention as a volatile, fast-growing asset class. Rich with potential to make a good profit, the act of simply buying an altcoin and forgetting about it for two to three years seems to be a no-brainer.

However, the maturation of crypto assets may change that a little.

Over the course of this year, Bitcoin has seen gains of more than 200%, however, the Altcoins have not been able to replicate their late 2017 performance, with some commentators pointing to a possible end for Bitcoin’s alternatives. As it stands, the Alts are still here and some of them might still be worth looking at. From a different angle perhaps.

By that, I mean. If you feel like your Alts aren’t making you what you want, there are two options that are worth looking at. No active trading or programming and maintenance of trading bots.

Margin Funding

If you have been watching cryptocurrency market-related news. Then you might have noticed that Binance, the world’s largest exchange, recently launched a lending service. This exchange is only the most recent to do so.

This is an option offered to users by a few cryptocurrency exchanges that offer margin trading. These are peer to peer platforms that bring lenders and borrowers together and can be a slightly less involving means to generate gains from your crypto holdings. Exchanges that offer these services include BITFINEX, Poloniex and OKEX to name three.

Staking Your Assets

This is an option that is available for Altcoins that use the relatively new Proof of Stake as opposed to the traditional Proof of Work consensus mechanisms that run Bitcoin and most other coins/tokens. The Proof of Stake mechanism has grown in popularity over the past few years. It is said to have significantly less of an environmental impact than that of PoW, which requires a lot of electricity and generates a lot of heat.

Staking is the crypto Investor’s equivalent to locking up your funds and gaining compound interest on those funds. The process is as simple as acquiring PoS tokens then handing them over to platforms that offer staking services to handle the technical side on your behalf. Then you watch you “interest” accumulate.

Staking services on offer include Coinbase Custody, Staked and Battlestar Capital. There are also a multitude of tokens already using the PoS mechanism, these include; Tezos, Cardano, Dash and Qtum to name a few.

Conclusion

The truth here is, though the cryptocurrency market has made great strides, it is still young and still very speculative. No one can say with absolute certainty where we’ll end up. In the meantime, branching out into more than simply holding may possibly do wonders for your portfolio.

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Joel Bonga

A part time cryptocurrency trader, mostly a hodler, and Blockchain/crypto freelance writer. Plus an occasional contributor at BIZZNERD.
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