Should I include cryptocurrencies in my investment portfolio?

This post was sponsored by Revix.

cryptocurrenciesNowadays, you‘ll have a hard time finding someone who hasn’t heard about Bitcoin or cryptocurrencies. But beyond the noise and sensational news headlines, the overwhelming majority of people have very limited knowledge about cryptocurrencies and how this billion-dollar market works.

Co-founders of Revix, Sean Sanders (@SeanSanders08) and Louis Buys (@buys_louis) fill us in on the ‘need-to-knows’ of cryptocurrency.

Listen to Maya and Mapalo Makhu interviewing Sean and Louis on the My Money, My Lifestyle podcast.

What are cryptocurrencies?

In simple terms, cryptocurrencies are digital in nature and are designed to work as a way to exchange value over the internet. There is no central bank that issues or controls them and they can be peer-to-peer transacted, meaning that you don’t need a costly intermediary to handle them for you. In a sense, cryptocurrencies are an evolution of money, similar to how emails evolved out of the postal service.

What’s so special about digital currencies?

What is truly groundbreaking about cryptocurrencies such as Bitcoin is that, even though they are digital, you cannot simply decide to create more of them. Most cryptocurrencies are programmed to have a limited supply of digital coins, and new coins can only be produced if certain conditions are met. For example, Bitcoin will only ever have 21 million coins in circulation, while fiat currencies – like rands and dollars – have been printed in jaw-dropping amounts over the last decade through a central bank initiative known as quantitative easing. This has resulted in more fiat currency in circulation than ever before and, according to the IMF, global debt levels have ballooned to $184 trillion as a result. That’s 2.5x more debt per capita than income. It isn’t hard to imagine why this level of debt poses a serious global risk to the financial system and the associated fiat currencies that we know and use today.

Why should I include cryptocurrencies in my investment portfolio?

Cryptocurrencies have emerged as an alternative to these sovereign fiat currencies. Referred to as an alternative asset class, they consist of two interesting attributes that aren’t normally found together; firstly, cryptocurrencies are still in the stage of speculation, meaning that adoption of many of these crypto networks has only just begun. This gives them unparalleled return potential when compared to other investment options like stocks and property. Think of many of the internet titans – such as Amazon, Microsoft and Apple – back in the early nineties before the internet gained global adoption. Naturally, this high return potential comes with risk as some projects may fail, so you should never invest beyond your means. Secondly, the growth and success of cryptocurrencies is dependent on factors such as adoption rates and technological innovation. These factors are different from those affecting stocks or property returns, which are more heavily dependent on economic growth and unemployment levels. This means that cryptocurrencies’ returns move independently of almost every other investable asset class in existence, making them an exceptional diversification tool. As the saying goes, “the only free lunch when investing is diversification.”

Cryptocurrencies should also be viewed in the same way as other investable assets and not as a ‘get rich quick’ solution. The real money from any investment is earned with patience and a steadfast, long-term strategy. Investors are correct to be cautious, which is why it’s vital to diversify your cryptocurrency investments and to adopt a long-term view, as markets continually fluctuate and balance out.

How can I safely invest in cryptocurrencies?

Most future predictions that depend on numerous variables turn out to be wrong, reason being that nobody can know for certain what the future holds.

Further to this, there will always be an inherent risk when investing. However, the overarching goal is to limit the risk of losing capital, while still being able to seize the larger opportunity.

In this regard, Revix, a secure online cryptocurrency investment platform, enables customers to gain access to diversified ‘bundles’ of cryptocurrencies. These bundles provide exposure to the broader cryptocurrency market – similar to traditional index funds or ETFs – removing the need to bet on a single cryptocurrency.

Through Revix’s Top 10 cryptocurrency bundle, investors can own a diversified portfolio consisting of more than 85% of the global cryptocurrency market. Crypto bundles contain many of the most well-known cryptocurrencies like Bitcoin, Ethereum and Ripple, and are automatically rebalanced every month ensuring that all bundles evolve with the market. Investors can invest as little as R500 directly from their bank account, which makes the platform attractive to the everyday investor.

Furthermore, Revix offers its users the option of three different crypto bundles that to date have each outperformed an investment in Bitcoin alone on an annualised basis over the last three years.

Interested? Head over to www.revix.com to find out more.

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