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How To Use Bitcoin To Diversify Your Portfolio

In the investment market, diversification is vital to ensuring that your risk is spread across a variety of different markets and asset classes.

Whilst Bitcoin and other cryptocurrencies are a source of contention in the investment world, with many scams being run and some investors pessimistic about the long-term viability of these assets, for many they are the future of investment. They allow investors to buy a flexible asset that can be used not only to generate a strong return, but also used to buy goods or services.

As a digital currency asset, Bitcoins are completely different to most traditional investments such as stocks and bonds, making them a great way to drive diversification for most portfolios.

After all, with international social and political challenges such as Trump, Brexit and the trade war, rumblings of a global recession are getting louder, and as such investors need to be prepared. Investing across a range of asset classes is a great way to ensure that your money is as safe as possible, so in this article we explore how Bitcoin can be used to add diversity to any portfolio.

Bitcoin Is Sold On A Variety Of Platforms

A flexible asset, Bitcoin is sold across a number of platforms and markets, including forex and Coinbase, meaning that you can buy cryptocurrencies in a number of areas and further diversify your portfolio. Held in digital wallets, Bitcoins can be stored in a variety of places online so that you can find the perfect way to keep your assets safe.

By having their assets on different platforms investors can use a range of investing techniques to enhance their returns. It also means if you’re a beginner, you have a choice when it comes to buying, storing and trading your Bitcoins, meaning that you can find a platform or market that you’re comfortable with.

Investing In Bitcoin Is Easier Than You Might Think

As Bitcoin functions by the same fiat principles as the U.S. dollar it’s a great option for those that already have experience investing on the forex market. It’s surprisingly easy to buy and store Bitcoins or other cryptocurrencies, so almost anyone can move into buying Bitcoins without needing much investment knowledge, however making strong returns takes the same skill and investment knowledge that succeeding with any other type of asset requires.

For investors who are unsure about moving into trading with Bitcoin, consider using a social trading or copy trading platform to emulate the investment strategies of experienced investors. These platforms allow beginners to copy or mirror the trades of those who’ve previously achieved success, so that they can use their techniques to their advantage. There are a number of copy trade platforms out there so that you can find the perfect space to get started and use Bitcoin to improve the diversification in your portfolio.

Its Value Derives From Demand Not Business Value

Unlike most stocks and bonds, Bitcoins are not valued based on the value of the company or organisation to which they’re linked, but rather the demand for a particular currency. As such, if global economies do struggle then Bitcoin has the potential to grow in value as more investors could potentially look for alternatives to invest in during an economic disaster.

Also, as Bitcoin is an online currency it isn’t subject to regional economies, meaning that if one country does plunge into a recession, Bitcoin will remain strong. Therefore, as economies around the world continue to fluctuate, Bitcoin’s value is more secure than that of more traditional asset classes.

The Transaction Fees Are Comparatively Low

When trading Bitcoin there are lower transaction fees than some other assets, meaning that traders and consumers alike can save money when using Bitcoins, either to pay for goods and services or as an asset in a portfolio.

Bitcoin Has Real-World Applications

Whilst some asset classes like stocks and bonds can only be bought and sold in a certain way, Bitcoins are incredibly flexible and can be exchanged for products and services in the same way that traditional currencies are used. As such, investors can use their Bitcoins for whatever they need and have lots of additional options when it comes to selling off their assets.

Blockchains Mean That Bitcoins Are Pretty Much Impossible To Forge

Legitimate Bitcoins are back-up by a blockchain, a sophisticated form of technology designed to show every transaction that a specific asset has ever undergone. Owing to their nature, blockchains are impossible to forge, meaning that as long as you check that your Bitcoins have a blockchain you will be safe in the knowledge that your investment is legitimate.

This Asset Doesn’t Have Any Constraints Placed On It By Governing Bodies

As a decentralized, peer-to-peer investment solution, Bitcoin isn’t controlled by banks, governments or other financial institutions, meaning that when recessions hit this asset class is not implicated by any restrictions that may be put in place.

Bitcoins Aren’t As Heavily Taxed

In many countries Bitcoins are not classed as a legitimate currency, therefore they are only taxed if they’re used for certain applications. There are even some countries where Bitcoins aren’t taxed at all, which means that you can save money on taxes when you invest in Bitcoin.

There’s Loads Of Support Out There

For those that are unsure about investing in Bitcoins there are loads of resources out there that can help you to learn more about how to use this potentially lucrative asset class to your advantage. There are magazines, podcasts and blogs out there for you to use to learn more about different investment techniques and the options that you have. Thanks to these free or cost-effective, quick and easy-to-use resources anyone can find out the information they need to achieve success investing in Bitcoins.

For investors that want to spread their risk and start investing in a cutting-edge asset class, Bitcoin is the perfect option. Use this article to help you to find the Bitcoin investment solutions that will keep your portfolio diverse and profitable.

 

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