5 Types of Cryptocurrency That I Would Have in My Portfolio!

Ruby Layram 19th Jul 2024 No Comments

Reading Time: 5 minutes

More and more people are interested in adding cryptocurrencies to their investment portfolio, which is great! However, it’s important to remember that there is more to the world of cryptocurrency than Bitcoin.

Don’t get me wrong, Bitcoin is an excellent coin to consider (and one that I’ve definitely got my eye on!). But for the sake of diversification, it might be worth setting your sights on other coins that have similar potential for growth.

In this guide, I will share 5 different types of cryptocurrency that I would add to my portfolio if I was starting from scratch.

• The importance of diversification
• The benefits of looking outside of Bitcoin
• 5 types of cryptocurrency that you could consider in 2024

The Importance of Diversification When You Invest in Crypto

First things first, let’s chat about diversification.

Imagine you’re at a buffet. You wouldn’t pile your plate with just one dish, would you? No, you’d want a bit of everything to taste and enjoy.

Investing in cryptocurrency is quite similar. Putting all your money into one coin is like putting all your eggs in one basket. If that basket drops… well, you get the picture.

Diversification helps spread risk and increases your chances of hitting a winner. There is no magic number here. However, it is important to select a handful of different coins to invest in to spread your funds across different areas of the crypto market.

A lot of beginner investors pile all of their cash into Bitcoin. But, what about when Bitcoin goes down? By investing in other coins, you can reduce the impact of big losses on your portfolio.

The Benefits of Looking Outside of Bitcoin

It can sometimes seem like Bitcoin is the main character of the crypto world. But guess what? There’s a whole universe beyond it, teeming with exciting opportunities.

Let’s explore why venturing beyond Bitcoin could be beneficial for you.

You might also like: 3 ways to invest in Bitcoin without buying Bitcoin

Staking Rewards

Some cryptocurrencies offer staking rewards, which is like earning interest on your savings account but usually at a much higher rate.

By holding and “staking” certain coins, you can earn more of them just by keeping them in your wallet.

It’s a great way to grow your portfolio passively.

Access to More Decentralized Applications

Different cryptocurrencies power different decentralized applications (or “dApps”).

Think of dApps as regular apps but without a central authority controlling them.

By diversifying, you get access to a wider range of these dApps, which allows you to participate in exciting products and features. For example, some cryptocurrencies can be used to access play-to-earn games which reward players with free crypto for playing fun games.

Environmental benefits

Bitcoin is fabulous, but its energy consumption isn’t the best for our planet.

Many other cryptocurrencies use Proof of Stake (PoS) instead of Proof of Work (PoW), making them much more eco-friendly.

So, proof-of-stake coins might be a better option if you’re interested in building an ethical portfolio.

5 Types of Cryptocurrency To Have in Your Portfolio

Alright, let’s get to the juicy part. Here are five types of cryptocurrency that I would hold in my portfolio.

Each of these coins has a unique potential that makes them a great way to diversify!

1. Bitcoin

Let’s start with the most popular of them all, Bitcoin.

It’s the first and most well-known cryptocurrency, often referred to as digital gold. Bitcoin is the pioneer that started it all and has become a household name.

It’s a must-have in any crypto portfolio due to its stability and market dominance. Even if the market fluctuates, Bitcoin usually manages to bounce back. Plus, it’s expected to be one of the first cryptocurrencies to be used for day-to-day payments on a global scale.

Although Bitcoin offers a degree of stability compared to other cryptos, its important to understand that investing in the coin doesn’t free you from risk completely!

All cryptocurrencies are prone to volatility, even Bitcoin. 

2. Ethereum

Next up, we have Ethereum. If Bitcoin is the gold of the digital world, Ethereum is the silver.

It’s not just a currency but a platform that allows developers to build and run dApps. Its native coin, Ether (ETH), is used to power these applications.

Ethereum’s versatility makes it a solid investment. The network recently upgraded to Ethereum 2.0, which involved moving to the more sustainable proof-of-stake mechanism. This makes it a more eco-friendly option than Bitcoin!

3. Dogecoin

Yes, Dogecoin! Although this crypto started as a joke, it has turned into one of the most popular cryptocurrencies.

Its mascot, the Shiba Inu dog, is a familiar face in the crypto world and has captured the hearts of millions of investors.

Dogecoin has seen tremendous growth and has a strong, active community behind it. It’s affordable and fun, making it a great addition to a diversified portfolio.

4. Solana

Solana is one of the newest cryptocurrencies in this list but that doesn’t mean that it hasn’t got potential!

Known for its incredible speed and low transaction fees, Solana has quickly risen through the ranks. It’s a platform for dApps, similar to Ethereum, but boasts faster processing times and lower costs.

If you’re looking to invest in blockchain technology that could power the future, Solana is definitely worth your attention.

5. Ripple

Unlike other cryptocurrencies that aim to replace traditional finance, Ripple wants to work with it.

It’s designed for quick and cheap cross-border payments, making it a favourite among financial institutions.

Despite some recent regulatory challenges, Ripple has shown resilience and remains a strong contender in the crypto world.

Before you make any investment decisions, it’s important to understand the risks of investing in cryptocurrency. These assets can be very volatile and there is no guarantee that the price of cryptocurrencies will go up.

Always do your due diligence and only invest with money that you can afford to lose.

Remember, the key is diversification. By spreading your investments across different coins, you reduce risk and increase your chances of success.

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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.