How to build a well-balanced crypto portfolio


Each investor or trader will have their own ideas on what makes a well-balanced crypto portfolio. But, there are some general rules worth considering:

  1. Split your portfolio between high, medium, and low-risk investments and give them appropriate weightings. A portfolio containing a large portion of high-risk investments is definitely not balanced. It might have the chance to provide you bigger gains but may also cause huge losses. Your risk profile will determine what’s best for you, but there should be some mix.
  2. Consider holding some stablecoins to help provide liquidity for your portfolio. Stablecoins are the key to many DeFi platforms and can help you quickly and easily lock in gains or exit a position.
  3. Rebalance your portfolio if needed. The crypto market is very volatile, and your decisions should change depending on the current situation.
  4. Allocate new capital strategically to avoid overweighting any one area of your portfolio. If you’ve made big gains recently from one coin, it can be tempting to pump in more money. Don’t let greed interfere, and think about where you can better place the money.
  5. Do your own research. You really can’t beat this classic piece of advice. You are investing your own money, so don’t rely solely on the advice of others. For tips on spotting potential scams, see 5 Common Cryptocurrency Scams and How to Avoid Them.
  6. Only invest what you can afford to lose. Your portfolio isn’t correctly balanced if you feel stressed about it. Your positions should not cause you serious consequences in case things go terribly wrong.
    Crypto portfolio trackers
    A portfolio tracker is a program or service that allows you to trace the movements of your holdings. You can see how your current allocation stacks up with your long-term goals and track your progress. Here are some examples you might want to consider:

CoinMarketCap
CoinMarketCap is a hugely popular price tracker that’s developed its own portfolio feature. The portfolio tracker is available for free on desktop and mobile devices. To use the portfolio tracker, you need to add in your holdings manually as it doesn’t connect to your wallet or exchange. There’s also the option to add in the prices you bought at to track your gains accurately.

CoinGecko
CoinGecko is mainly known for its cryptocurrency price tracking, but it has a portfolio option too. It’s free to use and is available on your browser or mobile device. If you’re already a regular CoinGecko user, the tracker is worth a try too.

Blockfolio
If you’d like the option to trade when managing your portfolio, Blockfolio is a good option. The company has been around since 2014 and is well known in the crypto space. However, it’s for mobile devices only, so it doesn’t offer the same desktop crypto trading experience.

Delta
Delta is a mobile app that allows you to view your crypto portfolio and traditional investments simultaneously. It can connect with 20 exchanges and a variety of wallets, including Binance. There’s both a free and paid version, but you cannot trade within the app.

Closing thoughts
A lot of the cryptocurrency market is dependent on the health of Bitcoin. But that’s no reason not to balance your portfolio. Varied crypto investments can offset some of the losses that occur with a Bitcoin crash, so it’s always worth having some diversification. Remember, there’s more to balancing your portfolio than holding multiple coins. A bit of strategy will go a long way in creating a suitable portfolio for your risk tolerance.

Source. Binance Academy.

$400M African fertilizer deal executed on blockchain.

A state-owned Moroccan fertilizer company has executed a $400 million transaction using blockchain technology, in what it says is a first for intra-African commerce.


In a deal facilitated by the Eastern and Southern African Trade and Development Bank, OCP Group sold phosphate fertilizer exports to Ethiopia using blockchain technology, in a deal worth an initial $270 million. The remaining deals will be executed in the coming months, taking the full transaction value to $400 million, reports Global Trade Review.

Trade finance deals which are typically executed over a matter of weeks can be finalized in hours using blockchain, according to OCP Group. TDB previously used distributed ledger technology to facilitate the export of $22 million worth of sugar from India to Ethiopia. The companies say that the use of blockchain tech simplifies the supply chain process, making it easier to validate documentation and improve transparency.

TDB CEO Admassu Tadesse said the bank has been focused on maintaining liquidity while cross-border trade slowed down due to the COVID-19 pandemic. 

“As part of our response to the pandemic, we have been providing liquidity to our clients to curtail cross-border trade and supply chains disruptions, and ultimately, to help our member states continue working towards their development objectives,” Tadesse said.

Tadesse stated that the utility of blockchain technology had made itself known during the logistics slow-down. “With transport logistics slowing down, blockchain has been instrumental in making this happen.”

Non Fungible Tokens (NFTs) EXPLAINED.


Non-fungible tokens, or NFTs, are the latest cryptocurrency phenomenon to go mainstream. And after Christie’s auction house sold the first-ever NFT artwork — a collage of images by digital artist Beeple for a whopping $69.3 million last week — NFTs have suddenly captured the world’s attention.

NFT

NFTs offer a blockchain-created certificate of authenticity for a digital asset such as an artwork, a piece of music or a video. The interest has created a digital market that boasted $250 million in sales in 2020, with NFTs reaching new levels of hype after a digital artwork went for $69.3 million at a Christie’s auction last week. The craze has also driven scores of people to put up their own digital art and tweets for sale as NFTs, and even toilet paper companies are trying to ride the wave.

What’s an NFT? 

This is the part that takes a bit of open-mindedness. An NFT is a unique digital token, with most using the Ethereum blockchain to digitally record transactions. It’s not a cryptocurrency like Bitcoin or Ethereum, because those are fungible and exchangeable for another Bitcoin or cash. NFTs are recorded in a digital ledger in the same way as cryptocurrency, so there’s a listing of who owns each one.

What makes an NFT unique is the digital asset tied to the token. This can be an image, video, tweet or piece of music that’s uploaded to a marketplace, which creates the NFT to be sold. The technology started in 2015 when unique tokens were created for the Ethereum blockchain, but they became a big deal in February.

Osinachi Jacon is a Nigerian Artist, and he publishes his Artworks on a websites where buyers bid in Ether,,for the privilege of owning an Osinachi’s artwork. That makes the 29-year-old one of Nigeria’s and Africa’s leading lights in the current wave of crypto art and Non-Fungible Tokens (NFTs).

Last Sunday, Osinachi’s Mirror Mirror and Am I Pretty sold on SuperRare for 9 ETH and 13.2 ETH respectively – $16,227 and $23,633 as at when the bids ended. The most expensive yet? This sold nine days ago (also on SuperRare) for 20 ETH which was $35,919.

So buying an NFT means I own the asset, right?

Nope. 

That’s the real kicker to understanding the whole concept. The person who buys the NFT doesn’t own the actual asset. 

“NFTs challenge the idea of ownership: digital files can be reproduced infinitely and you do not (usually) buy the copyright or a license when purchasing an NFT,” said Jeffrey Thompson, associate professor at the Stevens Institute of Technology in Hoboken, New Jersey. 

For example, the creator of the Nyan Cat meme sold an NFT of it for $590,000. The person who bought the token owns the token but doesn’t actually own the meme. That still belongs to the creator, who held onto the intellectual and creative rights. 

What the owner of the token has is a record and a hash code showing ownership of the unique token associated with the particular digital asset. People might download Nyan Cat and use it on social media if they want, but they won’t own the token. This also means they can’t sell the token like the owner can. 

Why are NFTs going for such high prices? 

As with physical collectibles such as Beanie Babies, baseball cards and toys, there’s a market for NFTs. The buyers tend to be tech-savvy individuals who understand the idea of wanting to purchase a digital good and likely made a killing this past year with cryptocurrencies. Ethereum, for example, went from just over $100 last March to a current price of about $1,800. In some cases, buyers are just flexing their digital wallets to show off how much crypto they have, but for others, there’s a deeper interest. 

“Specifically for art-related NFTs, there is a huge surge in demand due to their novelty and creativity of early artists,” Jason Lau, chief operating officer of crypto exchange OKCoin, said in an email. “Whether it’s a physical work with an attached NFT (think of it as a digital autograph and proof of veracity), or an entirely digital work (where the NFT is the art), this new medium is opening new ways for collectors and artists to explore their relationship with the artwork itself.”

It’s also great for the artists, says Lau. By selling digital art directly to those interested, an artist can begin monetizing work without having to try to sell it in a gallery. 

What kind of NFTs are there? 

NFTs can be tied to any digital asset. Twitter CEO Jack Dorsey sold the first-ever tweet, as an NFT, for $2.5 million. Tampa Bay Buccaneers tight end Rob Gronkowski created his own limited-edition trading cards that sold as NFTs for a total of $1.8 million. Kings of Leon sold NFTs of their newest album and made over $2 million. There’s even one guy who sold NFTs for his farts.

If you don’t want to jump right in bidding six figures, there are multiple NFT marketplaces out there, with Opensea being the biggest. Buyers can search for art, domain names and random collectibles to bid on without having to break the bank. 

Basketball fans might want to check out NBA Top Shot, where they can buy video highlights via packs, similar to how collectible trading cards are sold. A rare highlight like a two-handed reverse windmill slam by Lebron James sold for $179,000. 

As the hype for NFTs grows, expect more digital assets to come up for sale and bring in some big money. 

What are the downsides?

A drawback is the hundreds of dollars in fees required to create an NFT. If you’re making your own token on the Ethereum blockchain, you need to use some Ethereum, which as mentioned earlier is kind of pricey. Then after you make an NFT, there’s a “gas” fee that pays for the work that goes into handling the transaction and that’s also based on the price of Ethereum. Marketplaces simplify the process by handling everything for a fee when an NFT is sold. 

WHAT IS A STABLE COIN? PART 1

A stablecoin is a type of cryptocurrency whose value is tied to an outside asset, such as the U.S. dollar or gold, to stabilize the price.

Stablecoins try to tackle price fluctuations of cryptocurrencies by tying the value of cryptocurrencies to other more stable assets – usually fiat. Fiat is the government-issued currency we’re all used to using on a day-to-day basis, such dollars and euros, and it tends to stay stable over time. 

Usually the entity behind the stablecoin will set up a “reserve” where it securely stores the asset backing the stablecoin – for example, $1 million in an old-fashioned bank (the kind with branches and tellers and ATMs in the lobby) to back up one million units of the stablecoin. 

This is how a digital stablecoin and a real-world asset are tied together. The money in the reserve serves as “collateral” for the stablecoin. A user can theoretically redeem one unit of a stablecoin for one unit of the asset that backs it. 

There is a more complex type of stablecoin that is collateralized by other cryptocurrencies rather than fiat yet still is engineered to track a mainstream asset like the dollar. 

Maker, perhaps the most famous stablecoin issuer that uses this mechanism, accomplishes this with the help of Collateralized Debt Positions (CDPs), which lock up a user’s cryptocurrency collateral. Then, once the smart contract knows the collateral is secured, a user can use it to borrow freshly minted dai, the stablecoin.

A third variety of stablecoin, known as an algorithmic stablecoin, isn’t collateralized at all; instead, coins are either burned or created to keep the coin’s value in line with the target price. Say the coin drops from the target price of $1 to $0.75. The algorithm will automatically destroy a swathe of the coins to introduce more scarcity, pushing up the price of the stablecoin. 

This type of stablecoin is much less popular so far. One of the most popular stablecoins following this model, basis, shut down in 2018 due to regulatory concerns. 

Types of stablecoin collateral

Using this framework, stablecoins come in a range of flavors, and the collateralized stablecoins use a variety of types of assets as backing:

  • Fiat: Fiat is the most common collateral for stablecoins. The U.S. dollar is the most popular among fiat currencies, but companies are exploring stablecoins pegged to other fiat currencies as well, such as BILIRA, which is pegged to the Turkish lira.
  • Precious metals: Some cryptocurrencies are tied to the value of precious metals such as gold or silver.
  • Cryptocurrencies: Some stablecoins even use other cryptocurrencies, such as ETHER, the native token of the Ethereum network, as collateral.

Bitcoin ETF Explained

Photo by Pixabay on Pexels.com

A bitcoin ETF is an exchange-traded fund that specifically tracks the price of the leading cryptocurrency and allows traders to purchase or sell the security on a stock exchange throughout the day. They can be cash-settled or physically settled, meaning investors will receive either fiat currency or actual bitcoin (BTC+4.03%) upon exiting, respectively.

ETFs are regulated traditional financial products and can be bought through a number of retail-friendly mobile trading apps, including Robinhood, Trading212, TD Ameritrade and Fidelity. The most popular ones track major stock indexes, such as the Standard & Poor’s 500 Index, or other traditional assets and commodities like oil and gold.

Bitcoin ETFs have been a hot topic in the crypto space for many years, ever since the Winklevoss twins “Coin” Bitcoin ETF filed with the U.S. Securities and Exchange Commission (SEC) in 2013 was rejected. It was widely believed that a bitcoin ETF would usher in a new wave of institutional investment into the crypto industry, bringing much-needed maturity and stability to the market. Seven years on, however, the SEC still has yet to approve a bitcoin ETF despite dozens of proposals from multiple companies including a second Winklevoss Twin ETF in 2018, one from Bitwise, five from Direxion, two from GraniteShares and many more.

The main arguements given by the SEC for these repeat rejections have been that the bitcoin market is too volatile, lacks sufficient surveillance and is too easily manipulated.

Things may be about to change, however, as Canada’s financial regulator, the Ontario Securities Commission (OSC), recently approved the world’s first two bitcoin ETFs in quick succession. The Purpose Bitcoin ETF (BTCC) and the Evolve Bitcoin ETF (EBIT) are both physically settled ETFs and have applied to be listed on the Toronto Stock Exchange. TradeBlock, a CoinDesk subsidiary, is the index provider for the Purpose ETF.

With the arrival of a bitcoin ETF in North America, many are optimistic the SEC will follow suit soon in the United States especially if Gary Gensler, former commissioner of the Commodity and Futures Commission (CFTC) and MIT blockchain tutor, is confirmed by the US senate to replace former SEC Chairman Jay Clayton.

“My guess is we get an ETF this year, says Mike Novogratz, CEO of Galaxy Digital and former colleague of Gensler at Goldman Sachs in the late 1990s.

“Gary taught a class on blockchain at MIT and on crypto. He understands it cold. He’s progressive, right? And progressives broadly are going to go after … the rent takers. Crypto is not a rent taker… Crypto is trying to disrupt the rent takers.”

Bloomberg Senior ETF analyst, Eric Balchunas,tweeted his support for the new bitcoin ETFs, adding, “U.S. usually follows shortly after. Good sign for U.S. bitcoin ETF.”

Sui Chung, CEO of CF Benchmarks, also anticipates pressure will now be on the SEC to follow suit. “Now that the OSC has said that if a product is well constructed enough the crypto market is sufficiently mature for these types of financial products, the industry’s attention inevitably turns south of the border to the U.S.”

Bitcoin ETF FAQs

Who can invest in ETFs and how do you trade them?

You don’t need to be an accredited investor to purchase ETFs. Anyone can invest in them.

All you need in order to begin investing in ETFs is to set up an online brokerage account or download one of the many mobile trading apps. From there, you’ll be able to buy and sell a wide range of ETFs that track a number of different markets. A list of leading mobile trading services can be found here.

What are the pros and cons of trading ETFs?

While it might seem counterintuitive to invest in a bitcoin ETF rather than buy actual bitcoin, there are a number of advantages to doing it this way, namely:

  • No need to go through the process of having to store crypto safely yourself
  • Buying an ETF through an online broker is significantly more secure, faster and less prone to outages than purchasing digital assets directly from a crypto exchange
  • There are much clearer tax implications and guidance for traditional financial products than digital assets
  • Stock exchanges are more liquid than crypto exchanges so it’s much easier to buy and sell ETFs

There are, however, a number of disadvantages to investing in a bitcoin ETF as opposed to buying the asset directly.

  • ETFs can only be bought and sold during market trading times, whereas crypto markets run 24/7. This means that if the price of bitcoin moves sharply, you could potentially have to wait hours before you have the chance to offload to buy up more.
  • It’s free to hold your own bitcoin but ETFs charge management fees.
  • Buying ETFs requires you to complete know-your-customer (KYC) checks but bitcoin can be bought anonymously peer-to-peer.
  • ETFs require you to trust third-party custodians.