“Like the stock market, allocating risk into a single coin can produce superior returns, however, it is prudent to consider investing into a diversified portfolio of crypto. There are five main crypto currencies and a USD stable coin offered on Mine Digital (with many more coins available via OTC transactions). Given that diversification is the only free lunch, it might be worth investors creating their own basket currencies.
“Every investor’s situation is different and should seek professional advice in making investment decisions. While we cannot directly advise people on an investment strategy, we are seeing investors create their own basket of currencies,” said Grant Colthup, CEO, Mine Digital.
A common crypto currency basket could be:
Bitcoin 60% allocation with a 10% allocation to each of Ethereum, Ripple, Bitcoin Cash and Litecoin. These coins all have different characteristics with varied market appeal and this diversity should assist first time investors in seeing if crypto investing is for them.
Dipping their toe in this way will help new investors understand the similarities and differences and will open the broader picture of digital assets.
Mine Digital states that this is general advice only and investors should seek advice from a qualified and licensed financial professional in order to ensure that they understand the risks associated with digital assets and that they have been included as an investible asset within their mandate.
Mine Digital recommends that SMSFs hold their digital assets with an exchange that offers insured custody. Insured custody minimises the loss to the investor in the case of a ‘hack’ or employee malfeasance. It also means that investors do not need to take responsibility for the management of their own keys. On the other hand, self-custody of crypto assets, means that users must safely keep and guard their ‘keys’ in order to access their holdings.
Crypto investing offers opportunities and risks should be minimised
Mr Colthup reiterated points that he had made in an earlier press announcement about the need for risk management of any investment and that a digital wallet should have the possibility of insured custody.
What insured custody looks like
Insured custody of cryptocurrency wallets at Mine Digital looks like an insurance policy over an electronic account in a client’s name. From the client’s point of view, there is no difference in how they interact with their account or the platform, but behind the scenes, cutting edge data storage and protection technologies ensure that their assets are secured.
“The exchange that people choose must be secure, robust and offering ways for investors to actively manage the risk of their crypto assets. Exchanges’ should be viewed as a trusted and reliable gateway for investors to access the world of crypto and digital assets. We expect several new offerings will come to market in 2020, thus investors should do their due diligence now such that they can be well placed when these opportunities arise,” said Mr Colthup.
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Mine Digital Exchange is Australia’s new standard for digital asset trading and storage. Mine aims to provide Australia’s fastest, most liquid and secure digital asset exchange.