In the early years of cryptocurrency trading, most traders thought it best to stake their interests on only one type of coin. For the most part, this attitude still prevails today. Many still prefer to start their crypto trading journey with one coin, and a good number of those traders will concentrate all of their wealth into one currency over the long term.
But nowadays, that isn’t the only trajectory that traders have. Aside from making traditional per-coin crypto investments, traders now have the option of buying an innovative new asset that’s called a crypto basket.
What exactly is a crypto basket, and what separates it from a conventional crypto investment? To answer these questions, here’s a quick explainer on how crypto baskets work and why they might appeal to you as a crypto trader.
Cryptocurrency may not be a traditional investment per se, but the more familiar investment strategy for it is to simply buy into one currency at a time. Conventional crypto investments typically involve one main coin, one designated wallet, and one mining setup if the trader has any interest in mining. For example, someone who chooses to trade exclusively in Monero (XMR) will stick with buying XMR coins, storing them in an XMR wallet, and preparing a mining rig to mine new XMR tokens.
An alternative to doing this is to buy a virtual crypto basket and to experience trading with several coins at a time. Each crypto basket will contain a small bundle of currencies, but the basket itself will be managed as a single asset that works through smart contracts. In terms of variety, a crypto basket will work just like a sampler basket of a particular type of physical goods (like wine, cheese, or chocolate) or digital goods (like a collection of digital vouchers or e-gift certificates). Such baskets, whether in physical or digital form, contain a little bit of everything inside.
Another interesting thing about crypto baskets is that, like holiday baskets or travel baskets, they can also subscribe to a certain unifying theme. For example, the crypto basket can be curated to contain a certain number of high-profile crypto coins, a collection of privacy tokens, or a set of proof-of-work coins.
There are also services that allow crypto basket buyers to view quick summaries on the basket’s overall volatility, the amount of developer activity that’s going into the basket, and other metrics that help them learn more about their crypto goodie collection. These are just some of the intriguing features that traders can expect if they want to look into crypto baskets.
After learning a little more about the difference between crypto baskets and traditional crypto investments, you may be wondering if it’s a good idea for you to invest in the former. How will you know if a crypto basket will prove to be a rewarding investment?
Here are a few advantages of crypto baskets that may resonate with you:
They’re Useful If You Need a “Starter Pack” Introduction to Crypto
Though there are definitely some crypto baskets being developed for seasoned and high-profile crypto traders, many of those that are currently available in the market may appeal more to crypto beginners. These baskets are meant to give a taste of how to trade in different currencies before the trader settles on the ones they like most. If you have yet to determine your trading preferences for crypto, then the basket may serve as a good introduction for you.
They Allow You to Start Crypto Trading with Diversified Assets
Another appealing thing about crypto baskets is that they offer the buyer some diversification in their crypto assets from the get-go. That also means that traders can diversify their risks and start their trading journeys from a more resilient crypto portfolio. If diversifying your crypto assets is a priority for you, it may be a good idea to invest in a crypto basket.
They Simplify Your Crypto Asset Management
Lastly, crypto baskets can make multi-crypto asset management much simpler for traders. If you’re using a consolidated basket, you’ll likely save time on researching individual crypto investment strategies and painstakingly building a multi-coin cryptocurrency portfolio from scratch.
Of course, there may be some caveats to trading with a crypto basket. They may not be ideal for you if you already know your preferences with coins or if you want to stick to one currency that you really like. If you know for sure that you’d rather specialize in one or two coins, there’s no need to purchase a crypto basket just for the sake of it.
Crypto baskets are still a relatively new innovation in the cryptocurrency market, but there are some exciting possibilities for both serious and newbie traders as far as they’re concerned. Stay up to date with the market and be in the know about crypto baskets—in the near future, you may find one that aligns with your crypto investment interests.
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NFTs and DeFi overturn a banker's generational curse of poverty in 2 years – Cointelegraph
Here's Why I Still Won't Buy Bitcoin, and You Shouldn't, Either – The Motley Fool
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Returns as of 01/22/2022
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In less than a week, investors can pop the champagne corks and celebrate another successful year. Through Dec. 22, the widely followed S&P 500 was higher by 25%, which more than doubles up its average annual total return of around 11%, including dividends, since the beginning of 1980.
But it’s the cryptocurrency space that’s delivered the juiciest gains of all. Since the year began, the aggregate value of all digital currencies came close to tripling. Not surprisingly, Bitcoin (CRYPTO:BTC) has been one of the biggest contributors to this nominal value increase, with a year-to-date gain of 67%. It accounts for 40.5% of the entire $2.27 trillion cryptocurrency market.
Image source: Getty Images.
Bitcoin’s gains, which recently reached as high as 8,000,000,000% from where it began trading in early July 2010, have come on the heels of numerous catalysts.
To begin with, Bitcoin’s first-mover advantage has made it the most-popular cryptocurrency with retailers. As of late 2020, small-business financing platform Fundera estimated that 15,174 businesses worldwide accepted Bitcoin as payment — and this figure has assuredly grown since.
To build on the above point, Bitcoin was also recognized by El Salvador as legal tender in September. It’s the first country to allow Bitcoin to be used as accepted currency, and could pave a path for other nations to follow.
The world’s most valuable digital currency has benefited from rapidly rising inflation in the U.S. and abroad as well. Since Bitcoin has a perceived cap of 21 million tokens, it’s viewed as an inflationary hedge against a rapidly growing U.S. money supply and price hikes. In November, the Consumer Price Index for All Urban Consumers jumped 6.8% in the U.S., marking the biggest year-over-year jump in 39 years.
Investors look to be clearly excited about the upgrade potential for Bitcoin, too. In November, the long-awaited Taproot upgrade took effect. Taproot allows for smart-contract transactions to occur on the network, which opens the door for a broader use of the Bitcoin blockchain. Smart contracts are protocols that help to verify, enforce, and facilitate a contract between two parties.
Lastly, even the fear of missing out (or FOMO) has played a role. After watching Bitcoin gain 8 billion percent, crypto investors appear to be more than willing to overlook any threat of a reversion.
Image source: Getty Images.
Although Bitcoin has proved me wrong over the past year, I still wouldn’t buy the most-popular digital currency on the planet with free money — and I’d suggest others avoid it, too. Below are some of the reasons I simply can’t buy into the hype surrounding Bitcoin.
For starters, it isn’t the scarce token it’s made out to be. Take gold as a comparison. Since we can’t use alchemy to make any additional gold, what remains in the ground and what’s been already mined is all there will ever be. In terms of physical scarcity, that’s a true line in the sand. As for Bitcoin, lines of code are what limit its “cap” of 21 million coins. Even though consensus is unlikely to increase the number of outstanding tokens above 21 million, it’s not impossible that it happens. Thus, Bitcoin only offers the perception of scarcity and not true scarcity.
Another big issue for Bitcoin is dilution. But I’m not talking about the modest coin inflation that comes with cryptocurrency mining. Rather, I’m alluding to Bitcoin being a first-generation blockchain network that’s being left in the dust by third-generation blockchain innovation. There’s absolutely no reason for Bitcoin to be worth $913 billion when blockchain projects at a fraction of its value can scale better, process faster, and handle far more complex transactions. Bitcoin may be benefiting from a first-mover advantage, but the first to the foray is rarely the victor.
Image source: Getty Images.
History provides yet another reason I want nothing to do with Bitcoin. Major price swings are somewhat commonplace in the crypto space, and reversions following huge gains happen often. Bitcoin was up 8 billion percent at one point since July 2010 and has yet to demonstrate that it truly has staying power. Since it’s been unable to decouple from the stock market, I would be betting on a significant reversion following its pandemic-low bounce.
To build on this previous point, there now are considerably more avenues to bet against Bitcoin than there have ever been. The rise of Bitcoin-focused exchange-traded funds and Bitcoin futures offers a safer way for big-money players to bet on downside in the world’s most-popular crypto. In other words, Bitcoin becoming more mainstream as an investment will hurt more than help.
And finally, history also tells us that investors have a really poor track record of estimating the adoption of next-big-thing technologies. Looking back on the internet, business-to-business commerce, genomics, 3D printing, and so many next-big-thing advancements reveals that their adoption took far longer than expected. This isn’t to say that blockchain can’t become a mainstream technology in payment and nonfinancial applications at some point in the future. But it’s important to recognize that businesses aren’t willing to jump at the chance to use blockchain until it’s been thoroughly vetted in the real world. We’re just not anywhere close to that yet.
There are plenty of cryptocurrency projects that are really intriguing and could change the course of payment processing or supply chain management. Bitcoin just isn’t one of them.
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Media in the Metaverse: NYT's Kevin Roose on the Future of Crypto – Coindesk
Entering the metaverse as our new “online selves.”
Michael J. Casey
This episode is sponsored by Quantstamp and Nexo.io.
“I don’t think we should feel like this is going to be entirely a good thing … if Web 3 is becoming more like the offline world, in the sense of being exclusive and gate-kept in the ways that our physical world has been for so long.”
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Web 3, the metaverse and non-fungible tokens (NFTs) have potential to be a force for good in the world, to improve decentralization, raise underrepresented voices and empower creators. But with a digital land grab for virtual real estate growing fast, will people soon find themselves locked out of the metaverse?
Joining “Money Reimagined” hosts Michael Casey and Sheila Warren is Kevin Roose, New York Times tech columnist and author of “Futureproof,” a cautiously optimistic look into an automated, AI-filled and algorithmically driven future. Roose has also delved into the world of crypto: In March of 2021, he wrote a column explaining NFTs, and then sold that column as an NFT for 350 ETH ($1.14 million at current prices).
The future is rapidly approaching, and the crypto industry is determined to establish its place in it. Web 3 is shaping up in opposition to the current Web 2, moving away from the centralized, data-driven approach of today’s internet. Alongside Web 3 is the metaverse, where individuals can fragment themselves into two parts: their physical self and their digital persona.
Before Web 3 and the metaverse take hold, important discussions should be had now about the opportunities and obstacles abound in a crypto future. What is the role of media in Web 3? What responsibilities do journalists in the crypto sector have today? Is it possible to remain hopeful and yet cautious of crypto’s role in shaping the coming years?
See also: Who Writes the Story of the Metaverse
This episode was produced and edited by Michele Musso with announcements by Adam B. Levine and additional production support by Eleanor Pahl. Our theme song is “Shepard.”
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
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