If you’re looking for new investment options in 2022, consider diversifying your portfolio to include digital investments in the crypto world, where there are many different market opportunities. Blockchain technology and cryptocurrencies are making a significant impact in the world of finance and have seen lucrative returns for many smart investors. Here are some key ways to diversify your investments in the crypto world.
NFTs
Non-fungible tokens are immutable records of ownership secured and encrypted on a blockchain network. NFTs cannot be tampered with and often contain an encrypted copy of the digital asset or other information regarding a real-world asset. NFTs can include smart contracts, property records, personal documents, digital art, videos, music, etc. When an NFT is minted, it creates digital scarcity and adds value to that asset. Many artists have found it beneficial to mint their original artworks, while collectors are quickly beginning to invest in NFT trading cards, artworks, and other digital assets.
In recent years, the NFT marketplace has boomed, with many celebrities and artists purchasing high-ticket NFTs and creating their own collections. Investing in NFTs is an excellent long-term investment, similar to investing in the art world. Some NFTs have sold for millions, and this market is projected to continue to grow as new blockchain projects are created, and more artists and collectors join the marketplace.
Crypto
Investing in cryptocurrency directly can be an excellent first digital investment for your portfolio. Before investing in any specific token, familiarize yourself with the whitepaper of each crypto and learn the reasons, rules, and goals behind the creation of each token. Some crypto projects have long-term scopes that involve social impact and can be highly rewarding tokens for investment. Regardless of the cryptocurrency you invest in, if you’re not planning on spending it or exchanging it for NFTs, consider your options for generating rewards with the coins you hold.
Staking
If the crypto you select is backed on a proof-of-stake blockchain, you have the option to join a stake pool to earn rewards over time. Proof of stake blockchains allow coin holders to act as nodes on the network to verify ‘blocks’ of transactions. The coin holder can put their coins up as collateral for the chance to be selected to verify a block. The more coins staked in a particular pool, the more likely the node will be selected for verification. Each successful verification will reward all coin holders in the pool. Staking is a great way to earn rewards on coins you intend to hold onto long-term.
Yield Farming
Yield farming is another great way to invest your crypto and earn returns. Yield or liquidity farming involves entering your coins into a liquidity pool for a certain period, as designated by a smart contract. During this time, your coins will be lent out to borrowers on the network in return for rewards in the form of fees or sometimes new coins. There is always risk in any lending, but you can check the health of a liquidity pool by the number of coins locked in the collection: the larger the pool, the more likely successful farming is to take place.
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Blockchain Projects and the Metaverse
Other opportunities to diversify your investment portfolio include blockchain projects like NFT video games and the metaverse. The metaverse is a project that plans to overlap our real lives and our digital experiences and create an immersive new way to explore the internet and digitally socialize with each other. The metaverse will consist of interconnected digital universes, all running simultaneously and explorable by any digital user. Within the metaverse, as with NFT videogames, all items you can own, create, or earn are in the form of an NFT. The goal is to create a self-sustaining digital economy of scale that can support all metaverse users and encourage free trade of crypto, NFTs, digital assets, and virtual experiences.
These are just a few options for building and diversifying your digital investment portfolio. Blockchain technology and cryptocurrencies will continue to disrupt and improve various industries worldwide, so join a crypto community like FTX to stay up to date on the latest in the crypto world
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