Lär dig på ett vänligt sätt
friendly way

If you’re a business owner looking to tap into the over 575 million people across the globe using cryptocurrencies, you’ve come to the right place. In this piece, we’re covering why that’s a great idea, and how you can incorporate cryptocurrencies as a payment option.

The benefits of crypto payments

Whether you want to accept Bitcoin payments or crypto payments, incorporating digital currencies into your business is a great idea. Below we run through several advantages that crypto payments bring to the table. 

• Faster Settlements

Did you know that credit card companies can take a few business days to move the funds into your account? With crypto payments, once the transaction has been executed the funds will (almost) immediately appear in your crypto wallet. 

• Lower Fees

Card processing companies charge anywhere from 1% - 3% plus an additional charge for using that service. Other payment services, like PayPal for example, charge even more. While the transaction fee structure is dependent on the specific network, cryptocurrencies charge a minimal flat rate, with no added hidden costs. When making or accepting crypto payments, you will know the transaction fees upfront.

• Wider Audience

According to Statista, there are over 575 million people using cryptocurrencies, offering a much wider audience for your business to tap into. Capture new customers by adding crypto payments to your payment options and attract a new demographic.

• Reduce Fraudulent Charges

Fraudulent card activity costs the global economy over $32 billion each year. These chargebacks can occur for a number of reasons, from technical issues to outright fraud. With cryptocurrencies, transactions are final and cannot be reversed due to the nature of blockchain technology facilitating these crypto payments. 

How crypto payments can take your business to the next level

Accepting cryptocurrency payments allows your business to tap into a new growth potential, opening your business up to over 575 million global crypto users, attracting a forward-thinking new customer base seeking cutting-edge payment options. 

Additionally, you will be able to enjoy the benefits of near-instant settlements directly into your crypto wallet and ultra-low transaction fees that let you save big. Say goodbye to frustrating chargebacks and fraudulent transactions thanks to crypto's secure technology. Let crypto payments propel your enterprise to new heights. 

https://www.youtube.com/watch?v=ILSss0jpENQ 

What does a business accepting cryptocurrencies entail?

First, you will need to have a proper understanding of cryptocurrencies and an idea of which cryptocurrencies you would like to accept. While most businesses new to accepting crypto payments might opt for Bitcoin payments, there are several alternative options with varying features. Bitcoin Cash, for example, provides faster transaction times at a lower cost.

Next, you will need to create an account with a payment gateway, the crypto equivalent of a payment processor. This gateway will allow you to transfer crypto to fiat and vice versa easily. Ensure that the platform you opt to use is reputable, has high levels of security, and is in line with the regulatory requirements. If you decide to accept Bitcoin payments, you need to ensure that everything you are doing is above board.

Once you have chosen your payment gateway and set up the account, the last step is to let your customers know. Whether you do this through a marketing campaign or simply incorporate the crypto QR code on your website or in-store, this is an excellent opportunity to get the word out there and create a buzz around your business now accepting crypto payments.

A crash course in cryptocurrencies

For the sake of getting you fully prepared to accept crypto payments, we've included a short crash course on cryptocurrencies. The first cryptocurrency to come into existence was launched in 2009 as a response to the global financial crisis. The still-anonymous creator, Satoshi Nakamoto, wanted to create a global digital currency that would allow each individual to take control of their own funds, and not have to rely on governments and centralised financial institutions to do so.

A few years after Bitcoin entered the scene, several other cryptocurrencies started emerging, many of which used the same infrastructure. Bitcoin Cash and Litecoin are examples of this, offering the same service with several tweaks, notably faster and cheaper transactions.

While adoption was slow to take off, crypto payments eventually integrated into the mainstream financial sector as several companies started catering to the crypto crowd. While the markets still go through the typical economic cycles, cryptocurrencies and most notably crypto payments are here to stay.

How can I incorporate cryptocurrency payments into my business?

If you’ve decided to accept Bitcoin payments and propel your business into the crypto-sphere, the process is likely to be much more simple than one would initially imagine. Accepting cryptocurrency payments is made even easier through Tap’s corporate crypto accounts, created especially to fulfil your business needs.

The best part about deciding to accept cryptocurrency payments is that you don't need to forgo your traditional payment methods. Cryptocurrency works perfectly alongside your current point-of-sale system and offers an alternative online payment solution. With Tap, you also don't need to worry about crypto price volatility as you can easily make the quick exchange of crypto to fiat directly through the app.

In order to start accepting Bitcoin payments, you will need to fill in a quick form on the Tap website. You do not need to have a Tap account prior to this. One of our Account Managers will make contact with you and assist with the setup process, including creating a crypto wallet for your business. This Account Manager will continue to work closely with you, providing assistance at any time.

Tap is fully regulated by the Gibraltar Financial Services Commission and operates with a stringent level of security. Known for its easy-to-use crypto payments app, Tap allows users to buy and sell a range of crypto assets and easily convert them to fiat. Integrating the traditional financial sector with the crypto sector, Tap allows users to make payments directly from the app, selecting which currency, whether fiat or crypto, they would like to use. 

The app also provides users with the opportunity to earn interest on their crypto and fiat currencies by simply depositing them into a specific fiat or crypto wallet. With no lock-in periods and constant access to the funds, users can earn interest which is paid out weekly. Corporate crypto accounts offer the same earning opportunities. 

To find out more about our crypto accounts for businesses and set up your account to accept cryptocurrency payments, take a look here. 

‍

Formerly called the Matic Network, Polygon was created as a scaling solution to improve on some of the problems (including transaction price) within the blockchain network. Currently sitting within the top 20 biggest cryptocurrencies based on market cap, Polygon has caught the attention of many crypto investors. In this article, let's explore what Polygon is and discover the services and use cases associated with MATIC.

By providing a framework for generating scaling solutions that are compatible with Ethereum, Polygon aims to guide that future closer to reality. The team has announced the launch of a Proof of Stake sidechain, which has already attracted some interest among the Bitcoin, decentralised apps and cryptocurrency community.

The much-anticipated Ethereum scalability roadmap is now coming into force, and the Polygon initiative is one of them helping to achieve this. Let's take a closer look at the platform.

What is Polygon (MATIC)?

The Polygon network enables the development of Ethereum-compatible blockchain networks and scaling protocols. Polygon is more of a protocol than a single solution. This is why one of the ecosystem's primary products is the Polygon SDK, which allows developers to create these Ethereum-compliant networks. Designed as a modular, flexible second layer, the network aims to expand Ethereum in terms of size, efficiency, usefulness and security and in turn transform it into a full-fledged multi-chain system. 

Polygon uses a Proof-of-Stake consensus mechanism combined with the Plasma Framework. The Plasma Framework facilitates the execution of scalable and autonomous smart contracts, as proposed by Ethereum founder Vitalik Buterin. 

Through the platform's intricate technology and architecture, Polygon can process up to 65,000 transactions per second and execute block confirmation in less than two seconds. While Polygon is currently only interoperable with the Ethereum network, in the future it aims to support several other top blockchain platforms. 

Who founded Polygon / Matic?

The network was created by blockchain developers Jaynti Kanani, Sandeep Nailwal, and Mihailo Bjelic all with extensive experience building with Ethereum. The other co-founder, Anurag Arjun, is the only founding member to come from a non-programming background and serves as a business consultant and product manager.

After a successful ICO in 2017 and 2019, the team raised over $5.6 million. The Matic Network was later launched in 2017, before undergoing a rebranding in 2021 to the Polygon network as it is known today.  

How does Polygon work?

Polygon is a multi-chain platform that makes use of a network of side chains to facilitate transactions in an effective and cost-efficient manner. Bound to the Ethereum blockchain, Polygon can handle many different protocols, including the recently popular DeFi movement.

Polygon has similar functionality to other blockchain platforms like Polkadot, Cosmos, and Avalanche.

Through the platform, users are able to build Ethereum-compatible decentralized applications (dapps) using sidechain architecture and connect them to the main blockchain.

Through the PoS mechanism, users are able to stake MATIC in order to validate transactions as well as vote on network upgrades. The platform also uses a process known as PoS 'checkpointing' which revolves around a select team of block producers being appointed to each checkpoint by the stakers on the network.

These producers enable the platform to create blocks at a rapid pace as well as maintain decentralization by delegating PoS checkpoints to the main Ethereum chain. Block validation happens when periodical proofs of blocks are published by the block producers.

The Polygon network allows you to execute almost all of the same functions as Ethereum, but with fees that are significantly lower.

What is MATIC?

Matic is the native cryptocurrency to the Polygon network and gets its name from the platform's former name. MATIC is a utility token centred around providing governance rights and securing the network, as well as being used for staking and gas fees on the platform. 

As a sidechain, it runs parallel to Ethereum. It's used for fees, staking, and more. Polygon is a "layer two" or "sidechain" scaling solution that runs alongside the Ethereum blockchain - allowing for speedy transactions and low fees. The end goal of Polygon is to achieve millions of transactions per second.

The Polygon Network uses its own cryptocurrency, MATIC, to pay fees on the network, for staking, and for governance (meaning holders of the token get to vote on changes). The acronym MATIC is derived from Polygon's earlier days. Polygon was launched as Matic Network in October 2017, but developers changed their name to Polygon in early 2021.

Polygon's MATIC token is an ERC-20 standard utility token based on Ethereum. The token allows for low fees and instant transactions, just like the rest of the Polygon ecosystem. The maximum supply of MATIC is 10 billion coins, with new coins released into circulation on a monthly basis. At the time of writing roughly 70% of this total supply has entered circulation with all coins scheduled to be released into circulation by December 2022, according to the official schedule. With a maximum supply capped at 10 billion, this is making MATIC deflationary.

How has the price of Polygon (MATIC) changed over time?

Let's explore the MATIC price performance, looking at the value in US dollars. After a launchpad sale selling MATIC tokens at $0.00263 per token in April 2019, MATIC soon began trading at $0.0044 once launched on its own network.

For the next nineteen months, the price ranged between $0.01 and $0.03, before gradually entering a more bullish trading period in early 2021.

Opening the year at $0.01, the price reached $0.41 in March before soaring to its current all-time high price of $2.68 achieved in mid-May. Following the price peak, the price soon dropped to $1.08 in the next five days, before correcting to $2.21.

In July 2021, the MATIC price reached a low of $0.61 before embarking on a gradual uptrend. How much is Polygon worth? Several months later and at the time of writing MATIC was trading at $1.60.

What factors can affect the price of Polygon (MATIC)?

There are several factors affecting the price of the Polygon token, MATIC. The most pressing factors are the demand for the token (people buying and selling the cryptocurrency) and the number of users looking to participate in staking.

Other factors include the general crypto economics, the market sentiment, the project's fundamental and technical developments, the news surrounding both the MATIC market and cryptocurrency market in general, and how actively the token is traded on exchanges (inflow and outflow). Regulation announcements also typically affect the price of cryptocurrencies as consumers outside of the market gain more confidence in digital asset investment.

How to buy MATIC

MATIC is one of the many cryptocurrencies tradable on Tap, providing users seamless access to the growing cryptocurrency market. Users can buy, sell, trade, and store a variety of top cryptocurrencies through the simplicity of our Tap mobile app with an integrated digital wallet.

Tap is the best place to buy, sell, trade, and hold MATIC in the United Kingdom and European regions. Signing up for a Tap account enables you to buy, sell, and hold fiat and cryptocurrency and be a part of the financial revolution.

You can read more in-depth articles on cryptocurrency coins and tokens and study how cryptocurrencies like MATIC work in our crypto basic blog.

Market manipulation can be described as any attempt to interfere with the free and fair operation of the markets. This concept has become more popular as more businesses pop up, but is very much illegal and considered by law as fraud. Not exclusive to crypto markets, various acts of market manipulation can be found across all traditional trading sectors including the stock market.

There are many ways to practice market manipulation, such as falsifying numbers to attract investors' interest leading them to invest in the company and buy stocks that they otherwise would not have. Another method of market manipulation, especially crypto market manipulation, are pump and dumps, and that's exactly what we're covering in this article. 

What are pump and dump schemes? 

The term pump and dump can be traced back to as early as the 1990s when broker Stratton Oakmont artificially inflated the price of the stock he owned. Through false advertising and misleading statements, he created positive sentiment around his stock and then sold his cheaply purchased stock at a much higher price leading to great profits. Pump and dumps can occur across any industry and is most prevalent on stock exchanges and the digital assets space.

This may have been long ago, but pump and dump schemes quickly became popular in the cryptocurrency trading sector. Funny enough, pump and dumps within crypto were driven by John McAfee, creator of McAfee software security. John McAfee was not the only person to partake in pump and dumps, but he was the leader at the time.

He created trading groups where they would discuss which project to push funds into, driving the price up, and then selling for a substantial profit. People would see the price rise 200% in 15 minutes and buy in, and that's when McAfees' army would sell. This is similar to Oakmont, where he bought cheap stock and drove up the price so he could sell it for much more. 
‍

Are pump and dumps a scam?

Yes, usually they are a scam that only benefits insider traders, such as pump and dump group members. Even members of pump and dump groups can fall victim to this scam, as there is even insider trading within insider trading, meaning if they don't sell soon enough they will lose funds. In the traditional financial sectors, there are laws in place to prevent this problem.

How long does a pump and dump last?

That depends on what the pump and dump groups agree on, some only last a few minutes while others can last a few hours. The duration of a pump and dump is reliant on what the group agrees to. 

Are pump and dumps illegal?

In short yes, but not as broadly as they should be. Pumps and dumps in the fiat financial world are very much illegal and could lead to jail time. In the United States, it is a crime worthy of up to 5 years of incarceration or a $250,000 US dollar fine, or both, however, laws vary in different countries. So there are clearly rules and laws in place to deter fiat or stock traders from participating in pumps and dumps, but the same can not be said for cryptocurrency trading. 

This is another great example of why governments should be more open to accepting cryptocurrency as a legitimate currency. While there are no laws against pump and dumps in cryptocurrency, it is still extremely immoral. This can be seen in comparison to fiat, where it is considered illegal, so why not do the same for cryptocurrency?

We wish we could answer this, but at the end of the day, because of the lack of regulation or even consideration around crypto, pump and dump schemes have become increasingly more popular as people hope to make a quick buck off their fellow community members. Are pump and dumps illegal in cryptocurrency? No. Should they be? Yes.

As governments around the world work to establish a regulatory framework around cryptocurrencies we can only hope that pump and dump schemes make a feature.

Has Bitcoin had a pump and dump?

No, while Bitcoin has its own share of volatility, in the years since it's gained considerable value it has not been involved in a financial scheme of this nature. As its value is so high it would take a huge amount of investors and value to alter the market to this proportion.

Which coins are pump and dumps?

Generally, pump and dump coins are low market cap coins that are susceptible to volatility, meaning any money put in makes a big difference. However, pump and dumps can happen to almost any coin, the lower market cap coins are just usually the target in the crypto space.

Closing thoughts 

Pump and dump groups are a tricky topic within the cryptocurrency space, as some people greatly gain from these market tactics. Looking at it from an outside perspective, maybe as someone who saw a coin rising and was excited to get it, only to be left in the red 10 minutes later, this can be devastating.

Aside from the victims of pump and dumps, it is illegal within the fiat financial sector and should be considered the same regardless of whether governments see cryptocurrency as legitimate tender. Again, everyone is free to make their own decisions, we are simply here to educate you on what pump and dumps are, how they work, and what to look out for.

The DeFi scene has exploded in recent years, with a number of successful protocols contributing to the rising volume and liquidity (Uniswap, PancakeSwap, and SushiSwap to name a few). While these protocols have entirely democratized trading in the crypto space, there are still some risks associated with getting involved. 

If you have experience in DeFi trading you’ve likely come across this term. Impermanent loss refers to losses made as a result of the price changes of the digital assets from when the liquidity provider deposited them into the liquidity pool to now. Below we break down how impermanent loss happens and how to manage the risk. 

How does impermanent loss happen?

Impermanent loss is when the price of the digital asset changes from the time you deposited it, providing liquidity to a liquidity pool, to the time you withdrew it. The bigger this change, the bigger the loss (essentially less dollar value at the time of withdrawal). There are of course ways to mitigate impermanent loss.

Liquidity providers' exposure to impermanent loss is decreased when trading in pools with assets that have smaller price ranges, like stablecoins (a stable asset) and wrapped versions of coins for example. In these cases, liquidity providers can provide liquidity with a lower risk of impermanent loss.

In some cases, impermanent loss can also be counteracted by trading fees. Liquidity pools exposed to a high risk of impermanent loss can still be profitable thanks to lucrative trading fees. 

For example, Uniswap offers liquidity providers 0.3% on every trade, so if the pool has a high trading volume, liquidity providers can still make money even if exposed to impermanent loss. This will depend on the protocol, deposited assets, specific pool, and wider market conditions. 

What does impermanent loss looks like for liquidity providers in liquidity pools?

Here is an example of what impermanent loss might look like for a liquidity provider trading on automated market makers (AMM).

Say John finds an automated market maker that requires a pair of digital assets equating to the same value. For the sake of this example, say 1 ETH is equivalent to 1,000 USDT, which he deposits in a liquidity pool. The total value of his deposit, therefore, sits at $2,000. 

Other liquidity providers have contributed a combined offering of 10 ETH and 10,000 USDT into the liquidity pool, meaning that John holds a 10% share of the overall liquidity pool. 

Let's say that the price of ETH rises to 4,000 USDT. During this time, arbitrage traders will contribute USDT to the liquidity pool and remove ETH until the ratio reflects the price increase. Note that AMMs don't have order books. Instead, the price of assets is determined by the ratio between them in the liquidity pool, meaning that while the liquidity remains constant, the ratio of assets in it changes. 

In this case, if the price of ETH is now worth 4,000 USDT then the arbitrage traders will work to ensure that the liquidity pool now holds 5 ETH and 20,000 USDT. The liquidity pool's total liquidity is now worth $40,000.

If John decides to withdraw his funds, he's entitled to 10% of the liquidity pool's share based on his initial deposit and the size of the liquidity pool. He, therefore, is entitled to withdraw 0.5 ETH and 2,000 USDT, equating to $4,000 in value. However, if he'd kept the initial 1 ETH and 1,000 USDT this would be worth $5,000 now. 

In this case, John would have made bigger returns had he hodled instead of using the liquidity pool and this is what impermanent loss is all about. 

This example does not incorporate trading fees that John might have earned for providing liquidity to the liquidity pool. In many cases, these fees would cancel out the losses and make the process profitable. Either way, understanding what impermanent loss is, is imperative before providing liquidity in the DeFi space.

A look at impermanent loss vs price increases (excl trading fees)

So, impermanent loss happens when the price of the cryptocurrency assets in the liquidity pool changes. But how much is it exactly? Note that it doesn’t account for fees earned for providing liquidity.

Here is an overview of the impermanent losses incurred due to asset price increases (note that trading fees are not factored in here).  Impermanent loss examples:

1.25x price change = 0.6% loss

1.50x price change = 2.0% loss

1.75x price change = 3.8% loss

2x price change = 5.7% loss

3x price change = 13.4% loss

4x price change = 20.0% loss

5x price change = 25.5% loss

Note that impermanent loss happens whether the price both increases or decreases as it is calculated by the price ratio relative to the time of the initial deposit into the liquidity pool. Unfortunately in these cases, price volatility leads liquidity providers to lose money.

The risks associated with becoming a liquidity provider

Realistically, impermanent loss isn't the best name. The losses are known as "impermanent" because they only become evident when you withdraw your coins from the liquidity pool. However, the "temporary loss" then becomes pretty permanent. Although the fees might be able to compensate for those losses, it does seem like a somewhat deceptive title.

When you put cryptocurrency assets into an AMM, be cautious. Some liquidity pools are far more vulnerable to fleeting losses than others, as we've discussed above. As a general rule, the more volatile the assets in the liquidity pool are, the greater your chance of being exposed to impermanent loss. It's also preferable to start by depositing a little bit of money in a liquidity pool to see the returns before exposing a lump sum. 

Another thing to keep in mind is to look for more established, tried-and-true AMMs. It's fairly simple to fork an existing AMM and make a few modifications thanks to DeFi. However, this might introduce bugs that lock your funds in the liquidity pool indefinitely. If a liquidity pool promises exceptionally high returns, there's more than likely a tradeoff taking place and there's likely to be much higher risk associated. Be sure to understand the ins and outs of any liquidity pool before making any deposits.

Portfolio diversification is a strategy that involves allocating funds across a variety of different securities and assets to reduce risk and improve overall potential returns. It is recommended by financial experts because it helps to spread out the risk and prevents your portfolio from being too dependent on one particular asset.

What is diversification?

Diversification is a key strategy for managing portfolios and risks. Effective risk management involves spreading out allocations to minimise vulnerability to market changes.

The concept of diversification is simple - instead of putting all your eggs in one basket, you spread them out across multiple baskets. This way, if one allocation underperforms or experiences a loss, the impact on your overall portfolio is minimised because the other allocations can potentially offset those losses.

A diversified portfolio can consist of various types of assets, including stocks, bonds, funds, real estate, CDs, and even savings accounts. As each asset class behaves differently in different economic conditions, it offers varying levels of potential gain and loss.

While we won't cover this topic here, it's worth noting that when referred to in a business sense, diversification involves expanding product offerings or entering new markets to reduce reliance on a single revenue source and mitigate risks.

Exploring the concept of diversification in portfolio management

Diversification involves spreading allocations across various asset classes to reduce risk exposure. For instance, allocating funds to stocks, bonds, and cash equivalents simultaneously forms a diversified portfolio, or allocating funds to stocks across several countries and industries.

Diversification minimises the impact of poor performance in one asset class. In contrast to relying solely on a single asset type, diversified portfolios provide a safety net against market volatility, enhancing long-term stability.

Different types of asset options

Below we explore a number of asset options that can be utilised in a diversified portfolio:

Stocks

• Stocks tend to have the highest long-term potential returns but can also experience significant volatility in the short term.

Funds

• Funds can be diversified if they hold many different assets, but some funds may focus on a specific industry or sector.

Bonds

• Bonds offer more stable potential returns with fixed payouts but are influenced by changes in interest rates.

CDs and savings accounts

• CDs and savings accounts provide stability and steady growth based on interest rates.

Real estate

• Real estate can provide slow appreciation over time and potential income, but it also involves maintenance costs and high commissions.

By owning a mix of these assets, you can benefit from the different performance characteristics they offer. When some assets are performing well, others may not be doing as well, and vice versa. This lack of correlation between assets is what makes diversification effective in reducing risk.

The benefits of diversification

Diversification not only helps to reduce the risk of your portfolio, but it can also improve your potential returns. By spreading your allocations across different types of assets, you are more likely to have a smoother overall potential return. While one asset may be experiencing a downturn, another asset may be performing well, balancing out the overall performance of your portfolio.

It's important to note that while diversification can reduce risk, it cannot eliminate all risk. Diversification helps to reduce asset-specific risk, such as the risk associated with having too much allocation in one stock or one type of asset. However, it cannot protect you from market-specific risk, which is the risk associated with owning a particular type of asset in general.

How to build a diversified strategy

To develop a diversification strategy, you can start by creating a portfolio that includes a mix of different assets. Be sure to allocate based on your personal risk tolerance, time horizon, and financial objectives. Below are several options to consider when building a diversified portfolio.

Examples of building a diversified portfolio

Please note that this is not financial advice but merely examples of how one might diversify their portfolio.

You might explore the option of allocating funds to a widely diversified index fund, such as the S&P 500 index, which holds interests in numerous companies. Combining bonds and CDs could contribute to portfolio stability and assured potential returns. Holding cash in a savings account can offer stability and act as a financial safety net.

If you're inclined to expand beyond the fundamental approach, further diversifying your stock and bond allocations is an option. For stocks, you could contemplate allocating funds to a fund targeting emerging markets or international corporations, as these often diverge from broader index funds. Regarding bonds, varying maturity lengths in bond funds can grant access to short-term and long-term bonds.

Some financial professionals even suggest the consideration of including commodities like gold or silver to extend diversification beyond conventional assets.

Building a diversified portfolio may seem complex, but it doesn't have to be. You can utilise low-cost mutual funds or exchange-traded funds (ETFs) that offer diversification across different asset classes. Many major brokerages now offer these funds with zero commissions, making it a more accessible and cost-effective offering for those allocating funds.

If you prefer a more hands-off approach, you could contemplate allocating funds to a target-date fund or utilising a robo-advisor. Target-date funds recalibrate asset allocation according to your planned time horizon, progressively adjusting to lower-risk assets. Robo-advisors use algorithms to formulate and sustain a diversified portfolio grounded in your objectives and risk tolerance.

Risk management

Be sure to regularly review and rebalance your portfolio to ensure it aligns with your objectives. Assessing and adjusting the asset allocation helps maintain desired levels of risk and potential returns.

In conclusion

Diversification is an essential strategy for those looking to reduce risk and potentially improve returns. By spreading allocations across different assets, you can mitigate the impact of any single asset's performance on your overall portfolio.

Whether you choose to build a diversified portfolio yourself or seek assistance from a fund or robo-advisor, diversification can help you navigate varying economic conditions and work towards your financial objectives.

‍

The three core questions to ask yourself before investing are:

• What do you aim to achieve from each investment?
• How much money can you safely invest?
• How much risk are you prepared to take?

Establishing the answers early on will help you determine which investment avenues are best suited to your needs. For instance, investing for retirement will require a more steady and low-risk approach, while looking to make high profits will require a more high-risk approach. 

Below is a list of other factors to consider:

INFLATION

Inflation is the rate at which the value of a currency decreases. Always ensure your return on investment is higher than the inflation rate otherwise your investment will lose value over time. 

RISK

Managing risk is an important element of investing. Higher returns typically involve higher risk, ensuring that your strategies align with what you are comfortable with is a must. 

LIQUIDITY

Liquidity indicates how quickly an asset can be sold. For investments made using capital that you might require in the short term, you will want to ensure that you invest in a market that has high liquidity. For example, the Bitcoin market is highly liquid while a smaller altcoin will likely be harder to sell. 

DIVERSIFICATION

Diversifying your investments helps to manage risk and spread rewards. Similar to “don’t put all your eggs in one basket”, diversification ensures that should one coin underperform the impact is greatly reduced. Try to include a range of coins in your portfolio. 

TAX

Last but not least, ensure that you are aware of the tax implications of your investment, as tax laws vary from country to country. The responsibility lies with each individual to establish what these are and adhere to them accordingly.