Hello and welcome to my blog. For this last week of season 5, the topic chosen by the cryptoacademy is Hosting and staking.

Source

Explain in your own words what a cryptocurrency portfolio is.

A Criptocurrency portfolio refers to the number of crypto coins in which you have invested your funds. According to your strategy.

In my Cryptocurrency wallet, I have DOT, LINK, CRV, TRX and RUNE. So these coins together represent my cryptocurrency portfolio.

There are different strategies adopted by users to form portfolios. The general strategy is to invest a major chunk of funds in well-established giant coins like BTC ETH and BNB etc . Part of the funds is invested in medium-risk coins and a small amount of funds in high-risk coins.

The purpose of investing in well-established coins is to stabilise the portfolio. The medium and high-risk coins are added to the portfolio to maximise the returns as they tend to show high volatility. The funds invested are kept less in medium and high-risk coins to avoid bankruptcy in case of any untoward event.

There are some software and exchanges where we have bucket of coins to invest. These coins are also chosen to keep in view the above-stated principles

Do you prefer a diversified portfolio or a concentrated portfolio? Explain each one.

Diversification of a portfolio refers to the investment of funds into a large number of coins whereas a portfolio is said to be concentrated when investment is limited to few coins. However, it is noteworthy that a diversified portfolio should not be so diverse that it is difficult to manage the portfolio.

I prefer a diversified portfolio over-concentrated portfolio because a diversified portfolio is the best option to mitigate the risk.

Let's take the example of a diversified portfolio having 5 coins as compared to a 2-coin concentrated portfolio.

Let's presume that in a diversified portfolio 2 coins are in a loss of 5% each and three coins are in a gain of 5% each. So the loss would be 10% and the gain would be 15% resulting in a net gain of 5%. On the other hand, let's presume that in a two-coin concentrated portfolio one coin is in a loss of 5% and one coin is in a gain of 5%. So the net gain would be zero. So it is clear that diversified portfolio is better than a concentrated portfolio.

In your portfolio do you have any crypto assets in Hodl? Explain what is Holder in cryptocurrencies.

Holding refers to investment in a particular asset(s) or coin(s) for a very long time. Holding is practised by investors to take advantage of the appreciation of price in the future. Investors buy coins at low prices and wait for the appreciation of price to take place and take advantage of that.

In my portfolio, all the coins are in holding at least for the next bull season. The reason for holding is that at present my portfolio is in loss but the price at which i have entered into the market is going to give me huge profit in next bull season.

In your portfolio, you have some crypto assets in Staking. Explain what is Staking in cryptocurrencies.

In my portfolio, I am stacking TRX on the JustLend platform.

Staking refers to the locking of tokens for a particular period and earning interest on the staked coins. So the staked assets are locked and cannot be used for a locked period.

Staked tokens add to the liquidity pool on some exchanges and share the interest with liquidity providers. Staked tokens are always at risk because tokens are stored online.

Which do you prefer Hodl or Staking?

Let me point out some differentiating points between holding and staking and then I'll give my opinion.

• Holding doesn't increase the number of coins but staking does increase the total number of coins and the final coins are the sum of staked coins and coins yielded out of APR.

• Holding tokens can be mobilized at the time of need but staked tokens are usually locked. However, staking can be flexible on some platforms.

• Holding is generally done to keep tokens for years to decades while staking is just some for months to years

• One can Hold tokens on hardware wallets while staking require hot wallets. So holding is more secure than staking.

As for my choice is concerned, I prefer holding over staking for the owing reasons

Holding is more secure than staking because Hodl tokens can be stored in cold wallets. However, I can mobilise my tokens anytime. Staked tokens being online had security risks.

Thanks