When to Diversify
Anything other than Bitcoin?
I’m not a huge fan of diversification. I just find it simpler to be all in on something I believe in. Admittedly, this leaves me exposed to the consequences of market downturns like the one we’re in now.
So many financial professionals and bloggers have told me to “diversify”. Upon a closer look, I’ve decided this is super vague and could mean anything.
I can diversify my passive income streams, diversify the assets I’m holding, and diversify how I’m holding them. All three of these things factor into the security of my future. So that’s exactly what I set out to do.
I’m all-in on bitcoin, but in a diversified way.
Diversify where you keep it
If you have a bank account, I hope you don’t just have one. This is a single point of failure should the bank fail, or should you get on the bad side of the bankers.
The same goes for Bitcoin. If you’re holding it in a single wallet and you have a meaningful amount of it, then you should consider diversifying your storage strategy.
Use a combination of cold wallets, hot wallets, and exchange account to secure your holdings. Keep some on your phone, some within arms reach, and some offline and in a safe place.
This “diversification strategy” accomplishes two things.
It guards against a scenario wherein your primary method of storage is compromised
It guards against you wanting to do something stupid with your own money
The number of times I should have just “done nothing” and not touched my holdings is countless.
If I had of sat on my hands and just let a dip pass by instead of selling, then I would probably be a much richer man by now. Sometimes, it’s better to not be able to access your funds.
Diversify Your Passive Income
This is my favourite piece of diversification to focus on. The number of things you can invest in to give you a passive income stream is countless. The trick is finding a long-term reliable strategy.
I have the added requirement that I like for my passive income streams to be based on bitcoin. But recently I’ve come to want to acquire an already profitable business that has nothing to do with cryptocurrency.
That way, if all of crypto fails and my bitcoin is worthless, then I have my business’ passive income to fall back on.
P.S. It would have all been worth it.
While I like to keep the majority of my Bitcoin holdings tucked away and safe from my feeble hands, I do like to put some of it into passive income streams. Everything I own that isn’t Bitcoin is also fair game for using for passive income.
Here is a list of platforms I’m currently using.
darkcrypto.finance - DARK/CRO pool (400% APY), DUSD/USDC (30% APY) pool, SKY staking (500% APY), NESS staking (500% APY)
tectonic.finance - BTC collateralization into DUSD and USDC and then pooling above (Net 2% APY)
beefy.finance - BTC/CRO pool (40% APY)
mm.finance - BTC/CRO pool (100% APY)
Crypto.org Staking - CRO (12.5% APY)
Crypto.com Staking - CRO (12% APY)
Crypto.com Earn - Lending Bitcoin (8.5% APY)
Binance Staking - BNB (6% APY)
Sovryn Staking - SOV (5% APY)
BlockFi - Lending Bitcoin (5.5% APY)
Lightning Network Routing (0.5% APY on BTC)
A lot would have to fail for me to stop making money passively. But if it all fails at once, then I’m out of luck.
In that case, I am going to need to fall back on this business I want to buy. Who knows what that might be, it hasn’t happened yet.
Diversify Your Assets
This is the aspects of diversification that I have the biggest problem with. I find it really hard to diversify when bitcoin makes such an appealing case for being all-in on. With that being said, I do hold a couple of other cryptocurrencies, and a couple of different “types” of assets.
Bitcoin Maximalists will kill me for saying this, but I enjoy the benefits that some other cryptocurrencies give me.
I’m not saying they compete with bitcoin, and I recognize that they will likely trend towards 0 against bitcoin. But I have fun with them, and it gives me a certain degree of satisfaction to use them to set up passive income streams around them.
In the short term, I can roll the dice in the hopes that they go up against CAD or BTC. But I know in the long term, the strategy will be to capitulate back into Bitcoin.
I think land will always be a good investment. It is a physical thing you can use and make use of. You can grow things, build things, rent it, sell it later, and use it for shelter.
The pragmatic use cases for land far exceed the pragmatic use cases of bitcoin. I can eat the things that grow on my land, but I definitely cannot eat bitcoin.
This reminds me of my high school yearbook quote, it reads:
When the last tree has been cut down, the last fish caught, the last river poisoned, only then will we realize that one cannot eat money — Cree Proverb
I have an interest in keeping myself alive, otherwise what good will my wealth be if I am dead?
This is why I also think investing in some amount of emergency supplies is a good idea. I know I sound like a prepper, but I’d rather be wrong and have food in the event a disaster never comes, than be wrong about a disaster coming and not have food.
I think owning land largely accomplishes this, but you also need infrastructure such as the means to generate energy and generate clean drinking water. Off grid, sustainable living is underrated.
I would categorize this diversification strategy as providing you with monetary security (bitcoin), health security (land), and temporal security (distribution of assets).
Chances are, if you go to a financial advisor, they will tell you to get a life insurance policy, invest in bonds, have a healthy balance of equities and indexes, and get yourself a home under a mortgage. I reject this formula with a passion.
Adopting this flavour of diversification means trusting that the stock market won’t eventually fail.
Each of those things require that our central banks, the currencies they print, and the stocks of the companies won’t fail.
I don’t buy it. I haven’t bought this narrative since 2008 and I’m not buying it now. My entire strategy of being all in on bitcoin is an indication that I don’t buy it.
Thank you for reading, and happy diversifying!
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