@CryptoSorted 27 August 2021 more from that month

DOES DIVERSIFICATION HELP REDUCE YOUR RISK? Yes, diversifying your cryptocurrency investment does make sense and reduces risk substantially. There are different types of diversification that you can practice. 1. Cryptocurrency portfolio diversification 2. Cryptocurrency storage (wallet) diversification 3. Cryptocurrency platform diversification Let's discuss how to diversify under the above categories below. PORTFOLIO DIVERSIFICATION There's a popular saying that you shouldn't put all your eggs in one basket. Never invest all your money in a single cryptocurrency project. Because if things should go wrong, as they mostly do, you'll lose it all at once. Therefore it's important you divide your money and invest in 2 or more cryptocurrencies in different sub-sectors of the crypto economy accordingly. That way, if one of the projects pulls the rug on you, you will have the other remaining ones to hold on to. Furthermore, sometimes when some coins are experiencing a do, others are pumping. If you're invested in multiple cryptocurrencies, you could probably have one or more coins in your portfolio that will hold their head high and make you happy while the rest of the market is bleeding. These among other reasons are why you should be invested in multiple cryptocurrencies instead of one. STORAGE DIVERSIFICATION You can invest in 100 different cryptocurrencies in the name of diversification and still lose them all if you store all of them in a single wallet that gets compromised or hacked. Therefore, it's always advisable to divide and store your coins in different wallets (mobile, desktop, hardware wallets etc) accordingly. So that if by any chance one of your wallets gets compromised and your funds get drained you will still have some left in other wallets to fall back on. Never store all your coins in a single place. PLATFORM DIVERSIFICATION We all do yield farming, trading, crypto lending and borrowing and all those DeFi stuff on different platforms and on different chains that offers what we are looking for. It's important that you don't restrict yourself to a single platform because they all can be hacked. And if your wallets and funds are all connected to just one platform and it gets hacked, you will still lose everything. The same applies to trading on centralized exchanges. Use more than one centralized or decentralized exchange for your trading activities. So that if something happens to one account or platform you can fall back on the other. For example, let's imagine that due to KYC issues you lose access to your Binance trading account temporarily pending when you complete KYC which you're either hesitant to do or you don't have the required documents. If all your funds are on Binance alone, you will be stranded and be in a very uncomfortable situation. The same applies to if the exchange was hacked. Therefore, it's wise you spread your funds across different platforms as part of your overall diversification strategy. CONCLUSION As you can see, all-around diversification is necessary to mitigate the possible total loss of your capital. Cryptocurrency is already extremely risky. There’s no need to expose yourself to much more risk by putting all your eggs in one basket. By all means, diversify. Check out my article below to learn how to effectively diversify your cryptocurrency portfolio... ⬇️⬇️ https://cryptosorted.info/how-to-effectively-diversify-your-cryptocurrency-portfolio/ #Cryptocurrency