In the early years of cryptocurrency trading, most traders thought it best to stake their interests on only one type of coin. For the most part, this attitude still prevails today. Many still prefer to start their crypto trading journey with one coin, and a good number of those traders will concentrate all of their wealth into one currency over the long term.
But nowadays, that isn’t the only trajectory that traders have. Aside from making traditional per-coin crypto investments, traders now have the option of buying an innovative new asset that’s called a crypto basket.
What exactly is a crypto basket, and what separates it from a conventional crypto investment? To answer these questions, here’s a quick explainer on how crypto baskets work and why they might appeal to you as a crypto trader.
What Distinguishes a Crypto Basket from a Traditional Crypto Investment?
Cryptocurrency may not be a traditional investment per se, but the more familiar investment strategy for it is to simply buy into one currency at a time. Conventional crypto investments typically involve one main coin, one designated wallet, and one mining setup if the trader has any interest in mining. For example, someone who chooses to trade exclusively in Monero (XMR) will stick with buying XMR coins, storing them in an XMR wallet, and preparing a mining rig to mine new XMR tokens.
Hashshiny is cloud-mining platform which enables users to mine bitcoin and other altcoins without managing the hardware. The mining rigs are housed and maintained in a facility and the customer simply needs to register and purchase mining contracts.
An alternative to doing this is to buy a virtual crypto basket and to experience trading with several coins at a time. Each crypto basket will contain a small bundle of currencies, but the basket itself will be managed as a single asset that works through smart contracts. In terms of variety, a crypto basket will work just like a sampler basket of a particular type of physical goods (like wine, cheese, or chocolate) or digital goods (like a collection of digital vouchers or e-gift certificates). Such baskets, whether in physical or digital form, contain a little bit of everything inside.
Another interesting thing about crypto baskets is that, like holiday baskets or travel baskets, they can also subscribe to a certain unifying theme. For example, the crypto basket can be curated to contain a certain number of high-profile crypto coins, a collection of privacy tokens, or a set of proof-of-work coins.
There are also services that allow crypto basket buyers to view quick summaries on the basket’s overall volatility, the amount of developer activity that’s going into the basket, and other metrics that help them learn more about their crypto goodie collection. These are just some of the intriguing features that traders can expect if they want to look into crypto baskets.
Will a Crypto Basket Be a Rewarding Investment for You?
After learning a little more about the difference between crypto baskets and traditional crypto investments, you may be wondering if it’s a good idea for you to invest in the former. How will you know if a crypto basket will prove to be a rewarding investment?
Here are a few advantages of crypto baskets that may resonate with you:
They’re Useful If You Need a “Starter Pack” Introduction to Crypto
Though there are definitely some crypto baskets being developed for seasoned and high-profile crypto traders, many of those that are currently available in the market may appeal more to crypto beginners. These baskets are meant to give a taste of how to trade in different currencies before the trader settles on the ones they like most. If you have yet to determine your trading preferences for crypto, then the basket may serve as a good introduction for you.
They Allow You to Start Crypto Trading with Diversified Assets
Another appealing thing about crypto baskets is that they offer the buyer some diversification in their crypto assets from the get-go. That also means that traders can diversify their risks and start their trading journeys from a more resilient crypto portfolio. If diversifying your crypto assets is a priority for you, it may be a good idea to invest in a crypto basket.
They Simplify Your Crypto Asset Management
Lastly, crypto baskets can make multi-crypto asset management much simpler for traders. If you’re using a consolidated basket, you’ll likely save time on researching individual crypto investment strategies and painstakingly building a multi-coin cryptocurrency portfolio from scratch.
Of course, there may be some caveats to trading with a crypto basket. They may not be ideal for you if you already know your preferences with coins or if you want to stick to one currency that you really like. If you know for sure that you’d rather specialize in one or two coins, there’s no need to purchase a crypto basket just for the sake of it.
The Bottom Line
Crypto baskets are still a relatively new innovation in the cryptocurrency market, but there are some exciting possibilities for both serious and newbie traders as far as they’re concerned. Stay up to date with the market and be in the know about crypto baskets—in the near future, you may find one that aligns with your crypto investment interests.