Crypto Diversification

The advantage of diversification is that keeps you from having big losses. If you diversify correctly you can protect yourself from non-systematic risk. For instance, if you had your whole portfolio in a single alt-coin and it went to zero you would lose all your money. If you had ten alt-coins, and all held their value but one went to zero you would only lose 10%.

Keep in mind crypto is new and volatile. Any amount of money you put into this market you should be prepared to lose. You should also know that the market tends to follow Bitcoin so if the Bitcoin takes a dump don't be surprised if the rest of your portfolio does as well; this is the systematic risk side of crypto.

So here are my principles and suggestions for making your crypto portfolio.

• A large percentage of your portfolio should be in Bitcoin. It is the most established crypto and in some ways the least risky. It's also what leads the market.
• You should have 10–20 different cryptos to minimize your risk. Much more then that and it will be too difficult to download all the different wallets and trade on the different exchanges for them. As it is 20 cryptos is a lot of trouble.
• Make sure you have cryptos that fill different kinds of niches. For instance, Ether, Cardano, Casper, EOS, Tron and Harmony are all in competition with each other as smart contract platforms. This does not mean that multiple of these chains won't be successful but a portfolio filled with smart contract platforms is like a stock portfolio filled with real estate companies. This creates systematic risk. There are different kinds of niches like: payment systems, smart contracts, Dapp tokens, exchange tokens, privacy coins and more.
• Don't mindlessly pick coins in the top 20 on Coin Market Cap. Some of these projects are losers and others are stable coins (like USDT) that will not grow your wealth (unless you want to hold USDT for a quick buying opportunity).
• There are plenty of staking projects that will grow your wealth just for holding their coins. Some good projects to check out for this is Divi, Tezos, Kucoin and more. These staking projects will grow your wealth in a sideways market and protect you from loss in a bear market; take advantage of these opportunities.
• Remember to investigate a project before buying in. Understand the team, and what the project is attempting to accomplish. If you don't like the team or the vision don't get in; even if the coin pumps the project wasn't for you.
• I won't outright suggest too many coins but I will point out that a large portion of the crypto eco system is built on Bitcoin and Ethereum. These two projects will hedge your bets on your more risky projects.
• If you want 1000x gains you will have to take on more risk. Relying on a top ten coin for 1000x gains probably won't happen; you will need a small cap project for the big pump.

These are just a few things to consider; good luck!