Building wealth with cryptocurrency: How to use asset categories to your advantage

Building wealth is an often-overlooked process that more people should adopt. Contrary to popular belief, wealth alone does not make you rich, but rather ensures you are covered in case of an unforeseen event. Therefore, wealth brings security, peace of mind, and control over resources.

Luckily, there are numerous strategies for building wealth, but they require patience, as well as financial investments. You must take the time to set goals, explore your assets, and create a strategy tailored to your risk levels. The first step towards wealth is having a diverse and well-rounded portfolio of assets, which can include stocks, commodities, ETFs, and real estate.

One of the latest and most interesting investment opportunities involves crypto assets. These digital assets, residing on blockchains (decentralized networks), can increase returns and help balance the volatility of a portfolio. Bitcoin is the top cryptocurrency every investor should have access to, but there are many other coins to take an interest in, so let’s explore the crypto categories.

Bitcoin is the first and most important cryptocurrency on the market. It gained popularity by withstanding massive volatility throughout the years, and now it’s closer to adoption than ever. According to the Commodity Futures Trading Commission (CFTC), Bitcoin is considered a commodity, which means it falls under specific tax regulations.

Considering its power, Bitcoin is the leading cryptocurrency, and every investor and trader takes advantage of it, as it acts as a safe base for the portfolio. Whether you’re a beginner or intermediate investor, choosing Bitcoin first is the best move for starting with crypto.

Altcoins are all the other coins other than Bitcoin, and what makes them special is their focus on technological advancements. Ethereum, for example, is the second-largest asset after Bitcoin, but it’s a great altcoin since it has established essential technological developments, such as smart contracts.

In addition, Ethereum switched its consensus mechanism from proof of work to proof of stake, becoming more sustainable and scalable than before. Like Ethereum, many other altcoins have special features and opportunities for crypto to evolve, but they’re not as stable as Bitcoin is, so investing in altcoins must be done with caution.

Stablecoins are backed by fiat money, making them considerably safer to invest in than other cryptocurrencies. An example of such an asset is Tether USDT, which is pegged at 1:1 with the US dollar, but also supports currencies like the Mexican peso or the offshore Chinese yuan, as well as Gold.

Stablecoins are always beneficial to a portfolio, even if the value they provide in the long term is not as significant as that of altcoins, for instance. However, they add a layer of security, which is necessary for withstanding volatility and challenging market events, such as a bearish period.

Meme coins have gained popularity due to their limited utility and community influence. In other words, their value comes from people who have been lovers of internet memes since their beginning. Dogecoin, for example, is a cryptocurrency inspired by the Shiba Inu dog named Kabosu, one of the most loved memes of the century.

While it was created as a joke, Dogecoin can be used for online tipping and trading. Its value has been striking when Elon Musk showed his support for the coin, which made Dogecoin highly successful, but only during specific times. This is a feature shared by most coins, as they can bring in considerable value, but only when the market demand grows, as supported by the community.

Adding cryptocurrencies with diverse use cases to your portfolio is best, which is why considering financial coins for the long term is a profitable idea. These assets act as tools for the crypto ecosystem and are usually linked with DeFi (decentralized finance) markets, such as the following:

• Decentralized exchanges (DEXs) with platforms like Uniswap (UNI);

• Decentralized money markets for lending or borrowing crypto, such as Aave (AAVE);

• Bridges that connect blockchains, like Stargate Finance (STG);

Depending on how successful or popular these sectors are, investing in their underlying coins adds more value to the portfolio.

Non-fungible tokens have also experienced a moment of popularity in the past, notably with the Bored Ape Yacht Club collection, which people were obsessed with. NFTs are unique assets that offer ownership of a specific item, which is why most come in collections from which people can choose their preferred one.

Popular NFTs target artists and artwork, but they also come in the form of concert tickets, Rolex certificates, and even virtual land, making them valuable for extending a portfolio. While NFT collections have not been as famous recently, their creators are attracting more and more audiences as their supporting communities grow.

Decentralized gaming is the opposite of the industry that’s imposing microtransactions and endless limits. It involves games that allow users to explore worlds freely, as well as earn as they play through P2E (play-to-earn) features. Many are linked to external equipment, such as AR and VR, allowing users to experience unique worlds.

Investing in metaverse games is most beneficial when new ones are entering the market. Still, established ones like Decentraland, with its MANA token, or The Sandbox, with its SAND, are quite successful on the trading markets. Many of these games are built on the Ethereum blockchain, which has been spreading across multiple areas. According to Binance.com Research, “Ethereum is emerging as the institutional favorite, nearly surpassing Bitcoin in ETF inflows and cementing its role as crypto’s yield-bearing backbone.”

Building wealth can be challenging, as it requires more than a few months of planning and investment. This approach may last a lifetime, as it involves acquiring value in your portfolio to live a comfortable retirement. Using cryptocurrency in a portfolio can be beneficial, especially when diversifying assets and allocating resources across different coins. Altcoins, meme coins, or gaming tokens can all contribute to the growing value of your assets.