The primary purpose of investment is of course to make money, but it is equally important to develop a proper investment plan to ensure that you are protected from monetary loss. This is not simply to lock the money in a safe, but to develop a reasonable strategy to spread the risk. Any wealth preservation strategy has two key cores, namely long-term strategy and diversification strategy. *
The long-term strategy is not only to save money for retirement, or to leave a legacy for future generations, but also to beat inflation and ensure that your purchasing power does not depreciate.
Diversification strategy is by far the easiest way to reduce risks and protect wealth. Just as you don’t invest all your money in one company, it is better not to put your money in a single investment category. The key to diversification is to spread wealth into multiple unrelated asset classes, and then diversify among these asset classes.
In addition to investing in different stocks, bonds or other currencies, high-net-worth users will also invest in real estate, art, rare coins or other exclusive collectibles, jewelry, gold, and increasingly invest in Bitcoin.
What is special about Bitcoin?
Throughout history, there have been cases of confiscated gold, goods and even land during the crisis. It is also disturbing that, as we have seen in Venezuela, people there are struggling with high inflation, and sometimes it is extremely difficult to convert funds into another currency, which makes people feel helpless and can only watch. Seeing my life savings are worthless. Bitcoin is very different. It is in electronic form and has no borders. It can be transferred without any intermediary. It can be used by anyone connected to mobile devices or the Internet. All transactions are permanently recorded on the public ledger. There is no dispute over ownership. .
In a recent article in The New York Times, a Venezuelan economist described how Bitcoin has become part of Venezuela’s daily life, so that on a mainstream Bitcoin trading platform, Venezuela’s transaction volume is second only to Russia. , Ranked second in the world. But Bitcoin is not just used to protect wealth under extreme conditions. In general, Bitcoin is also an excellent choice for portfolio diversification, and it should be seen as part of a comprehensive wealth preservation strategy.
Why invest in Bitcoin?
When you think about wealth preservation or wealth enhancement, there are many reasons why Bitcoin is worth considering:
- Bitcoin is a new asset class: Bitcoin, together with other digital currencies, constitute a brand new asset class. Although there is no guarantee, the value of Bitcoin today may be only a small part of its potential market value.
- Wealth is changing hands: A recent survey showed that millennials are more likely to use and invest in Bitcoin, which means that as this generation enters the optimal age for making money, their demand for Bitcoin is likely to increase.
- Strong network foundation: As a form of currency without borders, Bitcoin and other forms of digital currency are likely to become more and more common, and then become part of the mainstream payment method.
- Bitcoin is an unrelated asset, and in its short past history, it has proven to be a hedge against recession.
How to invest in Bitcoin?
AAX's over-the-counter market provides a safe platform for investors to buy Bitcoin and other mainstream digital currencies. Once you have purchased Bitcoin, you can store your funds in a wallet of your choice or cold storage, or you can contact us to store your funds in a fully regulated entity for insured custody, or you can choose AAX currency Trading with other currencies on the trading market. AAX also has a contract trading market. Depending on your view of the market, you can go long or short, which means you can even make a profit when the price of Bitcoin drops. For more information, please refer to the Beginner's Guide to Contract Trading. Although how much you invest in digital currencies is entirely up to you and you need to take your own responsibilities, we usually recommend that about 2% of your investment portfolio be allocated to digital currencies.
* In this article, the protection of wealth or the preservation of wealth should not be understood as hiding money in anticipation of litigation, future legal disputes, tax evasion, or any other activity that may constitute fraud.
About AAX Academy
AAX is a digital asset exchange supported by LSEG Technology. AAX Academy is a user education channel created by AAX, which aims to help more users learn novice tutorials and learn the basics of blockchain.