Should crypto investors seek new ventures?

Since the COVID-19 pandemic began in 2020, it seems like everything has gone online for safety and convenience -- including work, education, medical care, entertainment, sales and more. It’s no surprise that cryptocurrency, which encompasses all types of digital or virtual currency, took off in 2021 as well.

Crypto investment has skyrocketed recently. Cryptocurrency users and investors have created a lot of buzz about this market and its potential. The biggest cryptocurrencies include Bitcoin and Ethereum, while exchanges like Binance, Coinbase Exchange and Kraken provide places to invest, trade and explore new markets. However, cryptocurrency is volatile. Recently, as the novelty has worn off, many investors have begun questioning crypto's risks and long-term viability. Here are some ways to diversify your investment portfolio or find cryptocurrency alternatives.

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Crypto’s Risks and Challenges

Despite its recent popularity, fueled by a surge in digital accessibility, decentralization and excitement on social media, cryptocurrency presents significant risks for investors. Here are a few of these major threats that may put your investments in danger:

• High competition: Crypto’s meteoric rise comes with drawbacks for more recent investors. Accessibility is a benefit, but allowing anyone to get involved has led to a flood of competition. It’s harder to hit it big when everyone wants in on the action.

• Volatile market: It’s well known that any market based on the hottest new technology is riskier than traditional options. Crypto is a fresh area of investment and is still being developed, which means the market is constantly in flux -- a single post on social media may cause a particular currency to jump or plummet.

• Vulnerability to cyberattacks: Many cryptocurrencies or exchanges are hosted on unstable platforms. Its recent popularity puts crypto at increased risk of cyberattacks. Hackers or other bad actors work hard to get into these systems and steal your investments.

• Minimal or nonexistent consumer protections: Decentralization is seen as a major feature for many crypto investors, but the lack of regulation means there are almost no consumer protections in place to protect participants in the market from scams, cyberattacks and other risks.

• Incoming and future regulations: Thankfully, consumer protections and other regulations are on the way. Crypto’s rapid growth has caught the attention of the entire investing community, including governments and regulatory bodies. These agencies have begun taking a closer look at cryptocurrency's risks and potential.

• Uncertain long-term strength: As with any new market, there’s no way to tell how long the bubble will last before it bursts.

Alternative Ventures for Crypto Investors

New and traditional markets are filling the void as cryptocurrency experiences uncertainty and failures. Here are some alternatives to diversify or revamp your investment portfolio.

Artificial Intelligence

Artificial intelligence (AI) is appealing if you’re still interested in getting involved with a cutting-edge technology market. Even major companies like Microsoft have investments in this constantly developing industry. AI is often more sophisticated than many crypto or blockchain endeavors.

Real Estate

You may be burned out on keeping up with the latest technologies with their volatile markets and high risks. If that’s the case, residential and commercial real estate are tried-and-true investment opportunities. People are constantly looking for new residences, whether they need a bigger house to start a family or are trading a timeshare for their own vacation home. In fact, the vacation rental market was globally valued at $87.09 billion in 2019 and is expected to keep growing.

Metals

Markets don’t get much more traditional than precious metals. Gold, platinum and silver are high-value and accessible assets with lasting power -- nowhere near the volatility of the current crypto market, despite certain claims.

Explore Crypto Alternatives

It’s a good idea to consider diversifying your portfolio if you’re invested in cryptocurrency. Risky and unexplored markets leave you vulnerable to big losses, but you can mitigate this by exploring other options.

Image credit: Wit Olszewski / Shutterstock

Devin Partida writes about AI, apps and technology at ReHack.com, where she is Editor-in-Chief.