Cryptocurrency’s rise as a viable financial asset didn’t happen overnight. The tech has developed in the open-source community since about 2009, and now, it’s a widely accepted alternative to "traditional” physical money. The technicalities underlying crypto are complex, but the takeaway is clear: cryptocurrencies are here to stay! The catch is that exchanging them is riskier than trading currency the traditional way. It gets even more sophisticated when dealing with securities tied to fluctuating cryptocurrency values.

Not only that, but related technologies have also developed in tandem with cryptocurrencies like decentralized finance (Defi) platforms and financial technology (fintech) in the form of mobile apps. But the key to building a great digital asset portfolio is knowing which ones will pay off in the long run and which aren’t worth your time. The learning curve is a bit steep, so let’s go over your options to lay the groundwork for how to build digital assets.

Blockchain, or crypto? What's the difference?

It’s a misnomer that cryptocurrency is synonymous with blockchain technology. Instead, blockchain is more like the underlying tech that cryptocurrencies use to create a decentralized ledger of all transactions. Each record in the decentralized "block” must correlate to previous blocks to ensure a chain of accurate records, a seemingly endless digital ledger that builds upon itself. That’s an incredibly boiled-down explanation of the difference between blockchain and crypto, but it’s a good starting point because DeFi and FinTech wouldn’t have grown without blockchain. 

DeFi

DeFi mainly refers to creating an online financial ecosystem aside from the usual intermediaries like banks, credit cards, and credit unions. The idea is that these middlemen don't need to be involved peer-to-peer, and they place artificial barriers for new investors. Anyone can trade stocks and financial instruments, but few have access to the tech and flow of information necessary to trade profitably on Wall Street. DeFi platforms change the playing field and do away with the hassles. It's not quite there yet, but a simple metaphor for DeFi is that it may become the Wall Street of crypto and emerging fintech eventually.

Fintech

Fintech is arguably the most exciting of all since the potential seems limitless at this time. There are mobile apps to trade cryptocurrencies in minutes, store various cryptocurrencies in secure, private digital wallets, and manage your digital assets in one place. Anything that leverages technology in the financial space to deliver new services or products to market is technically fintech; however, the movement is still fresh. Additionally, a newcomer needs to sort through dozens of apps to find the right mix for their particular digital investment strategy; a lot easier said than done!

Finding a balance in digital investments

Ultimately, the goal is to strike a balance between digital investments and your strategies to grow them. What may work well for your financial goals may not work as well for someone else, and that's where we step in to help.

Check out our recommended options in our Crypto Tech collection.