These are my top risk-averse cryptocurrencies

What is a secure cryptocurrency? Well, it depends.

Read on to see a couple of answers to that question based on different worldviews and investment goals. Ultimately, only you can decide which approach best suits your own point of view. That said, almost anyone can find a safe haven in the stormy crypto market.

Stable coins

Theoretically, a robust stablecoin should be about as secure as a stack of regular dollar bills. They are designed to match the value of a fiat currency, typically US dollars or euros, within a small margin of error. These tokens act as digital engine oil for the financial systems of crypto trading exchanges and services.

Converting monetary values ​​from one cryptocurrency to another, or between the fiat and crypto worlds, can be costly and slow when actual dollars and cents are involved. Translating the cash flow into a handy stablecoin can achieve the same effect with lower costs and faster execution.

To give investors a reason to fund this smart tool, stablecoins can come with benefits. For example, the popular stablecoin Tether have solid interest rates when held on crypto platforms such as Crypto.com or CakeDeFi. Widely supported stablecoins such as Tether and USD coin can also be effective payment tools, given their stable valuations and low transaction fees.

In general, actively owning stablecoins might be your style if you also like to have a lot of money in savings accounts, certificates of deposit, and other super-stable stores of value. Just make sure the coin you choose is backed by robust security and managed by a solid organization.

Bitcoin

You may have heard of Michael Saylor, who currently serves as the executive chairman of the data analytics company Micro strategy (MSTR -5.57%).

Under Saylor’s hand, MicroStrategy has converted all of its cash reserves to Bitcoin (BTC -1.23%), adding more of the leading cryptocurrency through many different funding sources. The company is pouring cash flows from its software business into more Bitcoin, along with new debt and money raised by selling shares on the open market.

As of the last count available, MicroStrategy managed 132,500 Bitcoins, currently worth approximately $3.1 billion. It is one of the largest Bitcoin collections in the world, beaten only by countries such as China and Grayscale Bitcoin Trust equity fund.

In Saylor’s opinion, Bitcoin is the only cryptocurrency that can replace traditional currencies and gold as a global form of money. From this point of view, Bitcoin looks like the only safe and stable store of value on the market today. As Bitcoin evolves into the worldwide monetary system, every other currency will lose value by comparison. When the dollar falls, so will the dollar-denominated stablecoins. Therefore, a Bitcoin “maximalist” like Michael Saylor would argue that Bitcoin is the only truly stable investment today.

Of course, this is an extreme opinion, and there is no special magic that guarantees Bitcoin’s special place in the crypto universe. Better tools may come, some may find ways around Bitcoin’s encryption layer, authorities may put a heavy regulatory thumb on the leading crypto name, and so on. I’m not saying that any or all of these risks will materialize, but I do recommend approaching Bitcoin (and all investments) more cautiously than Michael Saylor has shown.

A diverse crypto portfolio

Betting your farm on Tether, Bitcoin, or any other cryptocurrency is a risky strategy.

Here at The Motley Fool, we recommend building a diverse portfolio of at least a couple dozen stocks, addressing different markets and business models. You don’t want to be left holding the bag if your only stock takes a dark turn.

The crypto market is no different, except that it has fewer robust names available, and it requires fewer cryptos to build a properly diversified portfolio.

So start with a foundation of Bitcoin and stablecoins, augmented by some smart contract platforms, cross-chain protocols and specialized Web3 tokens. Have fun with it and take some risks. Some of the additional altcoins may fail, but others may well pop up instead, more than making up for the losing bets.

This approach makes sense to me and I currently own more than a dozen cryptocurrencies. Bitcoin is my largest crypto holding, closely followed by Ethereum, Rippleand Polka dot. These are the tickers I expect to find their sea legs and beat the broader crypto market over the next decade or so. Nothing is guaranteed and I could be wrong, but that’s why I’ve injected smaller investments into a bunch of promising cryptocurrencies.

The other names are more speculative ideas that may or may not work in the long run. The law of averages dictates that a couple of them should take the challenge and make me some money. To me, that’s how you build a risk-averse crypto collection.