The rise of cryptocurrency has reshaped the global financial landscape, offering decentralized, borderless, and innovative ways to transact and invest. However, as the market matures, some investors and enthusiasts are seeking alternatives to cryptocurrencies.
From real-world assets like real estate to non-fungible tokens (NFTs), crypto alternatives present new frontiers for innovation and investment. They cater to various goals, such as reducing volatility, creating utility in specific industries, or enhancing security and transparency in global systems.
This article seeks to highlight the best crypto alternatives, their potential benefits, and the risks involved. Whether you're an investor, technologist, or curious learner, discovering these alternatives could inspire new strategies and insights for navigating the evolving digital economy.
- 5 Best Crypto Alternatives
- Real Estate
- Precious Metals
- See All 8 Items
5 Best Crypto Alternatives
Here is a list of the five best alternatives to cryptocurrency for your consideration.
Real Estate
Real estate is one of the most popular alternative investments in the world and is easily one of the best crypto alternatives. It can enhance your portfolio by offering cash flow, competitive risk-adjusted returns, and a hedge against inflation.
One of crypto's greatest advantages is that it offers a variety of ways to make great passive income. Real estate is one of the greatest investment vehicles for passive income and is often much safer than crypto. Historically, real estate has been a reliable long-term investment as home values tend to rise over time. Here are a few of the best ways to invest in real estate:
REITs
A real estate investment trust (REIT) is a perfect option for investors who want exposure to real estate without a traditional real estate transaction. A REIT is formed when a corporation invests money from investors to buy and operate income properties. REITs are a solid investment for stock market investors who desire regular income, investors seeking high liquidity, or investors who do not have the capital to buy a property individually.
Residential or Commercial Rental Property
Owning rental properties is a great opportunity for individuals with significant capital, patience with tenants, and do-it-yourself (DIY) renovation skills. Rental properties provide regular income and can appreciate in value over time. However, a key drawback is that managing tenants can be tedious and stressful.
Tokenized Real Estate
Tokenization, with respect to real estate, is the process of developing a digital token to signify ownership of a type of real estate asset. With the advent of blockchain technology, real estate tokenization is providing an opportunity to steer clear of the illiquid, bureaucratic, and inaccessible characteristics of the traditional system.
Precious Metals
Precious metals include assets such as gold, platinum, silver, and more. These precious metals can be coins with a numismatic value or simple bullion (often stored as bars). Precious metals are popular investments because they’re often regarded as non-correlated assets (however, the level of correlation depends on the rest of your portfolio).
Precious metals are valuable because they’re scarce, have industrial use cases, or possess investment properties that make them an excellent store of value. Here are a few precious metal investments to consider.
Gold
Gold is the most popular and investable precious metal. It’s valuable for its scarcity, shaping capability, durability (it doesn’t corrode), and ability to conduct heat and electricity. Throughout history, gold has been a widely accepted store of value. It also serves as an effective hedge against economic or political turbulence and as a hedge against rising inflation.
You can find numerous ways to invest in gold. Investors can purchase gold stocks (shares of gold mining, royalty, or streaming companies), gold-focused ETFs, or gold-focused mutual funds.
Silver
Silver is the second most popular investable precious metal. Like gold, it's also used as a store of value to make silverware, jewelry, coins, and bars. It’s an important industrial metal used in the electronics, electrical, and photography industries. Silver’s dual role as an industrial metal and store of value makes it a more volatile alternative to gold.
Art
The art market has been one of the hottest alternative investment crazes in recent years. If an up-and-coming artist goes on to a successful career, the cash value of their work can explode. An Art Basel annual report estimated that the global art market sales in 2023 reached $65 billion. Here are a few ways to invest in art.
Online Art Marketplaces
Until recently, fine art as an investment has been almost entirely exclusive to the rich. Online art marketplaces completely changed this. They are a great starting point for investing in art because traditional artwork is illiquid and can present difficult maintenance and storage obstacles for novice investors.
Non-Fungible Tokens (NFTs)
NFT art is a digitized piece of artwork that a person has tokenized onto a blockchain. No physical copies of these digital files exist; rather, they are only available online, where investors and art buyers can buy and sell them.
NFT art provides proof of ownership, allows collectors to monetize their work without the intervention of third parties, and helps collectors distinguish the original from its copies. NFT art can be purchased from NFT marketplaces such as OpenSea, X2Y2, Blur, and Looksrare, among others.
Fine Wine
Buying wine can be an excellent source of diversification, providing investment returns with little to no correlation to traditional assets. The value of wine depends on a variety of factors such as harvest yields, weather patterns, and vintage and consumer trends, all of which intersect with demand and supply. Since most of these factors are unrelated to the stock and crypto market, wine investments are a great complement to a portfolio.
There are a few popular ways to invest in wine apart from buying individual bottles. Investors can buy wine shares – an easy and liquid way of gaining exposure to the wine industry. Larger investors can work with online platforms, which allow investors to build diversified wine portfolios. Lastly, investors can invest in wine funds and futures.
Equity Crowdfunding
Equity crowdfunding provides investors with a great alternative investment opportunity by helping them fund businesses for a stake in the company, often via an online alternative investment platform. The slice of equity received by each investor is proportional to the amount of cash invested. It is one of the best crypto alternatives because of its high profit potential.
Equity crowdfunding can be a great way to broaden an investment portfolio that has minimal capital requirements. It is important to note that equity crowdfunding is a high-risk investment because the majority of startups fail in the long term.
Should I Diversify With the Best Crypto Alternatives
Diversifying your portfolio with crypto alternatives can be a strategic move, but it requires careful consideration. These alternatives offer opportunities to tap into emerging markets, hedge against volatility, and align your investments with specific goals. However, they also come with risks such as regulatory uncertainty, market volatility, and technological vulnerabilities.
The key is to approach diversification with a clear strategy. Understand the potential of each alternative, conduct thorough research, and evaluate how these assets fit within your broader financial goals. By balancing risk with opportunity, crypto alternatives can complement a diversified portfolio.