Vitalik Buterin, the founder of Ethereum (ETH), has given financial advice to his five million followers on social media platform X. In response to controversial advice to ”be careful with diversification”, the crypto pioneer shares four important financial lessons.
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Ethereum founder advises
Buterin responds to an X-message from Alex Voigt, a German engineer with 114,000 X-followers. Voigt criticizes the well-known investment strategy of diversification by referring to Bill Gates, co-founder of Microsoft.
Voigt writes that after Bill Gates befriended Warren Buffet, he began diversifying his portfolio and selling Microsoft stock. He mentions that Gates’ fortune could have been $1.33 trillion if he had not taken this step, instead of the current $138 billion. “Be careful with diversification and with friends who recommend it,” he concludes.
Buterin says this is “terrible advice,” and he shares four key lessons with his followers.
This is awful advice. Some actual financial advice:
* Diversification is good.
* Save. Get to the point where you have enough to cover multiple years of expenses. Financial safety is freedom.
* Be boring with most of your portfolio.
* Don’t use >2x leverage. Just don’t.— vitalik.eth (@VitalikButerin) January 7, 2024
Firstly, he writes that diversification is actually a good thing. Diversification refers to the principle of spreading investments across different assets or asset classes.
Second, he encourages people to save. Specifically, he advises getting to the point where you have enough to “cover several years of expenses.” “Financial security is freedom,” he continues.
Third, he recommends being boring with most of your portfolio. By this he is most likely referring to the strategy of choosing stable, less volatile investments for the majority of your investments. Within the crypto landscape you will soon end up with bitcoin (BTC) and ethereum (ETH).
Finally, he strongly advises against using leverage greater than 2x. Leverage means using borrowed money to take a larger position than what you could buy with your own capital.
ENS crypto praised by Buterin
Earlier this week, Buterin also attracted attention by praising Ethereum Name Service (ENS) on
The ENS race skyrocketed with an impressive 64 percent thanks to Buterin. Although the price has partly corrected since the peak, it is still approximately 37 percent above the level before the X message.
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2024-01-07 21:04:21
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