A Guide to How Local Entrepreneurs are Diversifying with Crypto

In today’s global economy where there’s uncertainty, inflation risks, and shifting regulation, entrepreneurs in Exeter and the wider South West are increasingly recognising the importance of portfolio diversification. But diversification isn’t just to hold different business assets and cash reserves. There’s a new strategy to diversify with digital assets as a strategic tool for hedging, liquidity, and operational flexibility. Here are seven practical ways entrepreneurs are using cryptocurrency and crypto assets to boost business and personal portfolios.

Hold a small, strategic allocation of Bitcoin as an inflation hedge

The basic way to invest in cryptocurrency is to simply trade using platforms like Coinpass, but Exeter entrepreneurs can look for new ways. One of the most straightforward ways for a business owner to diversify is to allocate a modest percentage of their personal or company treasury into Bitcoin. Traditional cash reserves suffer erosion when inflation bites and interest rates remain low. So, Bitcoin might act as a non-correlated store of value over the longer term.

In Exeter, an entrepreneur with a small manufacturing business might decide that 2-5% of their spare cash sits in Bitcoin, while the bulk remains in deposits or investments that they understand well. The aim is to add a hedge, and if inflation speeds up or sterling dips, that small allocation behaves differently. But this requires recognising volatility and making the allocation deliberately small.

Use stablecoins for cross-border payments and currency management

Another practical use of crypto assets by entrepreneurs around Exeter is for payments and operational liquidity. For instance, imagine a local design firm subcontracting with overseas collaborators or suppliers. Traditional banking might involve delays, high fees, or unfavourable current conversions. By holding and transferring a regulated stablecoin, the business can make quicker payments, potentially lower cost, and with less reliance on banking cut-offs.

This enables the entrepreneur’s treasury strategy to include a crypto payments bucket separate from the main cash and credit lines. It’s still part of their diversification, and allows them to lock up operational funds in a format that sits outside traditional bank rails, and reduces concentration risk.

Tokenise business assets and explore on-chain financing

In Exeter’s growing entrepreneurial scene, supported by hubs like the Blockchain Hub Exeter at the University of Exeter and SETsquared Partnership, some founders are exploring how blockchain and crypto technology can be added into their business model.

For instance, a creative studio might consider tokenising future revenue streams or offering digital tokens to collaborators. This can create a crypto-friendly line of business. While this is still nascent and requires legal and regulatory care, the diversification benefit is that the business isn’t reliant on a single revenue model. It offers digital-asset enabled value streams, which opens opportunities for future partners and investors.

Hold crypto assets as a liquidity reserve separate from cash

Entrepreneurs always hold rainy day funds, which are reserves held in liquid form to handle unexpected downturns, market shocks, or business changes. Traditionally, these reserves are usually kept in cash, near-cash, or short-term investments. But a diversification strategy might include a small portion of the liquidity reserve held in crypto assets.

A startup in Exeter might decide to keep 90% of its backup reserve in a sterling account and 10% in a crypto asset. So, in the event of a bank holiday or liquidity freeze in traditional banking, the crypto bucket will remain operational 24/7. It offers flexibility in unexpected circumstances.

Invest in crypto infrastructure or Web3 business models

Instead of simply buying crypto tokens, some local entrepreneurs view the crypto economy itself as a diversification avenue. For instance, a founder in Exeter can invest in a Web3 startup, or set aside part of their personal portfolio to hold tokens of infrastructure projects like blockchain platforms and decentralised finance protocols that would boost future business models.

Here, the objective is long-term resilience. By owning a stake in the infrastructure that might support future digital economy growth, the entrepreneur can hedge their personal and business portfolio against stagnation. Their portfolio would be future-proofed, with an emphasis on utility and infrastructure.

Accept cryptocurrency as a payment and convert strategically

Some entrepreneurs diversify by broadening how they accept and manage payments. A small business in Exeter can decide to accept some cryptocurrencies from clients and customers. They can convert a portion immediately into sterling and retain a small portion in crypto form.

This diversification strategy works on two levels. First, it broadens the customer base by offering more payment formats, and secondly, it introduces a crypto holding mechanism linked to actual business revenue instead of pure investment. The business owner can make the crypto portion a strategic reserve, and integrate it into their overall asset allocation model.

Use crypto-asset education and awareness as part of risk management

Finally, for many local entrepreneurs in Exeter, real diversification is part of a culture. In business ecosystems, there’s growing attention to blockchain, crypto assets, and the digital economy.

Exeter business owners should educate themselves about the potential and risk of digital assets before they diversify portfolios through cryptocurrency. They can choose to host a workshop on crypto-asset regulation and integrate crypto-asset scenario-planning into the annual finance review. Even if they decide not to hold any tokens, having this awareness becomes a part of their risk management strategy.

Using cryptocurrency to diversify business and personal portfolios

Entrepreneurs in Exeter who approach crypto assets with discipline, clarity, and long-term mindset are finding ways to diversify both business and personal portfolios in practical ways. You can include digital assets as one more component of a thoughtfully designed portfolio, use it for reserves, invest in crypto assets, and use it as a payment. Actions like these can position the business for future modes of commerce.