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Since the inception of modern portfolio theory, traditional asset classes have been the standard investment products for portfolio construction. With the introduction of cryptoassets such as cryptocurrencies, tokenized securities, smart contracts, and blockchain-based token assets, the crypto “revolution” has created a new asset class for consideration in a modern portfolio. This chapter explains cryptoassets in a portfolio, including their limitations and parameters as an asset class in a diversified portfolio. Finally, it reports an improvement in a new portfolio’s reward/risk ratio using the Sharpe ratio when adding cryptoassets to simulated equity, bonds, and real estate portfolios. A caveat is that a cryptoasset’s contribution to a well-diversified traditional portfolio differs from the performance of investing in a single and isolated cryptoasset.

Bitcoin’s introduction as the first cryptoasset in 2009 ushered in a new era, representing a seismic shift in the financial markets. Since then, this evolving asset class has generated much interest, excitement, and growth. This chapter begins by providing a brief background of cryptoassets. It then discusses their main types (cryptocurrencies, security tokens, and utility tokens), users (individual investors, major financial institutions, endowments, and hedge funds), and benefits and drawbacks. Next, it sets forth the book’s purpose, distinguishing features, intended audience, and structure. The chapter provides a synopsis of each of the remaining 21 chapters. Although no single book can encompass all changes and iterations of these technologies as they emerge in the marketplace, this book brings together a broad collection of industry expertise and academic analysis to create a book helpful to researchers, academics, and practitioners.