Wednesday, November 30, 2022
HomeCryptoeverything you need to know before investing in it... or not

everything you need to know before investing in it… or not

It’s not yet a tidal wave, but the phenomenon is far from being anecdotal: 8% of French people have already invested in crypto-assets, according to a February study carried out by the consulting firm KPMG for the Association for the development of digital assets (ADAN). “Cryptocurrencies have become an essential investment provided that you limit your positions to between 3% and 5% of your financial assets”, says Karl Toussaint du Wast, wealth management advisor, co-founder of the NetInvestissement investment solutions platform.

Better to have a strong heart, because the last few months have not been easy: bitcoin is evolving around 21,000 dollars (20,000 euros), a drop of 56% in six months. But the cryptocurrency star is still worth five times more than two years ago. Something to make savers dream, whose traditional financial products hardly bring in more than a few percent per year.

  • What is bitcoin?

Bitcoin is a virtual currency created in 2009 by a certain Satoshi Nakamoto, whose true identity remains secret. Unlike conventional currencies (euro, dollar, etc.), bitcoin operates in a decentralized manner, without the intervention of a monetary authority such as a central bank.

Bitcoins are created by “miners” who, in exchange, ensure the security of transactions on a database, the blockchain. The total number of bitcoins that will be mined, and therefore created, was set at 21 million from the start. At 1er January, there were 19 million bitcoins in circulation. Once bitcoins are created, they can be bought and sold like any asset. This is what investors (individuals, companies or institutions) do to diversify their traditional investments.

  • What are the risks ?

The main risk is volatility: the prices of bitcoin and other digital currencies can record double-digit percentage moves in a matter of hours, in either direction. We must therefore accept such a level of fluctuation before committing to it. The crypto market even suffered an earthquake in mid-May with the collapse of the terra-luna cryptocurrency and its stablecoin (cryptocurrency whose course is backed by a classic currency such as the dollar or the euro).

But falling prices are not the only danger investors face. Bitcoin theft is a reality, not to mention outright scams.

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