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

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

It’s not a tidal wave yet, but the phenomenon is far from anecdotal: 8% of the French have already invested in crypto assets, according to a February study conducted by consultancy KPMG for the Association for the Development of Digital Assets ( ADN). “Cryptocurrencies have become a must-have investment, provided you limit your positions to 3% to 5% of your financial assets,” says Karl Toussaint du Wast, wealth management consultant and co-founder of investment solutions platform NetInvestissement.

Better have a strong heart, because the last few months have not been easy: Bitcoin is moving around $21,000, a 56% drop in six months. But the cryptocurrency star is still worth five times what it was two years ago. A dream for savers whose traditional financial products bring in little more than a few percent a year.

  • What is Bitcoin?

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

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

  • What are the risks?

The main risk is volatility: Bitcoin and other digital currency prices can see double-digit percentage moves in either direction in a matter of hours. We must therefore accept such a volatility before committing to it. In mid-May, the crypto market even suffered an earthquake The collapse of the Terra Luna cryptocurrency and its stablecoin (cryptocurrency whose price is backed by a classic currency like the dollar or the euro).

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

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