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Cryptocurrency Bitcoin : How To Invest In The Crypto Currency?

Cryptocurrency Bitcoin : How To Invest In The Crypto Currency?

What is Cryptocurrency Bitcoin? What's Bitcoin ? How are cryptocurrencies made? What makes them valuable? What are the different types of  them? How to invest in crypto currencies? Our Top 10 Cryptocurrency  in circulation as well as the price of the main cryptocurrencies of the day. Operation, uses and recommendations, taxation, find out everything you need to know before investing in digital currencies such as Bitcoin, Ethereum, Dogecoin, Binance Coin, Ripple ... which are no longer virtual.

Cryptocurrency Bitcoin

CRYPTO CURRENCY AND DIGITAL CURRENCY: WHAT IS IT?

Definition of a cryptocurrency

By crypto currency is meant both a cryptographic currency and a peer-to-peer payment system. These digital currencies are therefore digital currencies in the sense that they are characterized by an absence of physical support: neither coins nor banknotes, and payments by check or bank card are not possible either.

These are alternative currencies that are not legal tender in any country in the world. Their value is not indexed to the price of gold or to that of conventional currencies, nor are they regulated by a central body or financial institutions. There are no central banks at their head. And yet, security and transparency are their main assets! Indeed, cryptography secures transactions which are all verified and recorded in a public domain, ensuring both confidentiality and authenticity thanks to Blockchain technology.

Blockchain: the basic technology of cryptocurrency

Cryptocurrencies are all based on the same principle: the Blockchain. Cryptocurrencies are a series of numbers stored on a computer in the form of chains of blocks. The principle is actually quite simple imagine having a database, allow anyone to make changes to this database, on condition that you declare yourself a "member". Set up a very long and complex control procedure which must be carried out each time a certain number ("block") of changes is requested. This procedure is carried out not by a single controller, but by all the voluntary “members”. Once validated, the "block" of changes is dated and added to the others in the registry. Finally, allow everyone to read the registry, and you have a blockchain database ”. Thus, it is up to the network (all the peers) to validate and confirm each transaction.

This technology and system is the basis of the vast majority of cryptocurrencies, but Blockchain applications do not stop there. Indeed, it could disrupt the entire financial sector but also certain sectors such as the legal or administrative sector by eliminating the need for trusted third parties. No need for a notarial act or civil status register  with this distributed register technology which helps to make data more secure and transparent. Blockchain technology is after all a technology whose database cannot be changed without meeting certain conditions.

HOW IS THE CRYPTO CURRENCY MADE?

People who make cryptocurrency are called miners. They are said to be mining cryptocurrency. Minors are an integral part of the process. Without them, the Blockchain would be frozen. A miner in fact confirms the transactions that take place on the Blockchain.

For example, imagine that Peter gives 3 Bitcoins to Paul. The transaction will be immediately broadcast over the network, peer-to-peer, made up of computers called nodes. However, it is only after a certain period of time that the transaction will be confirmed by the computers belonging to the networks using the algorithms specific to said Blockchain. Once committed, the transaction now forms a new data block for the ledger. It is added to others in the existing Blockchain, permanently and immutable.

Behind these network computers, miners validate transactions. To confirm a transaction, a miner must find the product of a cryptographic function that connects the new block to its predecessor. This is called proof of work. In exchange for their services (and the computing power mobilized for this purpose), they get a reward in the form of tokens or tokens.

How to mine a cryptocurrency?

To undermine a cryptocurrency, it is usually sufficient to install software on your computer using the processor or the graphics card, or even both, in order to be able to solve the cryptographic problem requiring a relatively large calculation power, which will allow you to touch new units of the cryptocurrency in question.

Be careful, however, the main cryptocurrencies have become too difficult for individuals to mine. The mining of many of them has become largely professional and takes place in part on Chinese farms, buildings of several thousand m2 where tens of thousands of servers are running day and night to mine cryptocurrencies (Bitcoin, Litecoin , etc.).

Faced with this competition, cloud mining-type solutions have been developed. No investment in specific hardware is required. All you have to do is get in touch with a company that has invested in the necessary equipment and "rent" your computing power. But beware, there are many scams!

Which cryptocurrency to mine?
Obviously, individuals are keen to mine the most profitable cryptocurrency  like Bitcoin, but also Dash, Ethereum, Monero, Litecoin, etc.

However, it is very difficult today to make money by mining cryptocurrency. It is often much more interesting to invest in Cryptocurrencies  in order to hope to make profits.

Miner / developer: who makes the cryptocurrency?
The role of the cryptocurrency miner is therefore to validate the transactions carried out. He is thus paid in tokens of the cryptocurrency for which he has confirmed a new block.

The role of the developer is very different. A cryptocurrency developer will develop the computer protocol at the base of the cryptocurrency which defines in particular the number of tokens in circulation, their speed of circulation, their storage power, etc. He is like the architect of the network.

BITCOIN, ETHEREUM: THE MAIN CRYPTOCURRENCIES

How many cryptocurrencies are there? This often asked question sounds simple but in reality it is very difficult to know the exact number of Cryptocurrencies. No site lists them all.

In 2019 there was 2,871 cryptocurrencies. There are now nearly over 6,000 as of 2021 cryptocurrencies listed on  coinmarketcap. But that’s not the most interesting thing after all.

It should be noted that there are very many crypto-currencies but that only a few dozen can be qualified as popular cryptocurrencies. We often tend to rank promising cryptocurrencies based on their market capitalization, and rightly so.

The cryptocurrency Bitcoin, created in 2008 by Satoshi Nakamoto (without knowing who he is, if it is a man or a woman, or even a single person or several) is the first of crypto-currencies. He is somewhat of the digital gold standard of the cryptocurrency industry, the benchmark in the field. The main crypto currency experienced a “fork” in August 2017. A disagreement in the Bitcoin community over the speed of transactions gave rise to the birth of a new currency: Bitcoin Cash, which then immediately rose to third position in the Top 10 cryptocurrencies and has maintained itself since then. around the Top 10 crypto currencies.

Remember that the price of Bitcoin is only partially correlated to the global economic situation and rather obeys a momentum effect and that most other digital currencies are correlated with the first of the crypto currencies. But this is less and less true and challengers manage to make remarkable breakthroughs, especially Ethereum.

The other benchmark crypto currency is indeed Ethereum, which also experienced a “fork” in the summer of 2016. Ethereum, more complete than Bitcoin, relies on all Blockchain applications since it can not only process transactions but also complex contracts and programs. Indeed, technically more successful and more efficient than Bitcoin, Ethereum is both a decentralized exchange protocol that allows users to set up smart contracts as well as a cryptocurrency based on the Ethereum network, more commonly known as Ether. The strengths of this crypto network have participated in the spectacular increase recorded by Ethereum since 2020. The second active crypto could well see itself on the first step of the podium. Its market capitalization in mid-June 2021 exceeded 275 billion euros and over one year it recorded an increase of almost 950%, a much higher increase than that of Bitcoin over the same period (approximately 315%).

Bitcoin and Ether, together represent nearly 75% of the total market capitalization of cryptocurrencies.

RIPPLE, BINANCE COIN, DOGECOIN: MEDIUM AND SMALL CRYPTO COINS

But there are many other digital currencies. We can notably mention in medium-sized crypto currencies, which represent between 0.8% and 2% of the total capitalization of crypto currencies, the Ripple for example, which is not only a cryptocurrency (XRP) but also a transfer system operating independently. of the XRP token. It is first and foremost a digital payment protocol designed to facilitate interbank payments. Binance Coin, Dogecoin, Litecoin, Cardano, NEM, Monero, Stellar, or Iota are also cryptocurrencies that are regularly among the 10 most important cryptocurrencies. Small crypto currencies, which represent less than 0.8% of the total capitalization of crypto assets, still together represent 14% of the total crypto market.

Since the creation of Bitcoin by Satoshi Nakamoto, approximately 5,500 cryptocurrencies have emerged. It should be noted that crypto currencies are numerous, that new ones can emerge and challenge the heavyweights of the sector, but also that disagreements within a community can lead to a "fork", that is to say a split within the community and the creation of a new currency based on the technology of the old but with modifications.

PRICES OF THE MAIN CRYPTO CURRENCIES OF THE DAY

THE CRYPTO CURRENCY: AN ANTI-CRISIS REFUGEE VALUE?

If the coronavirus crisis has also impacted the price of crypto-currencies which have experienced a massive decline since the confinement of populations in the hope of stemming the Covid-19 epidemic, they largely caught up at the end of year 2020 and, overall, continued their bullish rally in 2021, until the crypto crash of May 2021 from which they are already recovering. In this troubled environment, cryptocurrencies have finally succeeded in establishing themselves as a safe haven. As Nathalie Janson, Economist and teacher-researcher at NEOMA Business School underlined at the beginning of December 2020: "radical economic uncertainty, negative rates, weak dollar" are all factors that contribute to the rise in the price of crypto currencies. “In recent months, we have started to hear a clear and categorical speech explaining that bitcoin is becoming a store of value in the form of digital gold.

It is not uncommon for one to compare crypto currencies to gold considering that it is, in both cases, a safe haven.

Jerome Powell, the chairman of the US Federal Reserve, even recently said that bitcoin is "essentially a substitute for gold rather than the dollar." The only thing missing is the historical status of a store of value. But their recent creations may allow us to see Bitcoin and other crypto currencies as the digital gold of younger generations who do not have the same relationship as the previous ones with the precious yellow metal.

CLASSIFICATION OF CRYPTOCURRENCIES ACCORDING TO THEIR 2021 MARKET VALUE

Coinmarketcap.com performs a ranking of cryptocurrencies according to their market valuation.

You may be wondering which cryptocurrency to buy or looking for information on which cryptocurrency to invest in or which cryptocurrency to trade. Investors often favor cryptocurrencies with a large market capitalization and relatively high prices, which reflects a certain confidence in the currency and a relative strength of the token.

Discover the ranking of the 10 most important digital currencies taking into account their market capitalization, that is to say the total value of all tokens in circulation (price of a token X number in circulation).

1. Bitcoin (BTC)

  • Creation date: 2009
  • Market capitalization as of July 27, 2021: $ 718.315 billion
  • Price variation over 1 year (USD): + 248% approximately

2. Ethereum (ETH)

  • Creation date: 2015
  • Market capitalization as of July 27, 2021: $ 268.147 billion
  • Price variation over 1 year (USD): around 614%

3. Tether (USDT)

  • Creation date: 2015
  • Market capitalization as of July 27, 2021: $ 62.557 billion
  • Price variation over 1 year (USD): - approximately 0.05%

4. Binance Coin (BNB)

  • Date of creation: 2017
  • Market capitalization as of July 27, 2021: $ 53.140 billion
  • Price variation over 1 year (USD): approximately 1,412%

5. Cardano (ADA)

  • Date of creation: 2017
  • Market capitalization as of July 27, 2021: $ 41.488 billion
  • Price variation over 1 year (USD): approximately 755%

6. Ripple (XRP)

  • Creation date: 2015
  • Market capitalization as of July 27, 2021: $ 29.910 billion
  • Price variation over 1 year (USD): approximately 179%

7. USD Coin (USDC)

  • Date of creation: 2018
  • Market capitalization as of July 27, 2021: $ 27.213 billion
  • Price variation over 1 year (USD): around 0.15%

8. Doge Coin (DOGE)

  • Creation date: 2013
  • Market capitalization as of July 27, 2021: $ 26.929 billion
  • Price variation over 1 year (USD): approximately 6,423%

9. Polkadot (DOT)

  • Date of creation: 2020
  • Market capitalization as of July 27, 2021: $ 14.013 billion
  • Price variation since its creation in August 2020 (USD): around 414%

10. Binance USD (BUSD)

  • Date of creation: 2019
  • Market capitalization as of July 27, 2021: $ 12.126 billion
  • Price variation over 1 year (USD): around 0.16%

WHAT IS THE CRYPTO CURRENCY FOR?


Cryptocurrency as a means of payment for the purchase of goods and services

What are the reasons for using cryptocurrency? Like any currency, cryptocurrencies enable the purchase of goods and services. Not being under the influence of a central authority and escaping any regulation, they have long been the prerogative of illegal transactions (ransomware, drug trafficking, etc.) but they tend to get rid of their bad reputation by becoming democratizing and attracting a wider audience. Cryptocurrencies are increasingly used for legal transactions today.

Digital currencies, like Bitcoin -BTC-, are used to buy many common consumer goods. For example, it is possible to buy with Bitcoins, computer equipment of course, but also food, jewelry, decorative objects, cultural products, etc. Overstock, general merchant site accepts payment in Bitcoins, just like Shopify. Paying for everyday goods with other cryptocurrencies is more difficult, but not impossible. The Ether, for example, could be used to buy works of art exhibited by young artists. The digital currency that wants to compete with Bitcoin has thus done, on this occasion, its entry into the real world. At the end of 2020, Paypal said in a statement its intention to “join the cryptocurrency market by allowing customers to buy, sell and hold bitcoin and other digital assets, by using the Company's online portfolio accounts ”. This announcement makes it possible for certain and rapid democratization of the virtual currencies that will be offered by this online payment companies.

Despite everything, it is more difficult today to carry out a daily transaction in cryptocurrency than with the currency that is current in the country where you live. Ditto for digital payments. However, cryptocurrencies could ultimately lower the cost of a digital transaction. And the financial and banking sector is watching these advances very closely. In the future, electronic payment based on cryptographic evidence may be the norm. Enough to embarrass the banks by forcing them to completely review the transaction model!


Cryptocurrency as a financial asset for investing

Cryptocurrencies must find their balance between means of payment and financial asset. Because it is indeed a good on which investors overwhelmingly have positioned themselves in recent years. For many who have flocked to these new kind of financial assets, cryptocurrencies are first and foremost a potentially profitable investment.

However, are digital currencies an investment like any other? What is certain is that altcoins or digital alternative currencies can be a new kind of investment, while participating in the new digital economy. It is common to include crypto-currencies in the category of miscellaneous goods and other atypical investments. This typology is relevant in the sense that it calls for prudence and to invest only a very small part of its capital in such assets.


Crypto currency as a means of making capital gains

Bitcoin was around $ 20,000 in December 2017 after a record year when the famous crypto currency saw its price multiplied by 15 in dollars. And Bitcoin has been talking about it again for several months with a spectacular rise that began at the end of 2020 and which continued at the start of 2021 with a high of more than $ 60,000 on March 13, 2021 (its value was multiplied by 10 over the last 12 months), before experiencing a resounding crash on May 19, 2021 and losing 20% ​​of its value. It was also a crash crypto because it involved a large number of tokens, which often found bullish trends the same day or the next few days. Still, this severe correction reminded investors that the meteoric increases in the price of crypto assets are accompanied by significant volatility! Even so, the increasing volume of trading and the massive rise in the market capitalization of cryptocurrencies clearly indicates investor interest in these new financial assets. Investors remain attracted to these digital currencies, capable of posting impressive performances matched only by their volatility.

Keep in mind, however, that buying crypto currencies is more or less investing in innovative technology. If the digital currency you have invested in becomes dominant (they all try with varying degrees of success to dethrone Bitcoin), you will have made a good deal.


Crypto staking to earn regular income

Some crypto currencies also make it possible to generate income by simply holding them. This is for example the case of Decred (DCR), Cosmos (ATOM), Tezos (XTZ) or even Algorandi (ALGO). This is called staking, a term derived from "proof of stake", meaning proof of possession or proof of stake. In exchange for holding locked tokens, which are used to validate transactions, the individual investor who holds them receives rewards (most often interest, or even token compensation).

The interest in the network is twofold: on the one hand, this practice allows better security of the exchange network and a reduction in Blockchain energy consumption; on the other hand, holding the token in question causes a scarcity of supply and a rise in the price.


Stablecoin: cryptocurrency as an investment medium in a given underlying

Finally, digital currency can also be used to invest in financial assets that have nothing to do with virtual currency. Thus, stable coins are crypto currencies backed by an underlying whose variation they replicate. These include Tether (USDT), indexed to the dollar, just like USD Coin or Dai. The cryptocurrencies Tether Gold and Pax Gold are they, as their name suggests, indexed to gold. Their low volatility helps reduce the risk of a cryptocurrency portfolio. But stablecoins are also very easy and simple to trade (sometimes much easier than the underlying they are linked to). Finally, the capital gains are secured and converted into stablecoins (if 1 USDT = 1 $, if the dollar goes up, you will own more Tether). Thus, the cash traditionally held in the portfolio can be directed to stablecoins.

Best of all, stable coins can allow you to secure your crypto capital gains without being taxed. Indeed, to collect a capital gain in cryptocurrency (such as Bitcoin for example), you can convert it into a stable coin rather than recovering your earnings in euros. In fact, the capital gains realized during transactions involving the conversion of your crypto-currencies into national currency are currently taxed at the flat tax. If you stay in the Blockchain, you are not taxed. This practice, known to experienced active investors, therefore helps to delay and mitigate taxation.


Crypto-equity crowdfunding: another use of crypto currency

Finally, crypto-currencies have another function, more niche but just as important: the financing of projects by raising funds from people (individuals and institutional investors or business angels). You may be wondering: what is a cryptocurrency ICO? This is no more and no less than a cryptocurrency fundraiser.

Crypto-currencies can indeed also be used to finance companies via crypto-equity crowdfunding, crowdfunding in digital currencies. The process, which has grown significantly since 2014, consists of financing equity crowdfunding through virtual currency. This type of practice is referred to as an ICO or Initial Coin Offering. Several platforms offer this solution, such as Swarm for example.


WHAT MAKES A CRYPTO-CURRENCY VALUE?

Why cryptocurrency is going down? Why is a cryptocurrency falling? How does a cryptocurrency increase in value? Find out what are the factors that influence crypto prices.


Confidence in virtual currency

First, as with any currency, virtual or real, the founding element is trust. People need to trust cryptocurrencies in general and trust a particular cryptocurrency, but that is not impossible - far from it. During the Greek crisis, some massively bought Bitcoin, a currency that inspired them more confidence than that, real and regulated, which suffered the full brunt of the monetary crisis and had to face galloping inflation.

In addition, in order to flourish and see its price rise, a cryptocurrency needs a supportive regulatory framework and a benevolent approach from regulators. On September 26, 2019, Bitcoin jumped 42%, from around $ 7,000 to over $ 10,000, after Xi Jinping's statements about the potential of Blockchain technology, which he called a "major breakthrough" for innovation independent of basic technologies ”. The 3rd highest daily rise in Bitcoin is therefore largely due to China's pro-Blockchain policy. In its wake, other cryptocurrencies adopted a bullish movement. China, by praising the underlying technology of Bitcoin, gave a strong buy signal to market participants who saw in the Chinese President's statements a clear desire to allow the development, if not the acceleration of cryptos, this which naturally boosted the entire sector.

More recently, at the start of 2021, it was the sudden appearance of the single word "Bitcoin" in Elon Musk's Twitter biography that caused the price of digital currency to soar, shortly before the billionaire whimsical announces having invested 1.5 billion dollars in Bitcoin and offers Tesla customers to buy their cars with the most famous crypto currencies. The boss of SpaceX and Tesla poses as a true influencer and ambassador of Bitcoin, helping to create a feeling of confidence in this cryptocurrency in particular, but also in cryptocurrency in general. Elon Musk has indeed also provided support to Dogecoin -DOGE-.

Note, however, that Elon Musk's exits also have the opposite effect depending on the content of the remarks made by the boss of Tesla. Thus, on May 13, the latter finally returned to the possibility of buying a Tesla in Bitcoins. The May crypto crash followed shortly after this statement. On June 4, 2021, bitcoin lost as much as 8% after Elon Musk tweeted suggesting a potential break with the first cryptocurrency by posting a heartbroken emoji and a reference to a popular song.

Whoever establishes himself as a true cryptocurrency guru significantly varies prices according to his tweets which have a direct consequence on the confidence of investors in a particular currency.


The number of cryptocurrency users

What also makes the value of a virtual currency is the size of its network and the number of people who use it all over the world.

The more users a cryptocurrency has, the more its value increases, which means the price of the token goes up.

Two essential factors will push people to buy a virtual currency: the penetration rate in the real economy (that is to say the ease with which one can buy goods and services in real life by paying with said crypto). currency) and the prospect of positioning itself in a crypto-asset while achieving a relatively large capital gain.

Speculation is still the main driver of the development of cryptocurrencies and their prices vary considerably depending on the appreciation of traders who think they will make money easily or not on a particular token, creating bubbles as in 2017-2018. . Intrinsic value doesn't really matter much. And the situation is very likely to continue as long as demand in the real economy remains relatively weak.


The growing democratization of virtual currencies is boosting the price of cryptos

The democratization of virtual currencies reflects the growing confidence of the general public in this type of asset. Individuals will now be able to pay for more purchases of goods and services via virtual currencies with their Paypal account as we have seen previously or with the future Facebook token, the Diem, which will make it possible to pay for purchases on the marketplace of famous social media.

Governments and central banks are also showing more inclination to adopt virtual currencies with an effort made on the regulation of cryptocurrencies and the emergence of digital central bank currencies. Finally, the financial markets also seem to be making room for cryptos. Many brokers now offer to invest in virtual currencies. Several large investment banks have a unit dedicated to crypto assets, and more and more traditional funds and hedge funds are positioning themselves in crypto assets. Last notable event: Coinbase, the U.S. crypto exchange platform went public in April 2021.

HOW TO INVEST IN THE CRYPTO CURRENCY?

In January 2020, a research study revealed that 74% of those surveyed were aware of cryptos as a means payment (13% are familiar with how it works) and the proportion of people who would be ready to pay for their purchases if they were accepted everywhere is close to 20%.

It must be said that according to a study carried out in April 2019 by the crypto exchange BitFlyer, two thirds of the 10,000 people surveyed believe that cryptocurrencies will still be there in ten years. However, barely a tenth of those surveyed bet on the use of cryptos as a currency in the future.

Are you one of the many people who do not know how to buy cryptocurrency but you don’t miss the urge and don’t know how? Find here our explanations and advice on how to position yourself in crypto currency.

Two ways to buy your Cryptocurrency 


There are two ways to get crypto currencies:

  • by selling a good or service and demanding payment in the cryptocurrency of your choice;
  • by converting "classic" currencies (euro, dollar, etc.) into encrypted currency.

Binance, Bitstamp, Poloniex, Coinbase ..etc, make it possible to convert any currency into Bitcoins quite easily, or even into other altcoins.

To convert your Dollar or Euros into Bitcoins, you must signup on an exchange platform by providing an electronic copy of identity document and a recent invoice (gas, electricity, internet) to prove your address.

Choose your crypto currency exchange platform or virtual currency broker

Cryptocurrency exchange platforms like Coinbase, Bitpanda and Binance allow you to acquire and trade active crypto directly, without going through derivatives.

To avoid scams and to see more clearly in the offer of crypto-currency brokers,  law have set up a new specific regime governing these service providers on digital assets. Since December 2020, financial regulators have established new rules and laws so as that brokers will be able to offer crypto-asset custody services or access to crypto-assets or the purchase / sale of crypto-assets against currencies having legal tender, must be registered. with the financial market policeman who will ensure the reliability of the service provider. So any actor who has not registered may end up on the blacklists.

In addition, an optional authorization can also be requested by the PSAN which, after having obtained it, will have the right to be able to canvass new customers.


Create a cryptocurrency wallet

Regardless of how you obtain it, you will need to create a "wallet" in order to hold your change.

A crypto wallet is an address in the form of a sequence of numbers accessed by a password. You can create a Bitcoin address and password for yourself for free and quite simply on a dedicated platform like Binance.com that supports several currencies.

Finally, to pay with cryptocurrency (or receive payment in cryptocurrency), a broker is necessary. You will have the choice between:

  • a trading platform similar to a broker;
  • software to download.

Please note, these brokers usually charge commissions. We also cannot recommend enough that you choose your broker carefully, as many of them have already gone bankrupt.

Also watch out for scams of all kinds that flourish on the web and "brokers" who refuse to return the sums held in your account.


How to trade cryptocurrency

All over the world, new initiatives are developing to invest in the cryptocurrency market. Thus, the New York Stock Exchange, announced in August 2018, the creation of the "Bakkt" platform by the Intercontinental Exchange (ICE), parent company of the New York Stock Exchange (NYSE), which makes it possible to buy, sell and store Bitcoins. But the United States is also seeing the creation of trust companies specializing in crypto currencies such as LLC and ITbit, two companies which, in addition to meeting the requirements of the New York State Department in terms of capitalization, reserves, compliance, protection of consumers and cyber-security, also provide guarantees of computer storage systems and cold storage vault systems for Bitcoin holdings of the famous GABI fund. In addition, several US banks are taking a keen interest in virtual currencies, such as JP Morgan who launched the JP Morgan Bitcoin Trading Desk a few years ago.

In Europe and Asia, individuals who want to position themselves on the crypto-currency market can turn to a specialized online broker who offers virtual currency trading via CFD-type derivatives. For example, eToro.com allows you to trade Bitcoin -BTC-, Ethereum -ETH-, Ripple -XRP-, Bitcoin Cash -BCH-, and Cardano -ADA-.  Binance.com allows you to trade Bitcoin, Ripple, Bitcoin Cash, Litecoin -LTC-, Ethereum, Litecoin and many other altcoins. You will also be limited in terms of leverage. Indeed, a CFD on cypto-actives cannot have a leverage greater than two. Recall that 89.4% of retail traders lose money according to the Study of results of retail investors on CFD and Forex trading based on the results obtained by nearly 15,000 retail traders from 2009 to 2013. The study also points out that the financial brokers who markets this type of CFD must be approved..

How To Invest In The Cryptocurrency

6 TIPS FOR INVESTING IN THE CRYPTO CURRENCY

1. Understanding Blockchain Technology

Before investing in this type of currency, make absolutely sure that you understand this innovation and especially the technology behind it. It ultimately comes down to fully studying the Blockchain technology from which crypto currencies originate. Also, and above all, pay attention to the details that differentiate currencies from one another: the programming language, the blockchain validation system, governance, the currency's ability to adapt to an order of magnitude change of demand for example.

2. Take into consideration the token expansion limit

The unit of cryptocurrency is called a token. The number of tokens created can be limited, as is the case with Bitcoin which will be limited to 21 million Bitcoins in circulation, making the product relatively rare, which of course contributes to its value. But a cryptocurrency can also follow a deflationary pattern. In this case, the quantity of money in circulation is unlimited, which could over time encourage the stagnation (or even decrease) of its price.

3. Check the transparency of virtual currency

Favor a cryptocurrency with a website with clearly identified investors and developers, a presentation of the project, possibly a roadmap indicating the planned technological advances. If none of this is accessible, beware, you could invest in a Ponzi scheme.

4. Stay informed on cryptocurrency websites

To be up to date in this ultra-niche and ultra-geek field, and therefore to ensure an investment under the best conditions by having all the information on the targeted asset, it is better to look for the information where it is found, that is to say on the web! Many cryptocurrencies offer their own websites, but broaden your search to community websites such as Reddit or Slack which will allow you to publish, consult articles, discuss and share issues and opinions. The Bitcointalk forum fulfills the same role but is exclusively devoted to cryptocurrencies (not just Bitcoin because it has a dedicated altcoins section).

5. Learn about the quality of virtual currency developers and their funding

What makes the success of a cryptocurrency above all is the quality of the developers who are at the origin of this innovation. So check their experience, training, work history, etc. Do they form a close-knit team with good rapport? You can verify that their interactions on the Slack or Reddit community are both cordial and constructive.

Finally, you absolutely have to know who pays the developers: a company or a private equity fund outside of cryptocurrency? Are developers paid with their cryptocurrency? The important thing is to be able to assess the motivation of the developers and possible conflicts of interest.

6. Limit your investments in these volatile, high-risk assets

One of the major characteristics of cryptocurrencies is volatility. Thus, the value of a crypto currency, i.e. its price, can rise or fall, very quickly, in unpredictable ways. In question: its young economy, its unusual nature and especially its sometimes illiquid markets. And the number of platforms further adds to the lack of liquidity of the tokens. Thus, at the end of 2019, "a volume of 143 bitcoins is enough to vary its price by 1% on the Bitstamp platform. Coinbase and Kraken are much more liquid, and it is respectively 456 and 672 bitcoins that must be exchanged to move the price of the crypto leader by 1%.

Investing in crypto currency is therefore not recommended for cautious profiles with a strong aversion to risk. For others, think all the same not to keep a large part of your savings in Bitcoin or others which remain high-risk assets. There is a real risk of losing a large part of the money invested in this way.

If the adventure of cryptocurrency tempts you, go for it with money that you are willing to lose. It must be an investment representing a very small portion of your financial assets. Cryptocurrency is more of an experiment to try if you feel like it than a reasoned investment made with a view to diversification. Wanting to make money really fast is never a good reason to invest in cryptocurrency.