“we take pleasure in speculating”

While bitcoin has been in sharp decline since its record high in early November, Jean-Martial Lefranc deciphers the news of the main cryptocurrency. For the co-author of the book “Bitcoin for Dummies”, bitcoin remains a great way to get a foothold in the world of cryptocurrencies.

Bitcoin is on a roller coaster. After curling around 69,000 dollars, it has just dropped below the 55,000 dollar threshold this Friday. Despite everything, for Jean-Martial, co-author of the book Bitcoin for Dummies, bitcoin has not finished surprising investors.

How useful do you think bitcoin is? Is it a means of payment or a means of savings?

It all depends on the country. Bitcoin may be a means of exchange or payment in a setting where banks would be deficient. This is the case in countries where the local currency is very weak, such as Honduras, in countries which are subject to international sanctions or which monitor their citizens very closely (like China). In Western democracies, it is more of a savings tool. But what is interesting is the “fun” aspect of bitcoin. We enjoy speculating and to follow course variations that are spectacular. It’s like a thrill ride, it provides emotions. In my opinion, this largely explains the success of bitcoin.

So bitcoin should be taken as something fun more than a real way to invest?

I think the first benefit of bitcoin today is its fun aspect and the fact that it allows people to be interested in cryptocurrencies. You have to agree to say that it’s a pleasure investment, even if in my opinion it’s not such a risky investment either than that in the medium term. The more people you have interested in bitcoin, the more its value goes up. The higher it rises, the more interest around bitcoin increases. It’s a virtuous circle.

Bitcoin: what is it used for on a daily basis?

After hitting a historic low ($69,044 on November 10, 2021), bitcoin is now trading below $55,000. Is it time to sell everything?

It’s not really a question of timing but rather of exposure. If you have invested 80% of your wealth in bitcoins, you may want to sell. But if you have 3% of wealth in it, it is better to keep it and see where it will go in two or three years. Personally, i don’t think bitcoin has peaked, this will continue to rise significantly in the coming years.

Is bitcoin dead?

How can these significant fluctuations be explained?

The fluctuation effect has several origins. First of all there is a very strong network effect, which causes all movements to be amplified because people who have them exchange a lot with each other. The second thing is that the market is not very transparent. When Elon Musk announces that he will sell 10% of his Tesla shares, everyone knows. We know why the price fluctuates. When large accounts, called whales (whales, these accounts that have 1,000 bitcoins or more) sell for millions of dollars worth of bitcoin, there is no prior announcement. Note, however, that the network effect is more powerful than the “whales” effect. There are a large number of small carriers who are going to have very quick buying or selling reactions depending on the price.

The limited number of bitcoins (20,999,999.977 units) also affects its value?

Indeed, the design of bitcoin, with a limited money supply, comes into play. There are a lot of bitcoins that have been lost or are getting lost because people no longer have access to their keys or wallets. There would be 20% of bitcoin’s mass that is never in motion. Even beyond the initial limitation, the loss of bitcoins makes cryptocurrency rarer and therefore more expensive.

Bitcoin: do not touch your Livret A to buy it!

How to “good” buy bitcoin if you are a beginner?

I think you have to maintain a balanced heritage, not put everything in bitcoin. You have to be careful, as in all types of investment. You have to play what you are ready to lose, but above all be patient. You also have to find a good platform to buy from.

Is it too late to buy bitcoin?

No, not if the objective is medium or long term. The best way to get interested in cryptocurrencies is to have some. You can buy it at any time to get into the bath. It is clear that all the people who have been waiting for sharp declines lately continue to wait.

Bitcoin: secure sites for trading in our exclusive comparison

Should we move towards other cryptocurrencies today?

It all depends on your profile. If you are really savvy and you understand what this or that coin can bring, it can be interesting to position yourself and bet very early on another cryptocurrency. It stays a risky bet. For people who just want to have fun and have some crypto, it’s hard to choose anything other than bitcoin. Anyway, the correlation between bitcoin and the rest of the crypto market is still very strong. Bitcoin remains, by far, the cryptocurrency with the strongest notoriety.

The comparison of platforms to buy bitcoin

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