Invest in Cryptocurrencies

The cryptocurrencies

Crypto-assets are a form of digital value based on cryptographic technologies and, for many projects, on blockchain-type infrastructures. These networks allow transactions to be recorded and validated according to rules defined by their protocol, without necessarily depending on a single central authority.

The blockchain, also called a “block chain,” is a digital ledger in which validated transactions are recorded chronologically. The cryptographic mechanisms and consensus systems used by each network help ensure data integrity and limit the possibilities for fraudulently altering already recorded transactions.

However, the methods for creating and issuing crypto-assets vary considerably from one project to another. Some protocols stipulate a maximum number of units that can be created, while others use different issuance mechanisms. Bitcoin, in particular, is an example of a crypto-asset whose protocol sets a limit of 21 million units.

These issuance mechanisms can help replicate certain economic characteristics associated with the scarcity of precious metals. However, they do not, in themselves, constitute a guarantee of stability or value. The price of a crypto-asset also depends on numerous factors, including its adoption, its utility, its technological environment, supply and demand, as well as the economic and regulatory context.

The blockchain technology

Blockchain is one of the fundamental technologies behind the development of Bitcoin and many other crypto-assets. It can be compared to a shared digital ledger, whose information is recorded and verified collectively by the participants of a distributed network operating on a peer-to-peer model.

Thanks to cryptographic mechanisms and validation rules specific to each network, blockchain makes it possible to maintain a consistent history of transactions and strengthen the integrity of the recorded data. Its use extends far beyond the realm of cryptocurrencies and can be applied to finance, traceability, digital certification, tokenization, and numerous decentralized services.

Investing in the cryptocurrency

Bitcoin was the first cryptocurrency to achieve widespread global adoption. Its concept was presented in 2008 by an individual or group using the pseudonym Satoshi Nakamoto, before the network’s launch in early 2009. Since then, its development has contributed to the emergence of an ecosystem encompassing thousands of cryptocurrencies with very different characteristics and uses.

The price of Bitcoin has seen particularly significant fluctuations since its inception. For example, it was trading around $972 in early January 2017, before reaching nearly $17,000 by the end of that year. This spectacular growth illustrates both the interest in this asset and the magnitude of the market’s volatility.

Unlike a stock or a bond, Bitcoin does not represent a claim on a company or a government and is not based on the financial performance of a traditional issuer. Its market value is primarily determined by supply and demand, adoption, perceived utility, market conditions, and numerous economic, technological, and regulatory factors. This configuration explains, in particular, the sometimes high levels of volatility observed in the market.

The crypto-asset ecosystem has since diversified considerably. Millions of users and investors worldwide hold, trade, or use various digital assets. However, the level of risk varies significantly depending on the projects, their technology, liquidity, market capitalization, and regulatory environment.

The end of 2017 also marked a significant milestone with the introduction of Bitcoin futures contracts by major regulated exchanges. These instruments allow professional investors to gain exposure to price fluctuations or implement hedging strategies. However, they are not “risk-free” products: futures contracts can lead to significant losses depending on market movements.