Investing in bitcoin

Cryptocurrencies are a high-risk asset class: volatility is huge and it's not uncommon to gain or lose 25% in a single day. If you are used to To invest in the stock market, you are used to volatility. However, crypto is even more volatile and risky. Who says high risks also says astronomical return potential. The price of YFI (which we talk about in the first part) has increased by 1000 in 2 months.

Imagine the number of new millionaires who emerged after buying this token at random... If you are starting out in crypto, the chances of buying the next YFI by chance are low, it is best to start with safe bets: Bitcoin and Ethereum.

Bitcoin, the king of cryptocurrencies

Much attacked, never equalled, it confirms more than ever its role as a digital gold. With a quantity of Bitcoin limited to 21M (of which 18M have already been mined), it is a deflationary asset like gold, but better. Easier to buy, store, sell, transparent and independent of states, Bitcoin has every chance of seeing its value continue to explode in the coming years. Thanks to halving (which divides the remuneration of miners by 2), the quantity of newly issued Bitcoin keeps falling. This makes it a great asset to hold for a strategy of wealth management diverse.

If its capitalization (price x number of Bitcoin in circulation) were to equal that of gold (9T$), each Bitcoin would be worth $500K. Institutional investors have started buying BTC in recent years, which highlights the seriousness that should be given to the project. Attention: the price of Bitcoin varies enormously, it is not uncommon to lose 15% in just one day.

Ethereum, the crown prince

The crypto created by Vitalik Buterin, Gavin Wood, and a few other engineers aims to enable the creation of a decentralized supercomputer. It allows you to create and launch decentralized applications and smart contracts.

The interest of the ETH token is simple: to interact with the ETH blockchain, you have to pay fees (gas). The more the network is used, the more ETH is in demand, and therefore more expensive. Unlike BTC, the quantity of ETH that will be issued is not yet fixed, so it is an inflationary asset (like our good old €).

ETH was the machine behind the 2017 ICO wave and is now behind that of the DeFi. Regularly criticized for its lack of performance, the ETH blockchain remains a safe bet.

A reasonable strategy would be to invest 5% of your net assets in cryptocurrency: 3% in BTC, 1% in ETH and 1% in very risky projects. Which ones to choose? Read on to find out.

Investing to fly to the moon

To make big profits in crypto, you have to forget the traditional way of analyzing a project. Cryptocurrency has its codes, its memes, its Twitter running gags and an extremely committed community. In 2021, DeFi projects are leading the way on the blockchain.

Here are 3 that we find particularly interesting:

• YFI: Created by Ande Cronje, yearn finance has become the biggest DeFi sensation. Its token will only be issued at 30K units. Its creator started by explaining that it had no value, it is worth more than $20K today. Indeed, this so-called “governance” token allows you to vote on the future of the protocol, and therefore de facto on the fees that will be distributed to the holders. The project is already very advanced, but the speed with which developers release new features, the amounts deposited in the protocol (>1B$) and the community make this project probably the most promising in DeFi.
• SNX: Synthetix is a protocol that allows speculation on any real asset. Do you think gold is going to fall? The protocol allows you to bet on this drop while staying in crypto, without intermediaries. The prices are given by an oracle called ChainLink (also an interesting DeFi project). The token is the gateway to be able to trade on the protocol. Now limited, it will eventually allow speculation on any asset, including shares or real estate.
• NXM: Nexus Mutual is MMA on the blockchain. The protocol allows anyone to insure themselves against the risk of hack/defect in a smart contract. To do this, he buys an insurance policy in NXM. On the other hand, investors provide ETH that is used as liquidity in the NXM pool. All amounts not reimbursed (30% on average) to insured persons go to the liquidity providers.

How do you buy your cryptos?

If you don't have cryptos yet, I recommend using Bitstamp. Coinbase is a bit nicer, but the transaction fees are higher. Make a transfer, buy BTC or ETH. If you want to speculate on DeFi, buy ETH instead. You can also take crypto courses on these platforms.

To buy DeFi tokens, send your tokens to Metamask and go to Uniswap. Some projects are also listed on Binance, which has the advantage of offering more pairs, liquidity and the possibility of placing several types of orders (limit, stoploss etc).

How do you store them?

If you have less than €1000 and don't want to make your life more complicated, you can leave your cryptos on an Exchange. If the exchange gets hacked (which has already happened to almost EVERYONE), you risk losing your funds.

If not, buy a Ledger. This hardware wallet made in France is the market leader. It allows you to store your cryptos securely and to interact with them via the Ledger Live application. You have the private key (the equivalent of the password). Nobody will be able to steal your cryptos without stealing your Ledger and finding its password, or stealing your private key. In case of loss, you can restore your account to a new Ledger with your “passphrase”. We strongly recommend this method.

In short

The opportunity cost of not investing in crypto in 2021 is huge... If you are willing and able to take risks, you know what you have to do.