Do you have interest in owning bitcoins?

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Do you have interest in owning bitcoins?

The volatility of its price and the liquidity risk weighing on the virtual currency make it a very uncertain investment.

“I sold all my bitcoins .” Coming from a Google ex who had slammed the door of the giant of the web to devote himself entirely to the development of the payment system on which the famous virtual currency is based , the confidence has something to surprise or even scare a tad. Because “the network is about to experience a technical meltdown,” adds Mike Hearn, in a post posted on his blog in January 2016. “The mechanisms that should have prevented this from happening broke down.”

“You could almost say that bitcoin is a technological action”

So, must the holders of the electronic currency, like him, take their legs close to their necks? Questioned by the JDN, the expert does not venture on this ground. “It’s up to everyone to assess the risk they are taking with investments.” Should we instead go to a marketplace to trade euros against bitcoins? Gonzague Grandval, co-founder of the Paymium platform, where nearly 2 million euros were exchanged for bitcoins in January 2016, will not say the opposite. But from here to advise investors to invest in bitcoin, there is a step that the entrepreneur refuses to cross: for caution – “This is not our job” – but also because he is well aware the limits of bitcoin as an investment product. ” The technology is young, the market is small so subject to strong short-term variations, which may be the feast of some professionals but are not suitable for individuals who would like to place a large sum. You can lose or win 20 to 30% in a few days. ”

This high volatility, the Bank of France had pointed at the end of 2013, in a publication devoted to the dangers associated with the development of virtual currencies. At the time, the price of bitcoin peaked at over $ 1,100, against less than 400 in early February 2016.

The institution also raised other limitations on the use of bitcoin as an investment vehicle: its value is not backed by any real activity, is not representative of any underlying asset, and legal risk related to its status as an unregulated currency exists. “Bitcoin has little or no value for use by economic actors, beyond the marketing and advertising aspects, while exposing them to significant risks,” she concluded. Yoni Assia, CEO and co-founder of the eToro trading platform, which offers its clients the opportunity to invest in bitcoin since 2014, says it differently: “Investing in bitcoin shows a certain state of mind, it says something about who you are and what you believe in.

“Most Bitcoin investors do it because they believe in the new world that bitcoin represents”

The Banque de France has at least the merit of being more forthcoming than the retail banks. None of the two banking networks solicited by the JDN did indeed wish to speak on bitcoin. On the other hand, they were both ready to discuss the potential of the blockchain , the technology that underlies it, through the initiatives in which they participate on this theme: the Bizhackathon Blockchain for BNP Paribas and “innovation laboratory” “as well as the Blockchain consortium of R3 for BPCE. In the group that oversees the Caisse d’Epargne and Banque Populaire networks, it is even rumored that bitcoin does not have the characteristics of an investmentand a savings product.

Gonzague Grandval is, unsurprisingly, not of this opinion. “In the long run, this is an interesting investment,” loose Paymium confused. The latter even dares to compare with the stock market: “It could almost be said that bitcoin is a technological action: Owning a bitcoin means owning a twenty-one millionth bitcoin network.” As the creators of the virtual currency have decided, there will never be more than 21 million bitcoins in circulation.

A characteristic that makes according to the economist Philippe Herlin an investment comparable to … gold, whose quantity is also limited. No need to push much more the author of “The End of Banks?” for him to draw his fetish expression “digital gold”.

“Even in a severe crisis, you can keep your assets in bitcoins”

Especially since its parallel between the electronic currency and the precious metal does not stop there. “As with any other real asset, you only have to spend a portion of your savings on it, the more cautious can put in only a few percent, and those who are more risk-averse may put more in. One thing is certain. : those who like the risk do not have interest to go on the stock markets, down since the beginning of the year.It is better that they invest in bitcoin.

However, be careful not to push the analogy too far: the propensity of bitcoin to volatilize is, given its virtual character, higher than that of gold is a tangible asset. The memory of the bankruptcy of MtGox and the disappearance of some 200 000 bitcoins, equivalent to the then 51 million euros and subsequently recovered, as well as the problems of theft by hackers encountered by some sites, are there to recall this predisposition.

“No guarantee is offered on the future liquidity of the investment made”

Another advantage, however, of bitcoin, for Philippe Herlin: it is elusive. “A Bitcoin account is not housed in a bank, if a bankruptcy crisis occurs and all your savings are in the banking circuit, you can lose everything, even in a severe crisis you can keep Bitcoin holdings, like the paintings you bought, your home … Your life insurance can be leached. ”

Yes but … still need to be able to recover his bet. “There is no guarantee on the future liquidity of the investment made, which will depend on the future volume of market participants.”, Reads a 2014 publication of  the Autorité des marchés financiers . In other words, investors keep their bitcoins but can only exchange them for currency if others want to buy them.

In times when even those who built the ship leave it, this can be problematic.

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