Bitcoin: “we are happy to speculate”

While bitcoin has fallen dramatically from its record high in early November, Jean-Martial Lefranc cracks the news for the major cryptocurrency. For the co-author of the book “Bitcoin for Dummies”, bitcoin is still a great way to gain a foothold in the world of cryptocurrencies.

Bitcoin is a roller coaster. After having approached $ 69,000, it just came back below the $ 55,000 threshold on 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 can be a means of exchange or payment in a context where banks are deficient. This is the case in countries where the local currency is very weak, such as Honduras, in countries that are subject to international sanctions or that closely monitor their citizens (such as China). In western democracies, it is more of a savings tool. But what’s interesting is the “fun” aspect of bitcoin. We are happy to speculate and follow the price changes that are spectacular. It is like an exciting journey, it brings emotions. In my opinion, this largely explains the success of bitcoin.

Therefore, should Bitcoin be seen as something fun rather than a real way to invest?

I think the first benefit of bitcoin today is its joy and the fact that it allows people to get interested in cryptocurrencies. We must agree to say that it is a pleasure investment, although in my opinion it is not such a risky investment in the medium term. The more people you have interested in bitcoin, the more its value will increase. The higher it goes, the more interest increases in bitcoin. It is a virtuous circle.

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

After hitting an all-time threshold ($ 69,044 on Nov 10, 2021), bitcoin is now trading below $ 55,000. Is it time to sell it all?

It is not really a matter of time, but rather of exposure. If you have invested 80% of your wealth in bitcoin, you may want to sell. But if you have 3% of the wealth in it, you better save it and see where it goes in two to three years. Personally, I don’t think Bitcoin has peaked, it will continue to rise significantly in the coming years.

Is Bitcoin Dead?

How to explain these large fluctuations?

The fluctuation effect has several origins. First of all, there is a very important network effect, which means that all movements are amplified because the 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 is going to sell 10% of his Tesla shares, everyone knows it. We know why the price fluctuates. When large accounts, called whales (whales, those accounts that have 1000 or more bitcoins) sell bitcoins worth millions of dollars, there is no prior announcement. However, keep in mind that the net effect is more powerful than the “whale” effect. There are a lot of small traders that will have very quick buy or sell reactions depending on the price.

Does the limited number of bitcoins (20,999,999,977 units) also affect their value?

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

Bitcoin: don’t touch your Livret A to buy it!

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

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

Is it too late to buy bitcoins?

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 them at any time to get into the bathroom. It is clear that all the people who have expected sharp falls in recent times are still waiting.

Bitcoin: safe sites to trade in our exclusive comparison

Should we move on to other cryptocurrencies now?

It all depends on your profile. If you are really smart and understand what this or that currency can contribute, it can be interesting to position yourself and bet very early on another cryptocurrency. It is still a risky bet. For people who just want to have fun and have some crypto, it is difficult to choose anything other than bitcoin. Either way, the correlation between bitcoin and the rest of the crypto market is still very strong. Bitcoin remains by far the most notorious cryptocurrency.

The comparison of platforms to buy bitcoins

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