Bitcoin and other crypto currencies: the pitfalls to avoid :

TIPS - Despite the multiple risks that hang over bitcoin, a YouGov study shows that the French are seduced by this highly profitable investment (for now). Here are some pitfalls to avoid.

"It's decided, I'm investing my savings in bitcoin, it's the currency of the future!" This sentence has already been heard at least once in recent months. "No offense to Nabilla, we can not invest in bitcoin eyes closed," blames Renaud Lifchitz, blockchain expert and member of the association "Le Cercle du Coin". On his Snapchat account, the reality TV star has recently touted the merits of bitcoin, "the new currency is developing." Resulting in a response from the Autorité des marchés financiers (AMF), which reminded the starlet of the dangers associated with this high-risk, unregulated and ultra-speculative investment.

Bitcoin, which was worth only a few cents in 2009, saw its value be multiplied by fifteen last year: between January and December 2017, its price rose from 650 euros per unit to nearly 20,000 euros, before plunging back to 10,000 euros and stabilize around 13,000 euros at the beginning of the year. Figures that have something to turn their heads, but must not forget an essential principle: it is an extremely risky investment!

"When you hear stories of people taking out loans or mortgaging their homes to buy cryptocurrencies, it's totally against the big rule of thumb: invest only what you might be willing to lose. People may end up ruined, for a potential gain that is not even proven, "said Renaud Lifchitz.

Above all, do not go headlong

Before you rush, it is important to take the time to learn the techniques and financial tools. "It takes six months to train properly," says Renaud Lifchitz, "knowing what a buy in the market, a short-term order, a short sale, that sort of thing. culture to understand the project we are investing in, as well as the tools we will use to buy or sell.There are popular books to learn how the stock market or forex works (the abbreviation for FOReign Exchange, which means foreign exchange market or even currency market, editor's note). "

Do not buy when value climbs

At first glance, this may seem logical, but it is more prudent to invest when the value of a virtual currency has dropped, not when it increases. "Overall, the best strategy is to buy and keep your cryptocurrencies for a long time, for several months or even years, and sell them, advises Renaud Lifchitz." First, it's less stressful. less expensive in transaction fees The more we look at the variations every day, the more we do exchanges to try to make a move, the more we risk losing money.It's the same as when you play at the casino."

Forget the bitcoin, it's already too late

There are usually four cycles in the financial news: the time of the creators, the time of the insiders, the time of the media and finally the time of the general public and the social networks. "We generally consider that we must invest in the first two times and sell, to profit from his gains, on the last two, says Renaud Lifchitz.When a financial news comes in the media or on social networks, as we currently sees it with bitcoin, it is that in general the good vein is passed.This is when the creators and insiders, in other words the big investors, will start to disinvest for to pluck the coming public, to say it cynically. "

Today, it is a bit late to invest in bitcoin, says our expert, who recommends instead to invest in virtual currencies with higher potential. "There are hundreds of cryptocurrencies today, so if you want to compare them, you can go to the CoinMarketCap site, which lists almost all of them, but if there were only one to quote, in my humble opinion is the ethereum Why, because it is getting mature, there is a strong team behind with a track record already laid out and, above all, ethereum is not just a cryptocurrency, there are plenty of 'business applications, for banks, insurance, and even for electronic voting.'

Be careful, you will pay taxes on your earnings

The regulation around cryptocurrencies is more and more strict, whether on the declaration, the taxation, or even, in some countries on the prohibition of exchange or possession. "In France, there is the obligation to declare accounts abroad and the profits are taxable." The spokesman for the government said Wednesday, January 11 during a trip to Lyon, that 'There was no reason that the flat tax - or single flat tax - wanted by Emmanuel Macron does not apply to cryptocurrencies,' says Renaud Lifchitz.

Beware of ads on social networks

"Buy bitcoin, it's time!" Bitcoin ads are legion on social networks, including Twitter and Facebook. "They are in fact intermediaries," says Renaud Lifchitz, "There are two risks: on the one hand, it can be a scam, you risk losing your money. are honest, these intermediaries will take you relatively high fees compared to a live purchase. " Similarly, avoid online betting platforms or binary options, which often abuse the credulity of individuals. "In any case, it is not a good business to go through these intermediaries, it is better to buy on real platforms of official exchanges where there is very little cost when buying or reselling."

In Europe, we find Bitstamp, which is the largest. There are also Kraken or Coinbase, who are based in the United States, or Binance, in Asia. It is also possible to buy virtual currencies to your neighbors. Through linking websites, you can find someone in your neighborhood or town who sells or buys, and make appointments. "The money is put into an escrow account and when the two players of the exchange have agreed, it is unlocked.It is relatively reliable, and rather reassuring for the user." The most known platform is LocalBitcoins. Fees are a bit higher than on traditional platforms. As prices change very quickly, they are not always updated as quickly in the physical world. Be careful !

Never reveal the size of your wallet

When you start to own a large sum, better to avoid greed and be robbed, do not shout loudly on all roofs. Obviously, it is more difficult to steal cryptocurrency than physical money, since it is not visible. Recently, in Turkey, a rich bitcoin holder was kidnapped. The thugs wanted to extort his password. 

Do not leave big amounts on trading platforms

If you have large amounts of bitcoin, do not leave them on a trading platform, says Renaud Lifchitz. Because it can be hacked or shut down overnight, as has been seen recently and repeatedly. The example of the Mtgox trading platform, which went bankrupt overnight, is quite telling. 

If you have large amounts of bitcoin, do not leave them on a trading platform, says Renaud Lifchitz. Because it can be hacked or shut down overnight, as has been seen recently and repeatedly. The example of the Mtgox trading platform, which went bankrupt overnight, is quite telling.

"All the cryptocurrencies that were stored have evaporated, investors have lost everything, says the expert.There are several devices to store its virtual currency.Either application portfolios, on computer or smartphone.This requires, of course, to put a strong password. " One of the best known tools is called Jaxx, it is compatible with all operating systems. You can also use a secure USB key, so-called cold wallets. The advantage is that the system is not connected to the Internet. This avoids the risk of hacking or theft. The French company Ledger has marketed a product of this type.