Should you invest in cryptocurrencies?

These new digital currencies, fully dematerialized, have proven themselves as a major innovation in the world of finance over a decade. Indexed or not pegged to the dollar, they are issued by companies or groups of private users, unlike traditional currencies, whose domain is reserved for governments. Cryptocurrencies have appeared in thousands of new applications: in video games, on trading sites or in services. Thanks to them, you can now buy and sell goods (real or digital) or even borrow capital without going through banks. This new type of financial asset is linked to the new internet revolution: Web3.

New Eldorado…

“For the first time, we are giving digital objects a physical existence, making them unique through technologies such as ‘blockchain’, the computer protocol that allows the creation of these cryptocurrencies, explains Raphael Bloch, founding journalist for TheBigWhale, an independent media outlet specializing in the sector. We are just starting to talk about metaverses or NFTs, but in two or three years everyone will be using them, sometimes without even knowing it. We are still in the prehistory of many new applications. » An opportunity to make a good (financial) bet on the future?

The price explosion of the most famous of them, Bitcoin and Ethereum, during the health crisis has indeed been able to offer double-digit (or even triple-digit) returns. A market with a capitalization of almost $3,000 billion in November 2021. The equivalent of an entire CAC 40 or a giant Apple at its highest. Enough to attract more than 8% of French people claiming to have “cryptocurrencies” in their portfolio, while 30% plan to acquire them, according to a study by accounting firm KPMG published in February. New Eldorado for investors in search of profit?

Or a financial bubble?

Alas, many of these currencies (there are 19,000 of them!) have been heavily untwisted since May. Bitcoin, the first cryptocurrency to account for 50% of the market, after hitting a high of $69,000 in November 2021, has since dropped over 66%. “We are in a period of market stabilization, Analysis by Raphael Bloch. With inflation returning and key rates rising, major investors are moving away from tech stocks and cryptocurrencies to refocus on public debt financing, which is once again profitable and safe. The huge influx of liquidity over the past two years has led to an increase in the number of cryptocurrencies and projects using them. Naturally, all these projects are not strong enough, it’s a bit like the dot-com bubble of the 2000s. Therefore, the natural position would be to postpone any future projects.

” Not necessary, promoted by Clément Vardzala from the financial site Cryptoast. In terms of investment, it is in such difficult times that opportunities are created. Today, however, the decline may well last for months or even years. » Therefore, caution is required. “As with any investment, the most important element remains risk awareness, education and awareness. But positioning yourself in this market today, even if you know how it works, means making sure you don’t miss your understanding of a whole part of the world of tomorrow. »

The argument, for some, and even with guarantees, seems insufficient. Because the current use of cryptocurrencies is largely speculative, even if in some runaway inflationary countries like Argentina, indexing these currencies against the dollar makes them a safe haven, albeit a very risky one. “Better go to the casino, at least we’re having a good time!” economist Michel Santi, a member of the Finance Watch association. Cryptocurrencies are a bit like the trading of the poor, people who want to gamble without being able to enter the stock market or invest in real estate. Cryptocurrency is not based on any basis: at least the company is behind the action. »

Crypto, not green

Another major barrier to investment is the environmental argument. To be “released” (or “drilled”), these assets use the processing power of computers running at full capacity. Named Operation proof of work (proof of work), extremely energy intensive and partly responsible for the global shortage of modern semiconductors. A sign of the awareness of players in this new economy is that Ethereum, the second cryptocurrency in the sector, has just announced that next August they will adopt a much less energy-intensive mode of creation: proof of stake (proof of stake).proof of stake). Enough evidence?

“Nah, slice Michelle Santi. We have to wait until all this is much better regulated, and some players will still accept very dubious financial flows. On the other hand, blockchain is a revolutionary technology. This allows transactions to be tracked and protected and will change our lives, in particular with the advent of the digital euro, a cashless currency that will replace our euros tomorrow and allow central banks to respond much more effectively in the event of a financial crisis. a crisis. . » With or without risk, watching these cryptocurrencies seems to be the consensus. “Make no mistake warns Raphael Bloch, in all these crypto projects, the Google of tomorrow. And Bitcoin, now 13 years old, is a mature technology. She’s here to last. »