WHAT IS THE CRYPTO CURRENCY FOR?
Virtual currency as a means of payment for the purchase of goods and services
What are the reasons for using cryptocurrency? Like any currency, cryptocurrencies enable the purchase of goods and services. Not being under the influence of a central authority and escaping any regulation, they have long been the preserve of illegal transactions (ransomware, drug trafficking, etc.) but they tend to get rid of their bad reputation by becoming democratizing and attracting a wider audience. Cryptocurrencies are increasingly used for legal transactions today.
Virtual currencies, like Bitcoin, can be used to buy many common consumer goods. For example, it is possible to buy with Bitcoins, computer equipment of course, but also food, jewelry, decorative objects, cultural products, etc. Overstock, a general merchant site, accepts payment in Bitcoins, just like Shopify. Paying for everyday goods with other cryptocurrencies is more difficult, but not impossible. The Ether, for example, could be used to buy works of art exhibited by young artists at La Compagnie (Paris X) in the spring of 2017. The virtual currency that wants to compete with Bitcoin has thus done, on this occasion, its entry into the real world.
Obviously, it is more difficult today to carry out a daily transaction in cryptocurrency than with the currency in the country where you live. Ditto for digital payments. However, cryptocurrencies could ultimately lower the cost of a digital transaction. And the financial and banking sector is watching these advances very closely. In the future, electronic payment based on cryptographic evidence may be the norm. Enough to embarrass the banks by forcing them to completely review the transaction model!
Cryptocurrency as a financial asset for investing
Cryptocurrencies must find their balance between means of payment and financial asset. Because it is indeed an asset on which investors have positioned themselves en masse in recent years. For many who have flocked to these new kind of financial assets, cryptocurrencies are first and foremost a potentially profitable investment.
However, are virtual currencies an investment like any other? What is certain is that digital alternative currencies can be a new kind of investment, while participating in the new digital economy. It is common to include crypto-currencies in the category of various goods and other atypical investments. This typology is relevant in the sense that it calls for prudence and to invest only a whole part of its capital in such assets.
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Crypto currency: what future for virtual currency?
Bitcoin was around $ 20,000 in December 2017 after a record year 2017 where the famous crypto currency saw its price multiplied by 15 in dollars. Even though this dramatic rise was accompanied by substantial volatility, we can understand the interest that virtual currencies can generate, capable of posting impressive performances which are matched only by their volatility. Although their situation has returned to normal since the second half of 2018, the increase in the volume of trading and the massive increase in the market capitalization of virtual currencies clearly indicates the interest of investors in these new financial assets.
Keep in mind, however, that buying crypto currencies is more or less investing in innovative technology. If the digital currency you have invested in becomes dominant (they all try with varying degrees of success to dethrone Bitcoin), you will have made a good deal. Ethereum remains the great challenger of Bitcoin with a market capitalization close to the most famous of the crypto currencies.
Note also that online brokers are starting to offer trading in cryptocurrencies such as Bitcoin, notably via CFDs.
The Intercontinental Exchange (ICE), parent company of the New York Stock Exchange (NYSE), the New York Stock Exchange, is at the origin of the “Bakkt” platform, specializing in Bitcoin and crypto-currencies, which allows 'buy, sell, spend and even store Bitcoins. Its Bitcoin futures are listed on a federally regulated market. An initiative that clearly reflects the interest of major financial players in cryptocurrencies.
Some don't even hesitate to compare cryptocurrencies to gold, considering that both are a safe haven. We can even go so far as to think that Bitcoin and other cryptodevi
ses is the digital gold of the younger generations who do not have the same relationship as the previous ones with the precious yellow metal.
Crypto-equity crowdfunding: another use of crypto currency
Finally, cryptocurrencies have another function, more niche but just as important: the financing of projects by raising funds from people (individuals and institutional investors or business angels). You may be asking yourself: what is a cryptocurrency ICO? It is no more and no less than a fundraising in cryptocurrency.
Crypto-currencies can indeed also be used to finance companies via crypto-equity crowdfunding, crowdfunding in virtual currencies. The process, which has developed widely since 2014, consists of financing equity crowdfunding through virtual currency. This type of practice is referred to as an ICO or Initial Coin Offering. Several platforms offer this solution, such as Swarm for example.
WHAT MAKES A CRYPTO-CURRENCY VALUE?
Why is a cryptocurrency going down? Why is a cryptocurrency falling? How does a cryptocurrency increase in value? Find out what are the factors that influence crypto prices.
Confidence in virtual currency
First, as with any currency, virtual or real, the founding element is trust. People need to trust cryptocurrency in general and trust a particular cryptocurrency, but that is not impossible - far from it. During the Greek crisis, some people massively bought Bitcoin, a currency that inspired them more confidence than the real and regulated one, which was hit hard by the monetary crisis and had to face galloping inflation.
In addition, in order to flourish and see its price rise, a cryptocurrency needs a favorable regulatory framework and a benevolent approach from regulators. On September 26, 2019, Bitcoin jumped 42%, from around $ 7,000 to over $ 10,000, after Xi Jinping's statements about the potential of Blockchain technology, which he called a "major breakthrough. for innovation independent of basic technologies ”. The 3rd highest daily rise in Bitcoin is therefore largely Chinese pro-Blockchain politics.
In its wake, other cryptocurrencies have adopted a bullish movement. China, by praising the underlying technology of Bitcoin, gave a strong buy signal to market participants who saw in the Chinese President's statements a clear desire to allow the development, if not the acceleration of cryptos, this which naturally boosted the entire sector.
The number of users of the crypto currency
What also makes the value of a virtual currency is the size of its network and the number of people who use it all over the world.
The more users a cryptocurrency has, the more its value increases, which means the price of the token goes up.
Two essential factors will push people to buy a virtual currency: the penetration rate in the real economy (i.e. the ease with which one can buy goods and services in real life by paying with said crypto currency) and the prospect of positioning itself in a crypto-asset while achieving a relatively large capital gain.
Speculation is still the main driver for the development of cryptocurrencies and their prices vary considerably depending on the appreciation of traders who think they will make money easily or not on a particular token, creating bubbles as in 2017-2018. . Intrinsic value doesn't really matter. And the situation is very likely to continue as long as demand in the real economy remains relatively weak.
HOW TO INVEST IN THE CRYPTO CURRENCY?
1 in 4 French people have already bought cryptocurrency. 1 in 3 French people intend to buy them according to the February 2018 study carried out by the Paypite Association. If 94% of over 60s do not intend to buy, according to the same study, a poll for “Les Echos” by Odoxa-Linxea in January 2018 indicated that a quarter of 18-24 year olds are considering to buy them, and 36% of them even think that they will one day replace the official currencies. According to a study carried out in April 2019 by the crypto exchange BitFlyer, two-thirds of 10,000 Europeans surveyed believe that cryptocurrencies will still be around ten years from now. However, barely a tenth of those surveyed bet on the use of cryptos as a currency in the future.
The Paypite study also tells us that 18% of French people do not know how to buy cryptocurrency. If you are not lacking the desire but do not know how to proceed, find here our explanations and advice for positioning yourself in crypto currency.
2 ways to buy your virtual currency