Cryptocurrency Investing: “Okay, I’m ready to get started…but how do I do that?” »

Now that you’ve decided to invest in cryptocurrencies (yes, yes, this business is serious!) and an investment strategy has been determined (if you still have small doubts, read the second episode here), all you have to do is take a risk. And there floats anxiety … ” Yes but how ? ! “

I understand you. If there’s one criticism that can be directed at the sector, it’s the difficulty of accessing it. To simplify things and open this “new world” to as many people as possible, here is a user guide for the three main channels for investing in cryptocurrency.

1 – The easiest way to reveal yourself: Use Fintech

For those who are looking for simplicity, the best gateway to the crypto market is probably Fintech. More and more financial apps are offering you the ability to buy and sell cryptocurrencies directly from your smartphone.

The new bank revolution It has established itself as one of the friendliest cryptocurrencies on the market by offering a list of 60 cryptocurrencies to its customers for an exchange fee of still 2.5%. You can also schedule recurring purchases to automatically increase your investment every month.

Other platforms specialized in general trading such as eToro Soon she followed suit. But, by distinguishing itself thanks to features such as the effect of leverage that allows you to double your first bet (at your own risk) or “social trading” to replicate the positions of the most successful traders.

Finally, other more popular apps have recently developed a cipher view – like Lydia Which offers since the end of 2021 an “investment from 1 euro” and without commission.

To find out: If these other platforms and apps have the advantage of making buying cryptocurrency so easy, this simplicity is often paid for at hidden costs (high “spreads,” for example, the difference between the official market price and the market price). effective purchase price or withdrawal fee) and a range of options are limited to the largest market capitalization.

Moreover, these players generally only offer a simple bid and no real possession of the assets. In other words, it is generally impossible to withdraw cryptocurrencies from one platform to send them to another or put them in a personal wallet. So you depend on these tools.

2 – The traditional portal for cryptocurrency: go to the exchanges

You are not on your first try? Following in the footsteps of the crypto pioneers, you will instead opt for the traditional cryptocurrency markets. These places to exchange assets, known as “exchanges”, It is the historical gateway to this market and was born with Bitcoin in 2008. This is BinanceAnd FTXAnd Or Coinbase (listed on the stock market last year) to name a few of the most famous ones.

It is by far the safest way to buy cryptocurrency via bank transfer or with your credit card. After creating your account with a few clicks and verifying your identity, you will have access to a selection of several hundred cryptocurrencies as well as many derivative products (options and futures) with high leverage for a fee of less than 0, 5%.

Somewhat more complex, these platforms are rapidly evolving to adapt to the needs of their users and expand their service offerings. A new generation of innovative FinTech companies is already emerging, such as Swissborgwhich democratizes “savings in crypto” products and has just received PSAN approval (for service providers in digital assets) from funders Autorité des marchés (AMF).

3 – For the more curious users: Wallets and DeFi

Finally, the most curious users will be able to venture into the promising and rapidly expanding world of decentralized finance (or DeFi). Above all, you will need to equip yourself with a “Wallet”, a digital wallet to store your cryptocurrencies and familiarize yourself with Web3 (this new generation of the decentralized Internet, which is governed by blockchains and cryptocurrencies). Thanks to this wallet, you will have the possibility from a simple internet browser (Chrome for example) to access several decentralized applications (called “dApps”) for exchanging cryptocurrencies (for example Uniswap where Suchiswap) or lend or borrow cryptocurrencies (avi) or the use of derivative products (dYdX).

This wallet allows you to be the sole owner of your cryptocurrency. However, it makes you fully responsible for storing your assets and thus puts you at risk of irreversible loss in the event of password loss or hacking. So you no longer have a safety net.

Another major plus: buying cryptocurrency directly with Euros is a rare fact in DeFi (yes, yes, it’s an almost virtual country, sure, but in and of itself!). Although, note that MetamaskThe leading decentralized wallet company has recently integrated ApplePay into its interface.

There, too, developments are plentiful. Newcomers like XDefi Wallet It seeks to facilitate the purchase of cryptocurrencies by credit card but with much higher transaction fees than centralized platforms.

So, let’s sum up: There are three main channels for investing in cryptocurrencies, the basic financial principle of which remains “the easier access to the tool, the more expensive it is to access it.” Before choosing this or that solution for the purchase and sale of this new asset class, I recommend that you familiarize yourself with each of the levels of services and fees. Now it’s your turn!

Please note: This article does not constitute investment advice, it is simply an attempt to shed light on possible investment methods in the cryptocurrency sector. As a professional in this sector, I obviously have a fairly clear opinion on the matter, but the latter is only shared by me.

* Jean-Samuel Laurier is a professor at Sciences Po Paris, a partner at investment fund Shift Capital, a crypto-asset specialist and author of the Bitcoin and blockchain protocols Ed. Mardaga, 2019). Les Echos START is neither paid nor paid to publish this text.

Leave a Comment