Bitcoin: the cryptocurrency that shakes the traditional financial markets

In less than a year, the Bitcoin soared to over $19,000 before undergoing a severe correction. An almost unprecedented performance in the history of the markets. Financial revolution or a simple bubble? Our analysis.

It’s the star of the moment. On the markets, one speaks “almost” only of Bitcoin, so much the cryptocurrency shows stratospheric performances.

Despite these fluctuations, the number of investors has increased considerably, to over 50 million users, while investment banks and funds have positioned themselves in the niche. Even economists have taken up the subject. But where does this cryptocurrency that unleashes passions come from, how does it work, is it secure, how far will it climb?

Bitcoin, what is it?

Bitcoin is not a stumbling block of change. It is a cryptocurrency, i.e., a “currency” that takes the form of an encrypted computer program.

This currency was launched in 2009 by a group of unknown hackers, hidden behind the pseudo “Satoshi Nakamoto.” The computer program is equivalent to the DNA of Bitcoin, which defines its technical characteristics and operating mode.

If not controlled and guaranteed by a central bank, Bitcoin is protected by blockchain technology. The “blockchain” is a kind of giant numerical account book that acts as a ledger. It lists and secures all operations performed with bitcoins.

Who uses Bitcoin?

There are mainly two types of investors. Individuals and institutions. The number of private users is estimated at 30 million, almost half of them in the United States. For most of them, it is primarily a speculative investment, to try to take advantage of the bullish wave.

On the other side, there are institutional investors, investment funds in particular, who are more discreet but are very present. These players want to position themselves on a new financial asset. On December 10, the Chicago Stock Exchange launched a futures contract on Bitcoin, while the French fund Tobam decided to offer its clients to invest in cryptocurrency.

Is it secure?

Investors and… hackers are coveting the explosion in the value of Bitcoin. For several months, attacks have multiplied, causing the closure of dozens of cryptomarket “exchanges,” platforms on which investors buy and sell Bitcoin.

A few days ago, the Youbit platform, the fourth largest operator in South Korea, closed its doors after being the victim of a new computer attack, attributed to North Korean hackers. Nor is the sector more exposed than others, such as industry or finance, which are also under attack from IT, even if there are calls for the crypto exchanges to be grouped in order to pool their costs and strengthen their protection system.

How high can it go?

That is the question that is agitating the markets. In December, Bitcoin had sessions with increases of over 30%. Since the beginning of the year, the Bitcoin price has increased more than 15-fold, from $900 to over $17,000, with a peak of $18,000.

Few financial assets have experienced such growth. Only a few stock market values and “penny stocks,” these values whose share is only worth a few cents, posted comparable increases.

Potentially, Bitcoin has no limits as long as demand increases. It could continue to climb in the coming weeks, especially if the futures contracts launched by the Chicago Stock Exchange give credibility to its financial normalization.