Investing in Cryptocurrency: The Risks

I have seen plenty of articles, blogs and news stories recently on cryptocurrency, cryptocurrency mining and the bitcoin fork. I even have a personal friend who has hopped on the cryptocurrency bandwagon, if you will, and realized many more investors may be considering cryptocurrency for their own portfolios.

From what you may read and hear, cryptocurrency seems to have some potential. But is it the new currency that can eventually replace or co-exist alongside existing currencies? Or is it a designer currency destined to fail like a passing fad? (
The Risk of Investing in Cryptocurrency
Be warned, this is a hugely speculative investment. There are a host of cryptocoin vulnerabilities that you need to be aware of. Hackers have gained unauthorized access to digital wallets and cryptocurrency exchanges. As recently as 2016, more than $50 million in ether was stolen from investors in a fund known as the DAO.

Additionally, cryptocurrency market prices are often highly volatile. The DAO hack previously mentioned caused the price of the cryptocurrency ethereum to tumble, leading to a violent market correction. Such events can be notoriously hard to predict and following the pulse of the digital currency community can be a daunting task to any investor.

Trading and investing in cryptocurrency may have the potential for a big payday. But I can tell you from experience when you see such volatility, press coverage and your neighbors start giving you advice on when to buy and sell, it’s probably a good idea to pump the breaks.

Crypto investing and trading is a very new market. It requires specialized knowledge that may be inscrutable to the uninitiated. Rampant growth has led to volatility. And while it may seem attractive to invest in digital currencies, this brand new field does have some instability to consider before investing. As with any new investment, be sure the weigh the risk versus reward so you can make the right choice for your situation.