Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and to control the creation of new units. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services.
There are a number of reasons why you should be careful about investing in cryptocurrencies. Here are five of the most important ones:
Cryptocurrencies are Volatile
Cryptocurrencies are incredibly volatile. The price of Bitcoin, for example, has ranged from a high of $19,511 in December 2017 to a low of $3,194 in January 2018. This means that if you invest in a cryptocurrency, you could lose a significant amount of money if the price drops.
Cryptocurrencies are Unregulated
Cryptocurrencies are not regulated by any government or financial institution. This means that there is no guarantee that your investment will be safe. Cryptocurrencies can be stolen by hackers and there is no way to get your money back if this happens.
Cryptocurrencies are Anonymous
Cryptocurrencies are anonymous, which means that it is difficult to track who is buying and selling them. This could make it difficult to recover your investment if something goes wrong.
Cryptocurrencies are Unstable
Cryptocurrencies are unstable and tend to fluctuate in price a lot. This means that you could make a lot of money if the price goes up, but you could also lose a lot of money if the price drops.
Cryptocurrencies are Risky
Cryptocurrencies are risky investments. They are highly volatile and there is no guarantee that you will get your money back. If you are looking for a safe investment, cryptocurrencies are not the right choice.