1. Volatility: Cryptocurrencies are highly volatile and can experience sudden drastic swings in price, making them a high-risk investment.
2. Lack of Regulation: Cryptocurrencies are not regulated by any governmental agencies, and as a result they are open to manipulation and fraud.
3. Scams: cryptocurrency scams such as pump-and-dump schemes and Ponzi schemes are common and can cause investors to lose all or part of their investment.
4. Security: Cryptocurrency transactions are irreversible, and if an investor’s private keys are stolen, then their funds are lost forever.
5. Tax Implications: Tax implications for cryptocurrencies vary from country to country and are complicated due to the decentralized nature of the asset.