1. Security Risk: Digital currencies are volatile and highly vulnerable to hacking, as evidenced by the numerous examples of digital currency exchange hacks.
2. Regulatory Risk: Governments have not yet established consistent regulations for the digital currency industry, creating uncertainty and potential losses for investors.
3. Liquidity Risk: The digital currency market is still relatively small and illiquid, making it difficult to quickly sell a digital currency position.
4. Counterparty Risk: Investors are exposed to risk from the solvency of exchanges or other counterparties with whom they transact.
5. Volatility Risk: Prices of digital currencies can change rapidly, creating the potential for losses.