1. Price Volatility: Cryptocurrency prices can be extremely volatile, making it a risky investment. The prices of cryptocurrencies can fluctuate drastically due to market sentiments and news about the technology, and as a result, investors can lose a lot of money quickly.
2. Security Risks: Cryptocurrency is not insured by the FDIC and there is no central authority or bank to back it up. As a result, if you lose your private keys or your funds are stolen, there is no way to get them back and you lose all the money in your cryptocurrency wallet.
3. Regulatory Risk: Cryptocurrencies are largely unregulated, so governments can intervene at any time and change the rules. This puts investors at risk if their coins become illegal or classified as a security, which could be subject to government regulation.
4. Hacking Risk: Since cryptocurrencies are stored electronically on the blockchain, hackers try to gain access to users’ digital wallets and steal their funds. This is a risk that all cryptocurrency investors need to be aware of.