Cryptocurrency and its risks

A cryptocurrency is a digital asset, such as Bitcoin (created in 2009), recorded on a blockchain, a shared digital ledger maintained by a network of computers rather than a central bank. Some people use cryptocurrencies to make payments or treat them as investments, and since 2024 U.S. investors have been able to buy regulated funds that hold Bitcoin. Cryptocurrencies carry serious risks: their prices can swing wildly, sometimes losing more than half their value within months; they are not issued or backed by a government, and crypto holdings are generally not protected by FDIC deposit insurance the way bank deposits are; exchanges have failed or been hacked; lost passwords or keys can mean money is gone for good; and crypto is often used in scams, such as fake investment platforms and romance scams. Because of these risks, experts generally treat cryptocurrency as a high-risk, speculative investment and advise never investing more than you can afford to lose.

This explanation is AI-generated and can occasionally be wrong. 🚩 Report