Cryptocurrency: A Quick Guide to Usage and Risks

The tremendous surge in the price of certain cryptocurrencies such as Bitcoin have attracted the attention of the news media and many investors. Need a primer on bitcoin and other cryptocurrencies? Read on for quick answers to your questions.

Is there a role for cryptocurrencies in a well-balanced investment portfolio?

For investors, adding cryptocurrency exposure to their portfolio would mean reducing their allocation to traditional asset classes, such as stocks, bonds, and cash - the building blocks of a prudent, well-balanced investment program.

What are the five biggest risks of investing in cryptocurrencies?

1. Volatility. Cryptocurrency prices are subject to wide fluctuations.
2. Liquidity risk. Cryptocurrencies may be difficult to liquidate quickly at a reasonable price.
3. Lack of regulation. Cryptocurrencies are not overseen by any government or central bank.
4. Pricing variability. There is no central market for pricing.
5. Cybersecurity risks. Exchanges and platforms are subject to breaches.
   

Cryptocurrencies: The bottom line

We caution against speculating in Bitcoin and other cryptocurrencies. Unlike stocks and bonds, cryptocurrencies lack intrinsic economic value and generate no cash flows, such as interest payments or dividends.

This information has been provided by third party sources believed to be reliable by INTRUST Bank, N.A. ("INTRUST"). The information is general in nature and is not intended to be, and should not be construed as, legal or tax advice. In addition, the information is subject to change and although based upon information that INTRUST considers reliable, is not guaranteed as to accuracy or completeness. INTRUST makes no warranties with regard to the information or results obtained by its use and disclaims any liability arising out of your use of, or reliance on, the information. Past performance is no guarantee of future results.