Digital currency is used just like traditional bill-and-coin currency for purchases and online payments, but it's also considered a commodity, just like silver or gold. That means it's just as vulnerable to market fluctuations as any other commodity or stock would be. We aren't pointing this out to warn people away from making cryptocurrency investments, but to make it clear the market can move up and down—and, as is the nature of a young and active commodity—it can sometimes do so quite wildly. It's best to take a longer “big picture” view of your investment, as opposed to letting a momentary drop in value send you into a panic.

Digital currency coins are encrypted to keep them secure—but there's a potential drawback there. This coding identifies the currency itself, but not its owner. Whoever holds the coin's encryption code becomes its owner, and there's nothing in the coin's coding that says it belongs specifically to you—or to anyone else. This built-in anonymity feature means when a coin is stolen, it's gone—and you have little to no recourse in getting it back.

Finally, the saddest one, cryptocurrency can be worthless, investor could drop off; the overall effects of world economies could become so severe as to affect cryptocurrency value—even with safeguards in place, extreme factors could have an effect.