It’s the same barrier to investing in it: To hold
cryptocurrency, you have to accept that “if
your coin falls, you could lose a lot of money,”
says Francisco Alvarez-Evangelista, a research
associate at the Aite-Novarica Group, a financial
services analysis firm.
Many banks rely on the stable value of
currency in order to lend, borrow or earn
interest on money, but it’s not possible, at this
time, to do those things with cryptocurrency
in a way that’s as stable or safe as with
traditional currency.
And to spend your digital coin, you have to
accept the risk that its value could go up after
you spend it, since your transactions are based
on the real-world value of your coin as it exists
at that moment. For example, if the value of
your cryptocurrency doubled after you bought
a $5 sandwich, that means it effectively cost
you $10. But the value could also go down,
making previous purchases a good deal.
Another barrier to consider is that regulators
are still evaluating cryptocurrency fintechs.
The U.S. Securities and Exchange Commission
recently announced that it was going to
potentially sue Coinbase, one of the most
well-known exchange firms, for offering a
new lending product, and Coinbase has since
canceled the product launch.
Consumers should also know that using a
cryptocurrency debit card is considered a
taxable event by the Internal Revenue Service,
since the cardholder is technically selling
cryptocurrency as they make transactions
with their debit card. Some card issuers may
automatically generate 1099 forms for their