Lincoln financial professional talks cryptocurrency risks

There are several types of cryptocurrency, the most popular being bitcoin.

LINCOLN, Neb. (KLKN) – The cryptocurrency bitcoin has been on a rollercoaster ride this year, with sharp drops and increases in value.

Local financial professional Tim Kulhanek, from Stonebridge Insurance and Wealth Management, says it’s important to know what cryptocurrency is before investing in it.

Cryptocurrency is a digital currency that’s created by using computers to “mine” unique tokens by solving complex math problems. There are several types of cryptocurrency, the most popular being bitcoin. Bitcoin and other cryptocurrencies are mostly unregulated, and many governments are concerned about taxes and their lack of control over the currencies.

Why has Bitcoin’s value been so unstable?

• Bitcoin’s value is essentially based on what people think it’s worth at the moment, and as we’ve seen with other elevated risk investments like stocks, that opinion can change rapidly
• Bitcoin isn’t like regular money; it’s called a decentralized currency because it’s created by so-called miners around the world

Is cryptocurrency too risky for the average investor?

• Cryptocurrencies are often considered risky investments because of their instability; unexpected changes can lead to sharp and sudden moves in price
• Experts advise investing only as much money as you’re prepared to lose

Kulhanek advises his clients to keep their cryptocurrency investment separate from their retirement funds. For those important savings, he suggests you have a balanced portfolio.