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What is Cryptocurrency? Should I be investing in it?

March 01, 2024

Cryptocurrency (crypto) has been a hot topic in recent years. Maybe you’ve heard about it on the news, through social media, or that one person you know that tells you about their crypto investments every time you see them. You might be wondering what it is or if you should invest in it.

Cryptocurrency is a digital currency based on a network that is distributed across computers. Advantages of owning cryptocurrency include low cost and quick transfers between two parties and the decentralized nature of crypto networks, which means transactions aren’t subject to a single point of failure.1 Disadvantages of cryptocurrency are pricing volatility, the energy required to “mine” and the anonymity, which makes funding criminal activities easy.

Investing in cryptocurrencies directly is speculative and risky. Launched in 2008, bitcoin was the first cryptocurrency. On March 12, 2020, Bitcoin experienced a more than 39% decline in a single day. 2 For reference, the largest single-day decline in the S&P 500 was 20.5% on October 19, 1987 – nearly half that amount. 3

Bitcoin Exchange Traded Funds (ETFs) launched in January 2024. These ETFs make participating in the crypto craze a lot easier. In a statement after the approval of Bitcoin ETFs, the Securities and Exchange Commission (SEC) Chair, Gary Gensler, said, “While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse bitcoin. Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.” 4

If you’re interested in the technology, but not cryptocurrency specifically, we’ve got good news for you. You are likely exposed to the blockchain technology behind cryptocurrency within your investment portfolios. Many of the Magnificent 7 stocks are investing in blockchain technology and experts believe that blockchain technology can be of use to multiple industries outside of cryptocurrency including supply chains, and processes such as online voting and crowdfunding. Financial institutions like JPMorgan Chase & Co. are using blockchain technology to lower transaction costs by streamlining payment processing. 5

We are proponents of diversification, meaning investing across different asset classes, sectors, countries and companies. We also believe creating good saving habits and having a solid financial plan is more important to achieving your financial goals than chasing the next “it” investment.


Cryptocurrency Explained With Pros and Cons for Investment (investopedia.com)

Bitcoin’s price history: 2009 to 2024 | Bankrate

3 Biggest Stock Market Crashes In US History | Bankrate

4 SEC.gov | Statement on the Approval of Spot Bitcoin Exchange-Traded Products

5 Cryptocurrency Explained With Pros and Cons for Investment (investopedia.com)


A cryptocurrency is a digital or virtual currency that uses cryptography for security. A defining feature of a cryptocurrency is that it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation. Because cryptocurrencies are virtual and do not have a central repository, a digital cryptocurrency balance can be wiped out by a computer crash if a backup copy of the holdings does not exist. Since prices are based on supply and demand, the rate at which a cryptocurrency can be exchanged for another currency can fluctuate widely. The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Capital Analysts or Lincoln Investment. The material presented is provided for informational purposes only. Past performance is no guarantee of future results. No person or system can predict the market. There is no guarantee that any strategies discussed will result in a positive outcome. All investing involves risk and no investment strategy can guarantee a profit or protect against loss, including the potential loss of principal. Inflation is the rise in the prices of goods and services, as happens when spending increases relative to the supply of goods on the market. S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the US from a broad range of industries whose collective performance mirrors the overall stock market. The NASDAQ is an index that tracks the cumulative results on a market capitalization basis of all stocks trading in the NASDAQ system. The Dow Jones Industrial Average is a widely watched index of 30 American stocks thought to represent the pulse of the American economy and markets. Investors cannot invest directly in an index. Diversification does not guarantee a profit or protect against a loss. Information on taxes is provided for educational purposes only and is not intended to be tax advice. You should speak to a tax professional concerning your specific situation. When you click on the link provided in this email, you are visiting an independent, third-party website. The Lincoln Investment Companies makes no representation as to the completeness or accuracy of information provided at the site. Nor are we liable for any direct or indirect technical or system issues or consequences arising out of your access to or use of any third-party site. When you access this site, you assume total responsibility for your use of the site you are visiting.