#FINANCIAL_LITERACY

Cryptocurrency is going mainstream. After nearly a decade as an alternative form of digital-only currency on the fringes, it’s now being embraced by some major financial institutions

• Bank of New York (BNY) MellonCorporation, the oldest bank in the nation, announced in February, 2021 that it will start holding, transferring, and issuing cryptocurrencies, including bitcoin. BNY Mellon will be the first big custody bank to accept cryptocurrency, which is becoming increasingly popular among investors. Custody banks oversee assets held by money managers, such as real estate and money in outside accounts. 

• Credit card company Mastercard also announced in February, 2021 that it will start supporting certain cryptocurrencies for payments. The credit card network says it uses a variety of partners to create crypto cards that allow people to transact using their cryptocurrencies. Mastercard does not allow cryptocurrency to pass directly through its network, but it says it will soon start working with some large banks to use cryptocurrency for payment more directly.

Good to know: Cryptocurrency is an open-source form of currency that allows users to exchange value without depending on a pre-existing physical currency, often referred to as fiat currency. While Bitcoin is the most widely held cryptocurrency, since its introduction in 2009, more than 2,000 types of cryptocurrency have emerged, including Ethereum, Litecoin, ZCoin, and Ripple. 

Cryptocurrency typically uses something called blockchain, or distributed ledger, software. That means the code produces an encrypted record of the value of each virtual coin and the transactions it’s involved in, distributing that record across numerous networks on the Internet. 

While the value of many cryptocurrencies is tied mostly to demand, which can make their value fluctuate widely, another type, called a stablecoin, is tied to an underlying asset such as gold or the U.S. dollar. 

Bitcoin reportedly reached a record high of $50,000  in mid-February, 2021. Until recently, big banks have been wary of cryptocurrencies and the potential risks and regulatory concerns that could accompany them. Keep in mind that cryptocurrencies can be volatile, meaning they’re subject to big swings up and down. 

Consumers can buy cryptocurrency through an exchange or an app, and then either hold on to it as an investment or use it for online transactions with other people or with businesses that accept it. Stash currently doesn’t offer the option to invest in cryptocurrencies. Stash does allow you to invest in companies that use or develop blockchain technology, through its ETFs.

Stash recommends the Stash Way when you’re investing, which includes regular investing, investing for the long term and diversification. You can check out Stash’s portfolio diversification analysis tool in the app to help you diversify. And remember, all investing involves risk, and you can lose money in the stock market.