Not a day goes by I'm not asked this provocative question: Is Bitcoin a good investment? People also want to know if they should be putting money in other cryptocurrencies like Ethereum, Ripple or Zcash?
In a sphere as nascent as digital currencies, I am always realistic and measure my enthusiasm for the sector with a healthy dose of caution. Josh Brown, CEO of Ritholtz Wealth Management, wrote an excellent comment piece after he attended a recent crypto currency summit that succinctly condenses my views about wading into crypto.
"The rules for how things work in the crypto realm are being written in real time," he wrote. "We pick up a phrase or a bit of terminology, and we begin to use it authoritatively moments later - as though we'd been doing so our whole lives. We're hanging onto people's words who've become experts in a thing that didn't exist just a few years ago."
So how do we suss out the noise and focus on the useful information from reliable sources?
Welcome To Cryptocurrency Wonderland
It is no secret that traditional financial institutions and governments are resistant to new digital currencies. On a daily basis, I report on what a hard fork means and how new digital currencies are created. I explore what is pushing the prices of cryptocurrencies up and down. I am constantly asked which coin is worthy of investing in. Is Ripple, for example, the next big thing?
But there's a lot of infighting in the crypto community about which currencies are better and which will thrive going forward. Brown perfectly sums this up in his post
"The consensus still seems to be that Bitcoin is the one," he wrote. "The original Bitcoin people look down their noses at the Ethereum people. 'What's your problem, why do you need to do this?' they sneer, referring to ETH people as 'Eth-heads' in message boards, from what I'm told. Ethereum's fatal flaw as a bet on upside is that the amount of ETH will not be capped. Bitcoin will only ever have 21 million outstanding units, hence the scarcity bet being made now. With Ethereum, there isn't going to be scarcity. Which is why some people are saying its current price "makes no sense."
This week I am working from one of the Balearic Islands, the Spanish island of Ibiza, located about 100 miles east of Valencia in the Mediterranean. On Saturday evening a group of friends met for dinner, and one of our guests just happened to be a ex-Blackrock fund manager. It was inevitable that Bitcoin would come up in conversation, and this ex-fund manager grilled me on why digital currencies could be the future?
Over a bottle of rosé and pizza, I attempted to explain the emergence of blockchain technology which is credible and also being adopted by banks. I held forth on why it is the future and how Bitcoin (created from blockchain tech) by some unknown figure called Satoshi is the next big thing.
We discussed why digital money is not regulated yet and why Ethereum, Zcash, Litecoin and Bitcoin Cash differ.
This old-school ex-fund manager was polite throughout our conversation, only asking the occasional question. But then after three hours of chatting, he very bluntly said, "I don't buy it." Full stop. The end. His curt tone suggested there was no way to convince him otherwise.
I'd apparently wasted my breath over dinner explaining cryptocurrencies. He just wasn't buying into the whole digital assets phenomenon.
Going down the cryptocurrency rabbit hole
But cryptocurrency enthusiasts speak a whole different language and maintain optimism that's in stark contrast to that skepticism. Almost on a daily basis, I report on cryptocurrencies with genuine passion and love for the new technology. Ever since I first heard of Bitcoin in 2012 over drinks with Michael Parsons (a U.K.-based blockchain and Bitcoin advisor) at a wine bar called the Archers in Swiss Cottage, London, I have been obsessed.
Global traders, investors, engineers, thought leaders, hedge fund managers and fintech entrepreneurs are all attending crypto summits to parse out answers and separate the blind enthusiasm from the logical strategy.
Last week, I interviewed John Mcafee, one of the biggest crypto evangelists out there.
"This movement is unstoppable!" he told me.
Only time will tell who's right.
More of What's Trending on TheStreet: