The bitcoin digital currency is on a roll this year, rising more than 54 times its Jan. 1 value to close at $730 Friday.
Does that mean investors should jump on the bandwagon?
Raoul Pal, a former hedge-fund manager and founder of the Global Macro Investor, a macroeconomic research service, recommends that investors treat the bitcoin like a lottery ticket, according to
The Wall Street Journal.
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He acknowledges the bitcoin may ultimately be worthless. But he also sees a possibility that it will take over "at least part of gold's traditional role as a store of value," the paper says.
If that happens, the bitcoin could surge to hundreds of times its current price, given the limited supply of bitcoins. The bitcoin system was designed to allow a total of only 21 million coins.
Larry Neal, a professor emeritus of economics at the University of Illinois, is more skeptical. The bitcoin represents a symbol of investors' struggle for return, he maintains, according to The Journal.
"Where's the backing that would persuade random strangers to accept this?" he said of the currency.
Even bitcoin proponents recommend that users and investors exercise caution.
"It’s very much still an experimental currency, and it should be considered a high-risk environment for consumers and investors at the moment," Patrick Murck, general counsel for the Bitcoin Foundation, which promotes the currency, said in a Senate hearing last week,
The New York Times reports.
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