Is it too early to invest in cryptocurrencies?

I think the short answer is no.

The reason I ask the question is that, if you are like me, and you are reading information about cryptocurrency investing from lots of different sources across the internet, you might be left with a slightly foggy feeling.

On one hand, you might read, that cryptocurrencies are a horrible investment because they are too volatile and that there are too many issues related to regulation and uncertainty about bitcoin being tied up in exchanges in China, etc., etc.

On the other hand, you might read about how people are making money trading cryptocurrencies, how companies are eager to fund cryptocurrency-related companies, and how even some financial planners and advisors are advocating the people include bitcoin in their retirement portfolio.

So it seems like if we believe the logic in the first paragraph, we should avoid investing in cryptocurrencies and instead look toward more traditional paths of building value, such as real estate or index funds.

But if we like the way the second paragraph sounds, maybe we should dive right in, hope for the best, and maybe emerge on the other side looking like we nailed the timing.

I don’t have an answer, but one of the things I hope to do with this project is figure out if this is the best time to be investing in cryptocurrencies. Just based on some early research, it looks like there are a handful of cryptocurrency systems that have moved beyond early adoption and are stable enough to not be super risky, but still fluctuating enough to provide some interesting trading swings.

While we’ve all probably read stories about early bitcoin users who were collecting coins for pennies on the dollar and using them to play poker online or for silly novelty uses, and then — almost overnight and accidentally, found themselves sitting on a pile of very valuable digital currency.

While those days are most likely over, the projected long-term growth of cryptocurrencies is still really promising. Even if the new crypto technologies and systems only half-deliver, there will still be a lot of value created.

One interesting aspect to investing in cryptocurrencies is that there is a sense of enabling new applications and uses that have a social benefit, like better a better remittance system, micropayments for content producers, or peer-to-peer microfinance. There’s also the upside of enhancing user privacy and improving cybersecurity.

It’s harder, for me anyway, to get excited about other investments in the same way, especially if we compare all of the upsides to other investments, like real estate or traditional securities.

Also, there’s that cliche piece of investing advice: The best time to invest was yesterday.

(In an upcoming post, we’ll look at the flip-side, and look at some of the risks involved with cryptocurrencies right now).