Is Bitcoin the future of money or finance fad?

Like many people I had heard the furore around Bitcoin via word of mouth from a rather enthusiastic friend of mine.

It all sounded a bit too technical and to be honest, too good to be true, so my first instinct was to nod, smile and dismiss it.

But having been subject to the same passionate sales pitch a second and third time I decided to see what all of the fuss was about.

First of all what exactly is Bitcoin? In simple terms it is a new type of money but it is not backed by a bank or ruling authority.

Instead transactions take place on the internet via a network and are recorded on a public ledger called a blockchain.

The concept is that payments can be made directly between two parties without an intermediary.

Still with me? If not it really doesn’t matter. While I am sure it is an appealing concept for many not to have banks interfere with their money what really has people going gaga over Bitcoin is its investment potential.

You buy Bitcoin using normal currency, pounds, dollars, euros, etc. and while there are certain ways to spend it directly its true attraction is to simply buy it low and sell it high like a stock.

The numbers are hard to ignore. In recent months the gains have been nothing short of astronomical.

There have been many peaks and troughs since its inception in 2009 when it was nothing more than an experiment among a small online community.

But let’s just take 2017 as a case in point.

At the beginning of the year a single Bitcoin was worth around $970 (£728).

But last month its value soared past the $10,000 (£7,496) milestone which naturally captured the attention of the mainstream media, particularly in America.

That’s an increase of more than 1,000 per cent in less than 12 months.

You can do any sum you want but the bottom line is anyone who owned Bitcoin at the start of the year is rubbing their hands now and contemplating early retirement while sceptics are thinking ‘why didn’t I invest?’

And it hasn’t stopped there, further landmarks and glass ceilings have since been surpassed, including the £10,000 barrier in the UK.

At the time of writing one Bitcoin is worth circa £13,000 ($17,000).

People with substantial amounts invested are already looking ahead to what might be in 2018 and pricing up their own tropical islands.

Of course, these are not random increases.

Spikes are usually prompted by major developments such as backing from a heavyweight financial institution.

While announcements around improvements to the technology or even its mere presence in the news, can all provoke a flurry of investment driving the value skyward.

As with any investment, knowledge is power.

But it is not all sunshine and speedboats. Naturally there is a downside.

Ironically, the first drawback is in the very thing that makes Bitcoin unique. No backing from the banks means – for the time-being at least – no regulation and no protection for the consumer.

Notoriously, in 2014, Japanese-based exchanged Mt. Gox went bankrupt at time when it was handling 70 per cent of the world’s Bitcoin transactions.

Millions of pounds worth of customer investment went with it.

While one criticism of the currency is the claim it is predominantly used for criminal activity ranging from purchasing drugs to funding terrorism.

Although the counterargument to that has been that ‘normal’ money is not exactly free from exploitation and fraud.

Another reservation is that the opportunity for a quick profit has created an incredibly volatile market with the occasional dramatic price plummet which is not for the faint-hearted investor.

But the major warning from those predicting Bitcoin’s doom is that it is a bubble which will simply burst.

And yet for every prophecy that it will crash and burn comes an announcement of another big backer taking it seriously giving further credence to its legitimacy.

Some industry commentators now say it rivals Gold as a storage of wealth.

Having weighed up the pros and cons, I’ve decided to put my money where my mouth is and invest a non-insignificant amount in Bitcoin.

It is surprisingly easy as well you can do it on a smartphone with a free app.

The key thing is it is an amount I am prepared to lose, but at the same time it is a sum that if the current rate of growth continues, will likely reap enough profit for a nice holiday or two by this time next year.

Ultimately financial experts remain divided as to whether Bitcoin is the currency of the future or merely another 'Ponzi' scheme.

Personally I'm willing to pay to find out.