My thoughts on bitcoin and blockchain have not changed. To recap, I believe that cryptocurrencies are on a path to being a transformative development for currency and that blockchain will be transformative for all manner of business (or almost all manor of business). The potential gains in security and efficiency will be viewed a huge step forward.

But we're not there yet. Every now and then you see something about a theft or hack, there was one yesterday in South Korea. Anyone should expect plenty of setbacks on the way to transformative. And in those setbacks, there will be people who get financially destroyed which in no way changes what I believe the future holds but doesn't help anyone who had their $10,000 life savings that grew into a life-changing amount only to then be stolen or otherwise lost. These issues will get addressed but I have no idea when.

Transformative is the bull case. A couple of weeks ago I had a chance to visit with a thought leader (I believe him to be) in the crypto space and although I was a believer in the concept before that meeting, he was able to convince me all the more so that crypto and blockchain are real. But he did not change my mind that all of this great stuff can happen without bitcoin. The internet is alive and well without Netscape or AOL. For those who don't remember, they were the internet, AOL far more so than Netscape.

The bear case on the cryptocurrencies is that someone made up a currency that has no practical use that isn't tied to anything, has very little liquidity (very little of the "float" actually trades) and not only is insanely volatile for a currency, it is insanely volatile relative to any segment of the equity or commodity markets. Also, for now there is the susceptibility to hacking.

Arguably, the mania is still escalating as evidenced by Longfin (LFIN) which just went public a few days ago, bought a crypto-company with the IPO proceeds and went up 2000% in about ten minutes (slight hyperbole).

Part of the behavioral equation here is FOMO, watching other people make a lot of money. There is a high possibility of people left holding the bag. Bitcoin, if it actually survives, could easily drop to $4000, settle down and start down a path of functionality that could include steady, even if modest, growth. Such a sequence would probably be good for its viability but would decimate all the people who've gone all in.

For a little perspective, the Bitcoin mania is still just a tiny fraction of the tech bubble from 2000; tiny. But the willingness to speculate with relatively large sums and very little understanding is alive and well and that rarely ends well for the majority who engage in the behavior.

I stick by my idea of going in small. If it goes up from $18,000 to $400,000 and someone puts 1-2% of their portfolio in, they will end up with a life-changing piece of money but if they crap out they won't be ruined.