<prompt> Human: The founder of Ethereum the second biggest cryptoasset put it succinctly: There are some good ideas, there are a lot of very bad ideas, and theres a lot of very, very bad ideas. And quite a few scams as well.Let me address those in reverse order.1 - The scams. There are many. The biggest by a mile is Bitconnect, which is a pyramid scheme and not even trying to hide it. Its going to implode very soon. Theres nothing to say here but stay away.There are also enormous red flags that the biggest exchange Bitfinex is insolvent and its substitute for dollars USDTTether is literally printing money and doesnt have the dollars to back it up. If you decide to take a step into this space, stay as far away from these as possible. The only safe exchange IMO is coinbase.Edit: Another user brought this up, its a good idea to mention. There is only one true Bitcoin, but because its software anyone can copy that software and make their own version of Bitcoin. This has become very popular in the past few months, there is now Bitcoin Cash, Bitcoin Gold and many other Bitcoin this or that. This isnt a scam per se as many legitimate currencies have been created through this process since the dawn of cryptocurrency, but naming them Bitcoin X is becoming commonplace. Understand that when you are buying Bitcoin Gold or whatever you are NOT buying Bitcoin. They have as much to do with each other as American and Canadian Dollars - the only similarity is the name.2 - The very, very bad ideas. I would put 95 of the assets created in the last 12 months under this heading. And youll never be able to tell which is which. Bitcoin is already volatile enough, so messing with anything thats not already established is taking far too much of a risk. Ive been doing this for years and I dont even touch anything that hasnt existed for at least a year. That doesnt mean everything older than that is in the clear. Because of...3 - The very bad ideas. There are some established assets that I wouldnt touch with a ten foot pole. RippleXRP being the one that stands out the most. The economics of the system are simply unacceptable for any sort of investment into it. Its not even worth going into detail.4 - The few good ideas. The first rule of crypto is never invest more than you can afford to lose. Because even though there some of the genuinely good ideas - Bitcoin and Ethereum are worth billions for a reason - none of this stuff is proven yet. I hope we can get to the point where enough people understand the technicalities and economics of the systems enough to intelligently discuss them and take them seriously as a new asset class. And Im willing to engage anyone on any questions. I invest in this stuff because I understand what Im investing in, not because Im chasing a get rich quick scheme. But I know were not there yet in traditional investment circles. So of course no discussion about crypto is complete without addressing the elephant in the room.Is it a bubble? Emphatically YES. All the elements are there. Its obvious to almost everyone at this point. But that doesnt necessarily mean you shouldnt consider investing in a small amount. Bubbles tend to form around technologies that change the world - railroads, telecom, the internet etc. This space is getting bubbly because a lot of very smart people see the potential and are investing considerable amounts into it. But I will be the first person to tell you that at some point in the future there will be a reckoning and the scams and bad ideas will implode, and it will likely drag down the good ideas with them to some degree. How much is unknown, but the implosion is a near certainty.But unlike housing, dotcoms and everyones favorite tulip bulbs - there are some unusual economic dynamics at play here. For one thing, theres nothing else to peg this stuff to where you can definitely say were in the late stages of a bubble. People have been calling it a bubble for years because we have no idea what a reasonable real world value for this stuff is at this stage. Because nothing like it has ever existed before. Its substantially different enough from existing assets that you cant directly compare them. I know this time is different sounds like typical bubble talk - but these are literally as different from stocks as bonds and commodities are. Theyre still bound by the same economic principles as everything else, but theyre a different type of asset. And within the broader context of crypto there are multiple different subtypes of cryptoassets as well.Another important dynamic that upsets the typical bubble paradigm is that the more expensive a cryptocurrency it is, the more secure - and thus valuable it is. That sounds bizarre, I know - but thats how the economic incentives work out. Its an abstract network of value. Its virtual but its still real and has intrinsic value - but ultimately the system is worth what the world collectively decides its worth. Security obviously plays a large role in that. If it was a stock youd be able to say its fundamentally overvalued if its PE is too high. But its not a stock. Thats not to say that it cant be overvalued. But because high valuation creates a positive feedback loop, you cant just look at the massive returns and pricing and declare it a bubble on that alone.Right now bitcoin is worth 150 billion and altogether crypto is 250 billion. The dotcom bubble peaked at 8 trillion and took years to get to that point. We could still be in the very early stages of the bubble and a conservative in crypto standards investment might still be worth quite a bit more than it is today on the other side of the implosion. The dotcom bubble gave us idiocy like pets.com, but the stuff that survived like google did go on to change the world. Another important thing to understand is that were not dealing with companies here - theyre open source, self sustaining decentralized networks. Bitcoin and Ethereum cant go bankrupt any more than the internet itself can go bankrupt. As long as theres at least one node in the world and there are hundreds of thousands and growing - they will continue to exist. There isnt really a plausible scenario anymore whether your investment in them goes to zero, just as you could say the same for gold. Itll always be worth something. Whether or not itll outperform stocks - literally no one can tell you that. The only really clear thing about it right now that theyre highly uncorrelated to other assets. On its own its risky but as a part of your portfolio a small investment in bitcoin can actually reduce your risk through diversification. A 1 allocation wont derail your future in the worst case scenario and could potentially have enormous upside in the best case scenario - particularly if your other assets have a bad streak. Thats the only case Ill make to a crowd as conservative and rightfully so as rpersonalfinance.Get your emergency fund straight first, have a properly balanced and allocated portfolio of traditional investments first - but dont write bitcoincrypto off because you dont understand it and the risk is difficult to quantify. Lots of very smart people are doing incredible work in this field right now and even though there will be a massive implosion at some point in the future - when the smoke clears the good ideas will stick around, and I think its unusually easy to spot the winners and the losers here.But in either case - dont invest in anything you dont understand. Learn about it first, then make up your own mind. At the very least if youre into finance and economics its fascinating stuff. If you cant take the time to do a little research on how it works and why its a good idea, then you shouldnt be putting your hard earned money into it.  <response>: This is a great topic. Really good information that should be read by everyone. I typically hear 2 sides of the story which is either 1Bitcoin is the future! It isnt a bubble! Invest in it! and 2 Its a gimmick, a huge bubble, and will fail soon and everything you put into it wont be worth anything. This post illustrates well the nuance of the situation and how it isnt 1 or 2, but a shade of grey in-between. Yes, it is likely a pretty damn big bubble, but that doesnt mean it isnt a good investment and that doesnt mean that you are bound to lose all of your money in it either. 