It's the summer of Bitcoin. The media, Twitter and blogosphere have been peppered with articles on whether cryptocurrencies will head higher or if it's just a giant delusional bubble.
Much of what is written has been close to idle speculation on what the future might hold. Thoughtful long-term perspective is rare. One article, though, shone through in my summer reading.
Viktor Shivets of investment bank Macquarie shared a perspective that makes his work my favourite Bitcoin article. He makes the important observation that money is not like other assets. Money is based on a promise and on trust.
The promise is that the central bank won't just randomly print more, for instance, New Zealand dollars – forcing a decline in its value. Similarly, as owners of New Zealand dollars, we trust the Reserve Bank won't do this, so we are comfortable keeping our money in the bank and using those dollars as a medium of exchange – a benchmark for the value of the goods and services we buy every day.
The 2008 global financial crisis rocked people's confidence and trust in that system. Confidence was not helped by the extensive programme of quantitative easing undertaken by central banks around the world. This meant more and more "dollars" were created in an attempt to save the global economy.
Printing more dollars risks making those currencies less valuable and leading to inflation.
The fact cryptocurrencies like Bitcoin can't be created on a whim by a central bank and take time and expense to produce means, according to Shivets: "They already reflect the essence of money better than existing money."
He sees a long term role for a cryptocurrency independent of global central banks and immune from the influence of politics.
There is a "but". One way of illustrating it is by comparing the rise of crypto currencies to the history of the automobile industry.
This is less of a stretch than it appears. In 1900 there were 2000 car makers globally. Despite the fact cars changed the world, making the horse and cart virtually extinct, it was impossible to have predicted which automobile manufacturers would survive.
By 1920, those 2000 producers had narrowed down to 200. Today it's well below 50.
This is precisely the challenge facing investors in cryptocurrencies in 2018. Even if we accept the role of an independent cryptocurrency, and believe the blockchain technology underpinning them is a car-like step forward, it is all but impossible to predict the winners.
Like the automobile industry of 1900, there are over 1000 crypto currencies in existence today. The least brave prediction I have ever made is that things won't end well for all of them!
There lies the dilemma for genuine investors interested in diversifying currency exposure away from central banks and towards cryptocurrencies. It's simply too early to pick the winners and the costs of backing the wrong cryptocurrency could be disastrous.
To finish with the words of Mr Shivets, and using the automobile manufacturing analogy, "we are still closer to the 1900s than the 1920s."
Our view is the same. There is genuine promise in cryptocurrencies and in blockchain technology but right now this is a speculators' market, not ready for serious investors.
I suspect by the summer of 2038, spanning the 20 years of the automobile example, the winners of the cryptocurrency wars will have well and truly emerged and this will be a mainstream currency.
I wonder what articles Twitter will be swamped with then…flying cars?