Bitcoin has had a hectic year, with prices spiking and high-profile thefts keeping it in headlines. Being cautious around the cryptocurrency might be understandable, but experts defend it as a viable investment.
Last August, bitcoin traded at around $230. One year on and the price has more than doubled to nearly $580. Not forgetting, the price spiked to over $760 in June before coming back down steepily. That kind of volatility would make some investors wary.
Also, the price of bitcoin (BTC) received a shock earlier in August as a result of the high profile hack of the exchange platform Bitfinex, where around $70million worth of bitcoins were stolen from the exchange. The cybertheft led to the accounts of all customers on the exchange receiving a haircut of 36 percent.
Despite concerns over volatility and security, many industry experts have a positive outlook for bitcoin.
"We always advise our investors to consider the fundamentals, but regardless of the temporary shocks, such as the Bitfinex one or the MtGox [hack in 2014], the reasons to buy BTC have remained the same," Anatoliy Knyazev, co-founder of investment company Exante, told CNBC via email.
"If you were bullish last year, and we were and enjoyed the rally from $200 to $700, than you should be bullish today."
However, Knyazev did acknowledge some investors may be concerned about security.
"If the hacks make you consider how safe your coins really are, perhaps consider reviewing your broker [and] check if the account is government secure, as the state insurance secures all deposits of up to 20,000 euro ($22,600) at Exante."
There's also a lot of faith that is helping to support cryptocurrencies such as bitcoin, according to Charles Hayter, chief executive and founder of digital currency comparison website CryptoCompare.
"Currency and bitcoin, in this sense, is about faith, and this faith is unerring for hard line libertarians, no matter how many hacks and scandals," he told CNBC in an email.
"Cryptocurrency has two key things going for it: lower transaction fees and opening up new realms of business through micro-transactions and synergies with the Internet of Things. Crypto and blockchain will do to finance what the steam engine did for the industrial revolution. It's not a question of if you will be using a cryptocurrency, it's a question of how and when."
In June, Chris Burniske, a blockchain analyst and products lead at investment manager ARK Invest, told CNBC he considered bitcoin to be a safe-haven asset. Despite the volatility and the cybertheft, he still stands by this view.
"The way in which it's a safe-haven asset is that it's so differentiated from the other assets. It doesn't move in tandem with them," he told CNBC in a phone interview on August 16th.
"Bitcoin provides a good option for a small percentage of someone's portfolio to park their money in a place that's completely uncorrelated to the rest of the capital market."
Part of the problem, according to Burniske, is that the Bitfinex hack, in which nearly 120,000 bitcoins worth around $70 million were stolen following a security breach, has tarred bitcoin's image.
"Bitcoin is only a safe-haven asset so far as it is stored and secured properly. A lot of interest has come to the space, and not all positive interest, since the Bitfinex hack which is definitely unfortunate," he said.
"Bitfinex's security protocols were not sufficient to keep the hacker out, but nonetheless bitcoin and bitcoin-blockchain remain a secure endeavour."
Investors who are considering investing in bitcoin need to survey the service provider landscape to decide how they want to access and secure their bitcoins, Burniske suggested.
"If a user wants to control 100 percent the way in which they access their bitcoin, there are hardware wallet providers, like Ledger, KeepKey and TREZOR," he said. "What those companies do is [provide investors with] a physical piece of hardware that you have to have in order to move bitcoin. It typically employs two-factor verification and a multi-frequency set-up. So that's extremely secure and you have 100 percent autonomy over your funds."
He also recommended GDAX and Bitstamp as reputable exchanges because they store most of their customers' bitcoins in cold storage, which is not connected to the internet and would require someone to physically break in and steal. They're also insured, so customers' accounts would be paid back in the event of a hack.
ARK Invest does not have any holdings in GDAX or Bitstamp. Burniske added that he stores the majority of his cryptocurrency with Coinbase.
There are other concerns to think about before investing in bitcoin. Bram de Hass, managing partner at Schildpad & De Haas Investments, said his two biggest reasons for not investing in it are competition from other cryptocurrencies like Ethereum and problems with tax.
"There are a number of other interesting second-generation cryptocurrencies and, before doubling down on bitcoin, I'd certainly consider a basket of strong contenders with attractive differentiating features," he told CNBC via email.
"Another major concern that could keep me from investing in bitcoin is unknowns regarding tax treatment when you buy, sell or hold Bitcoin. It is very difficult to make sound investments when the rules aren't clear but the game is underway."
Despite these concerns, bitcoin and the cryptocurrency space could be an exciting sector.
"Like any new industry, the world of crypto is a wild west frontier with its fair share of failed experiments and bad actors," said Hayter. "It's only through this phase of experimentation and evolution that lessons are learned and practical solutions put in place. Regulation to protect consumers will be important, but too soon and it could snuff out the opportunity."