Given that bitcoin, despite its first-mover advantage, has no intrinsic value like a stock or real estate or gold, it's only worth as much as people are willing to pay for it.

If bitcoin crashes like skeptics predict, people that own it will lose lots of money, says Eric Schiffer, CEO of Patriarch Organization, a digital investment company.

But massive bitcoin losses, which could be triggered by a government crackdown, a major hacking event or it being usurped by one of the nearly 1,500 other cryptocurrencies, won't cause a financial meltdown, says Redwood.