Guess what are the best- performing investments this year?

You may be surprised to learn that they are not the local lenders such as DBS Bank and OCBC Bank which are being snapped up like hot cakes by fund managers week after week on the local bourse.

And no, they are not the much-fancied e-commerce giants such as Facebook, Google, Tencent and Alibaba which have been grabbing headlines recently.

Instead, the honour goes to a handful of crypto-currencies - bitcoin and ethereum are the best-known examples - which are a mystery to many of us. As they say, reality can be stranger than fiction.

For instance, bitcoin has been skyrocketing for the better part of this year, topping US$2,000 (S$2,760) for the first time last month compared with US$967.60 at end-December.

If you think that this run-up by bitcoin is a quirk, you should consider what the crypto-currency has returned to investors since 2010.

Of course, with 20/20 hindsight, it is easy to kick ourselves for having missed out on what now seems like a sure-fire investment opportunity enjoying a rocket-like ascent.

Before we try to pin down the reasons for their phenomenal gains, let's find out more about them.

For the uninitiated, crypto-currencies such as ethereum and bitcoin are digital forms of money that live online and are embedded in complicated computer algorithms recording their movements.

An anonymous computer hacker known as Satoshi Nakamoto purportedly invented bitcoin in 2008.

He envisioned a "peer-to-peer cash system" allowing people to conduct business directly without using an outside institution such as a bank to facilitate payments.

It is quite a revolutionary idea: Cutting out the banks would mean an end to the billions of dollars in fees these institutions earn in their middleman role.

It would also spell the end of credit cards and debit cards.

If they ever become a fact of life, they may also make central banks redundant since no central bank can ever be in charge of crypto-currencies.

This makes such currencies very attractive, especially to investors who are distrustful of governments which direct central banks to print money in a profligate manner to finance their spendthrift habits.

Still, I wonder if this motivation has helped to create a huge bubble in crypto-currencies on a scale similar to the "tulip mania" in the 17th century, where a rising price sucks in ever more buyers who do not have the faintest idea what they are getting into. Back then, Dutch investors poured large sums into newly introduced tulips - sending the price of the flowers soaring, before crashing amid an oversupply.

One worry I have about crypto-currencies is - ironically - their heavy reliance on computer technology. This leaves investors prone to hackers exploiting flaws in a crypto-currency platform to gain access to a person's digital wallet. And unlike a real currency, it does not enjoy the backing of a government.

I felt that my misgivings were vindicated when Mt Gox, one of the biggest bitcoin exchanges, abruptly halted bitcoin withdrawals in February 2014 and closed shop, after claiming that more than US$460 million worth of bitcoins belonging to its customers had gone missing.

That dealt bitcoin a serious blow, which caused its price to plummet from over US$1,000 a coin to below US$200, before starting a fresh run-up from late February 2015.

Still, more and more people are getting into crypto-currencies. By some estimates, about US$80 billion worth of such currencies is floating around in global financial markets - a sum significant enough to warrant attention.

My most recent encounter with crypto-currencies came in a chance meeting with an old analyst friend, Carey, who works at a bank.

While we were chatting, I noticed that he kept stealing furtive looks at his mobile phone. It turned out that he had a small trading position in ethereum and he just could not take his eyes off the screen because the price kept going up even as we were talking.

Carey is not some wild-eyed speculator out to take risky bets in order to make a fast buck. Rather, he feels there is a chance that crypto-currencies may one day become mainstream so it would be smart to get exposure to them sooner rather than later.

While crypto-currencies may seem alien now, it is worth remembering that when personal computers built by Apple and other IT manufacturers were gaining in popularity 30 years ago, many people were sceptical that these gadgets would ever amount to anything significant.

But those who kept faith with Apple and held their shares long-term would have become multimillionaires.

Still, a word of caution is needed where investing in crypto-currencies is concerned. They are still in an early stage of development and their price swings can be a lot wilder than, say, stocks whose prices will usually move up and down with the business cycles.

Crypto-currencies have crashed in a big way in the past and there is every likelihood that this can happen again if, say, there is a recurrence of a calamity such as the 2014 Mt. Gox hack; those who lost their bitcoin hoard are still trying to get their money back even though the chance of success is slim.

So, if you want to invest in a crypto-currency, be sure not to dip into your emergency savings and use only your "play" money - the funds you can comfortably lose without threatening your overall financial health.

There are a few ways to get exposure to crypto-currencies. One way is to open an account with United States-headquartered Coinbase, a digital asset exchange which allows an investor to buy bitcoin, ethereum and a host of other crypto-currencies.

Carey, however, opted to invest in ethereum via a derivative product known as a contract for difference (CFD) using eToro, an online trading website.

This means that rather than owning ethereum directly, he buys a derivative product that tracks the price movements of the crypto-currency.

So, should I take the plunge like Carey did and plonk some "play" money into crypto-currencies? I haven't made up my mind yet. If all that is driving up their prices is just hype, I can afford to wait. What goes up must come down.