Alexander Bottema is a middle-aged computer programmer in Massachusetts. On the surface—a normal guy. However, he recently did something extraordinary.

“I’m not a billionaire yet,” Bottema told Business Insider. “But my capital has grown by a factor of more than one hundred since I sold all my stocks and liquidated my savings in order to buy bitcoins in 2013.”

That’s right—he bet it all on bitcoin. And so far, he’s won. Big time.

Alexander is enjoying a ride on a one-of-a-kind investment rocket ship. The digital currency has outperformed pretty much everything. Ever.

Even Dutch tulips in the 17th century didn’t go up this much, this fast.

When Alexander wagered his lifesavings, one bitcoin was worth $30. Today it is worth over $6,400.

While we can all be happy for Alexander’s good fortune, it would be a mistake to assume he was wise in his decision-making.

Process vs. Outcome

If you found out your financial advisor doubled your money overnight, but did so by wagering your life savings on a coin flip, would you laud their brilliance or fire them?

Point is: returns mean very little without also considering risk.

Some risks are directly measurable, i.e. the volatility of a security.

Others are what we might call, “invisible risks.”

There is no downside volatility to measure if someone wins a single coin flip bet. However, that does not negate the ex-ante risk that originally lurked in the background. The advisor could have lost the coin flip, resulting in grave consequences.

To find sustainable success as an investor, it’s important we try to judge investment merits not just by recent results. Short-term results can be deceptive. Noise masquerades as skill or insight.

Process is what counts. Eventually, a bad process will yield a bad overall outcome for the same reason Steve Wynn will beat you if you take him on enough times at one of his blackjack tables.

Part of a good process is setting yourself up to be what Nassim Nicholas Taleb calls ‘antifragile.’ You can’t win if you don’t stay in the game.

We’re all going to eventually be wrong sometimes. When we are, it’s important we don’t pay too high a penalty.

You don’t hear much now about people who lost big money trying to get the crypto movement off the ground twenty years ago. But those stories are out there.

Gambling vs. Investing

Betting it all on bitcoin is just that—a bet.

Gamblers make bets. They expose capital to randomness, or even negatively skewed odds. They focus on what may go right, hoping for a positive outcome.

Bitcoin is a new category, which makes it inherently speculative. Unlike a dividend-paying stock, there are no time-tested formulas to gauge its intrinsic value.

True investors play a patient, deliberative game, that stacks the odds in their favor. They only put capital at risk based on carefully crafted insights. They focus on what may go wrong and maintain a margin of safety.

Sophisticated venture capitalists embrace high-risk situations, but they still qualify as ‘investors’ as long as they properly manage their overall exposure. The first rule of thumb is to never, ever bet it all on a single deal.

A shrewd VC tilts probability in their favor by spreading out their risk, knowing they can afford to lose their entire sum in eight out of ten deals, provided one deal treads water, while another ends up a homerun.

Personally, I think that’s the proper mindset for crypto-currency investments. It’s a new terrain. Like many VC deals, there is a lot of upside potential, but also great uncertainty.

Hence, I advise clients who want to pursue the category to park only a sleeve of their portfolio in it, spreading allocations across several emerging forms of digital currency.

It is unclear if the category will endure, and if it does—who the long-term winner will be. It may be the currency Alexander presently owns, or something entirely different.

Also published on RealClearMarkets. Reprinted with permission. 

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date indicated and may change as subsequent conditions vary.