DENVER (MarketWatch) — Greg Denewiler almost seemed upset that the bitcoin hit a post-crash high of more than $205 on Tuesday.

“Everything I have been taught about finance says these things shouldn’t work,” the Denver money manager said of the controversial virtual currency.

“There’s no economic sense behind them,” he said with the kind of crustiness that can only come from years of investing experience. “You can’t value them.”

Denewiler is a chartered financial analyst and a value investor who typically runs the numbers before making an investment. He safely manages about $40 million from a downtown Denver office tower. Most of the accounts at Denewiler Capital Management are less than $500,000. And most customers are at or near retirement age, and do not need to be taking crazy risks like investing in bitcoins.

This, however, did not prevent Denewiler from bagging a few bitcoins.

Fast-Growing Investment Adviser

As dumb luck would have it, a friend coaxed Denewiler into investing in a “bitcoin miner” about a year and a half ago. A bitcoin miner is a computer server that is allowed to create bitcoins in exchange for processing bitcoin transactions.

If you don’t understand quite what that means, well, neither does Denewiler. His friend, an electrical engineer, bugged him and bugged him, swearing he could earn as much as 10% a month. Denewiler didn’t understand or believe it, but he finally gave up $600 just to appease his friend.

“I never expected to see that money again,” Denewiler said.

The bitcoin is a peer-to-peer electronic cash system that this one dude launched in 2009. His name was Satoshi Nakamoto, we are told, but no one knows whether he really exists.

The currency has since taken on a life of its own, like an open-source computer program, with multiple contributors around the world.

Unlike currencies issued by central banks, cryptographic code limits the number of bitcoins that can be minted. Nevertheless, the value of a single bitcoin has fluctuated wildly, from less than $5 last year to more than $205 on Tuesday, as priced by bitcoin exchange, Mt. Gox.

In April, the bitcoin hit an all-time high of more than $260, but then it plunged and remained below $170 until just this week.

Regulators around the world have complained that the bitcoin is the currency of choice for shady deals. Earlier this month, the Federal Bureau of Investigation shut down website Silk Road and arrested its alleged operator, Ross William Ulbricht.

Silk Road had managed sales of everything from bricks of cocaine to fake passports, and it also arranged for services such as forgery, computer hacking and murder for hire. It was like an Amazon.com for drug addicts and psychopaths, and it could all be had for bitcoins.

Besides providing a medium of exchange for thugs, the bitcoin has also created opportunities for financial fraudsters. In July, the Securities and Exchange Commission filed civil charges against a 30-year-old Texas man, Trendon T. Shavers, for cheating scores of investors out of millions of dollars worth of bitcoins. Some have called Shavers the “Bitcoin Bernie Madoff.”

News like this weighs on the value of the bitcoin. At first blush, it may drive the value down. But then once the public understands that the government is dealing with the bitcoin’s associated crime and fraud, the currency begins to take on more of an air of legitimacy.

The continued appeal of the bitcoin, meanwhile, is a sad commentary on where real money may be headed. Last year, the European Central Bank released a case study remarking that the bitcoin shares some characteristics with Ponzi schemes — an ironic observation from an organization that has been flooding the world with euros.

Others have called the bitcoin the next Tulip Bulb Mania — a reference to the frenzy that gripped the Netherlands in the 1600s.

“Who knows where your money goes?” said Denewiler. “A lot of people have gotten ripped off.”

Denewiler’s $600 investment, however, is now worth more than $7,000.

On top of that, he also received an early minted bitcoin with an error in its typography. He said this one rare brass coin at one point was selling for as much as $2,000 on eBay.

For now, Denewiler has taken $1,200 cash out of his bitcoin holdings, and is letting the rest ride. No matter what happens from here, the worst anyone will be able to say is that he doubled his money.

“You always hear about these people who ride it all the way up and all the way down,” he said. “Well no one will be able to accuse me of that.”

Part of him thinks maybe the bitcoin could go to $1,000. Another part believes it could go to zero. It’s just cocktail party talk. For analysis purposes, he can only defer to history: “These bubbles never end well.”