In 1637, a speculation bubble over tulip bulbs resulted in such an overheated market that some bulbs were going for ten times the annual salary of a highly paid craftsman. Like all bubbles, the “Tulipomania” bubble burst, and anybody invested in the market at the time – and there were a lot of them – lost their shirts. When something gets that expensive, something is clearly out of whack, and those once ridiculed for being too old-fashioned to get in on the market are the ones left standing when it all falls apart.
I note this because in recent months, I have seen a whole lot of articles about Bitcoin, a peer-to-peer alternative currency that enables people to buy things in complete anonymity. Bitcoin evangelists stressed that Bitcoin wasn’t just a handy way to buy products that were illegal (drugs) or sketchy (porn) without being traced. No, it was a financial revolution that was going to change the entire system of money upside down! It was a new era! Blah, blah, blah.
The thing with Bitcoin is that it got enough press and enough curiosity for some people to buy into it. And this kicked off a wave of speculation where suddenly Bitcoins themselves started to appreciate in value as people bought and sold them for real money. Media began writing about big Bitcoin market gains and market crashes, and it all looked like the travails of some wildly hot start-up that only the blind would not see as worth investing in.
Bitcoin mania grew to the point where it spawned other digital currencies, the most laughable one of them all was Dogecoin, itself a parody of Bitcoin based on the character of a popular Internet meme – a dog named Doge. But Dogecoin then got so much press that it gained value, too, and the parody became the monster it lampooned. Writers breathlessly wondered if Dogecoin was the new Bitcoin. New Bitcoin? Guys, Bitcoin itself isn’t even old yet! Everybody just relax.