The bitcoin bubble is a joke, and you're the punchline | Opinion

There are bubbles, there are bad investments and then there's dogecoin.

That's the bitcoin parody that launched in 2013 in homage to the particularly silly meme of Shiba Inu dogs saying syntactically challenged things. Now, if none of that makes sense to you, don't worry: You're normal. The point is that this was a joke about a joke. A way for the technologically savvy and the self-consciously hip to show that they were aware of all internet traditions, and tip each other for their online witticisms. As is often the case, though, the line between irony and sincerity eventually became so blurred that what was originally supposed to be a worthless currency was valued at as much as $2 billion a few days ago.

It's just a small part of what might be the biggest bubble in history.

That, at least, is what bitcoin and all its assorted imitators look like right now. Indeed, in the past year, bitcoin has gone from being worth a little less than $15 billion to a little more than $225 billion. And that's despite the fact that it still works so poorly as a payments system that people won't even accept bitcoin at an upcoming bitcoin conference.

That price change almost seems reasonable, though, compared to Tron. That's the cryptocurrency that's valued at over $7 billion even though it doesn't actually exist. It's just a white paper filled with a bunch of buzzwords. Then there's Dentacoin, the $1 billion "blockchain concept designed for the Global Dental Industry." (It's a digital currency you can use at the dentist.) Why anybody would want money you can only spend in one place instead of dollars you can spend everywhere is apparently a question with which they — and their investors — didn't concern themselves.

What in the name of the Pets.com sock puppet is going on? Well, it's the same thing that happens any time a new invention promises to change our lives: We go nuts. It's not just that we don't know what the invention can do. It's that we don't know what it can't. That gives us the license to dream, perchance to invest. So whether it's the telegraph or the railroad or the internet, these kind of technological breakthroughs almost always cause a temporary separation from our rational selves.

Every great bubble has people who think it's a movement, others a business, and the rest a racket. In this, bitcoin is no different.

The first group are the true believers. They're the techno-libertarians who think it's only a matter of time until bitcoin replaces the dollar because of the way its extremely limited supply means that it tends to gain, rather than lose, value over time. (Never mind that this also means that nobody ever wants to spend it.)

The second are the more realistic believers. They're the bankers and lawyers and various other middlemen who worry that bitcoin might eventually cut them out because of how it automatically creates a public record of who owns what — which is why they need to figure out how to use it first.

And the third are the cynics who want to capitalize on the current craze by pretending their businesses are really bitcoin ones, and bidding up the stocks of ones that do engage in such fancy. That, after all, is how such non-cutting edge companies as Kodak and the Long Island Iced Tea Company both managed to triple in value in a matter of days. It's just musical chairs for grown-ups: everyone knows this is nonsense, but everyone thinks they can be the second-to-last person to sell.

It's a fun game until the music stops — but it will. It always does.

It almost makes you feel sorry for dogecoin, but at least it was in on the joke. What's everybody else's excuse?