It's worth repeating the story of the first real-world bitcoin transaction in 2010 when it was worth about US one cent.
A guy in Florida bought two pizzas for 10,000 bitcoin (roughly US$100 million at this week's exchange rate).
The Business Herald team has been not investing in bitcoin since it first grabbed our attention in 2013 – valued about US$100.
Our sad, imagined non-investment is up 10,000 per cent. Still, it's a much better return than the one we didn't get after we didn't invest in the Xero float.
My point is not that you should find out what financial journalists are doing with their money and do the opposite.
I'm not saying you couldn't get rich doing that. In fact, (especially if the Financial Markets Authority is reading this column) I'm not offering any specific advice at all.
But I am making the point markets are strange, people are stranger and these, it would seem, are exceptionally strange times.
Some are calling bitcoin the future of money but others are calling it the biggest investment bubble since the tulip market of the 17th century.
It is quite possibly both.
Bloomberg writer Stephen Gandel makes the point if you apply any rational valuation methodology no bubble in the modern era compares.
He notes in the past year bitcoins have generated transaction fees of nearly $220m on market capitalisation of US$160 billion.
That gives bitcoin a price to earnings multiple (P/E) of more than 720 – in excess of four times the most overvalued tech stocks in the dot.com bubble of 1999 and 2000.
You really do need to reach back into history for comparisons.
The tulip bubble of the 1630s – to which bitcoin speculation is increasingly compared – is described as a mania, a kind of mass public delusion.
Tulip bulbs were such a status symbol in 17th-century Europe and varieties developed by Dutch growers so rare that bulbs were traded for values exceeding the annual salary of a craftsman, or in one case five times the value of a house.
A good bulb could flower and generate several more bulbs so the investment was sure to pay off as long as the price kept rising.
It didn't, of course.
Unlike tulips, though, bitcoin and the technology that underpins it looks like something quite revolutionary.
It is a new way of accounting for transactions that operates outside of the control of nation states and banks.
The real believers – the ones who are into it for more than a quick buck – might really be on to something.
We've seen the disruption of media, the disruption of transport and several other industries in the past few years. But the disruption of money would shake the world.
It's serious enough that central banks – including our own Reserve Bank have started researching it with a view to possibly setting up their own digital currencies.
And there are plenty of other bitcoin rivals out there already.
This is the risk for bitcoin. It is scarcity that creates its value and while that is something that the bitcoin system is cleverly designed to control, it has no control over the popularity of rival cryptocurrencies
Right now bitcoin is not practical as currency to do business with. It is too volatile, for a start.
The way it works - outsourcing the verification process to bitcoin miners - means transactions can take some time to process.
There are also issues about the amount of computing power and electricity use needed to process transactions if it was really adopted as a daily currency.
These issues could be solved in time. But by whom? Will it be bitcoin or a rival like ethereum or litecoin?
Will governments or traditional banks manage to co-opt and integrate block chain technology into the establishment?
Who knows? But the mania is growing.
Thankfully, bitcoin isn't yet at a scale that could crash our financial system if the bubble pops.
Even with a market capitalisation in the hundreds of billions. US stock markets alone have a market capitalisation of $US20 trillion.
More than US$5t worth of traditional currencies are traded on foreign exchange markets every day.
And consider the scale of real-world transactions - even for a minnow like the Kiwi dollar.
Millions of people use the kiwi for numerous transactions every day.
The daily volume of transactions being made in bitcoin is only about 400,000.
It's still a virtual drop in the bucket of global currencies.
