Bitcoin bubble? The warnings from history

From the tulip craze to the South Sea and dotcom bubbles, the past teaches us to beware too strong a dose of irrational exuberance

Bitcoin is drawing comparisons with past economic bubbles, owing to its meteoric rise this year. Here are some perhaps poignant history lessons:

Bitcoin is the first, and the biggest, "cryptocurrency" - a decentralised tradable digital asset. Whether it's a bad investment is the $97bn question (literally, since that's the current value of all bitcoins in existence). Bitcoin can only be used as a medium of exchange and in practice has been far more important for the dark economy than it has for most legitimate uses. The lack of any central authority makes bitcoin remarkably resilient to censorship, corruption - or regulation. That means it has attracted a range of backers, from libertarian monetarists who enjoy the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it's hard (but not impossible) to trace a bitcoin transaction back to a physical person.

Related: Bitcoin: is it a bubble waiting to burst or a good investment?