Except today is different. Previous bubbles were about things - tangible things that people bought and sold. Even Ponzi was selling postal orders, or had a scheme to do so. But today? We are having a bubble about nothing - cryptocurrencies, which are really of no use to anyone, and in fact, are not really being used for monetary transactions. People are investing in them just because and then hoping they go up in value, because everyone said they would.
Do these cryptocurrencies have any real value? Yes, to bad people. If your name is Ahmed, and you want to declare Jihad on infidels, you can send Bitcoin to Kim Jong, who in turn will send you case of AK-47's. You don't want to send a money order, as the infidels can track your bank accounts and seize money. So you sell a goat, buy bitcoin, and have arms shipped from North Korea. Everyone is happy - well, except for the infidels.
Of maybe your name is Larry and you want to deal fentanyl. You can't wire money from Missouri to the Tongs in China, as the DEA will catch on to you. But you can send bitcoins, and get your drugs in the U.S. Mail (no really, it is that stupidly easy). Everyone is happy, again, except all those people who O.D. and die as a result.
Or maybe your name is Dimitri and you want to traffic underage girls from the Ukraine to the U.S. You hire them telling them they will have cushy jobs as nannies for wealthy New Yorkers, but instead you put them in a shipping container bound for Baltimore, where they are prostituted. How do you get the money back to the home country? Again, Bitcoin to the rescue. You buy Bitcoin, send it overseas, where is it converted to local currency.
The problem, of course, is that it takes upwards of 300 minutes (that's five hours) to complete these transactions, so it gets cumbersome - and you have to hope the market doesn't fluctuate too much between the beginning and end of the transaction. But the real problem is, of course, you are doing illegal things, and governments are not going to sit by idly and let you get away with this.
Already the Chinese are cracking down, and it won't be long before the U.S. government does likewise. I noted before how I was treated like a criminal when I tried to wire money (using the SWIFT system, bank-to-bank) overseas once - and the irony was the clerk who basically accused me of terrorism was wearing a hijab at the time. PayPal and Western Union seem to be less regulated, although I am sure NSA has hooks into both. You want to send $100,000 to Pakistan by Western Union, someone is going to knock on your door.
So how long before these cryptocurrencies are regulated? And how long before trade in them is regulated? And if the only "legitimate" purpose behind the currencies is illegitimate, then what happens to them when they are regulated and can no longer be used to buy guns, drugs, and children?
People aren't thinking of this. People are, by and large, idiots. They see someone else making money at something or at least appearing to do so, and they want to jump on the bandwagon. Monkey-see, monkey-do.
And since everyone today has to be an investor as pensions are obsolete, then there is a lot of money to be made in selling crappy "investments". In fact, some are saying that the stock market is overheated simply because there aren't enough stocks left. Private equity investors have taken many companies out of the market, leaving fewer stocks to buy, and lots and lots of investors clamoring for return on their investment. It is an environment ripe for fraud.
It is all-too-easy these days to sell stocks or coins or whatever, and people will snap them up without investigating very much. It has taken on a religious-like fervor, much as the housing market did last time around, much as the gold market did a few years back, when prognosticators said it would hit $5000 an ounce. The raging true-believers shout down any dissent, just as they would shout down this posting, if they even bothered to read it (and you can bet the words "fiat currency" would appear in the first sentence - it is a buzz-word, just like "blockchain" is - say it three times and it means something, or so it seems).
The wreckage of previous bubbles in history often produced some positive residual results. While investors lost their shirts, often the wreckage was salvaged and provided low-cost opportunities for the next generation. The railroad bubbles of the late 1800's resulted in a lot of low-cost rolling stock and track available for the remaining railroads to expand. The tech bubbles of the 1990's and 2000's meant a lot of cheap servers, fiber optic capabilities, and cheap rent in silicon valley for a new generation of companies to grow and expand (and produce products and services that would have been uneconomical before). The housing bubble wiped out millions of people, but put a lot of housing stock on the market at low, low prices - for smart investors to snap up and rent out.
But the cryptocurrency bubble? I am not sure there will be much to salvage from the wreckage of this one - because there is nothing there. Something that is being valued simply by the laws of supply and demand isn't inherently worth anything, if it has no ultimate legitimate use. And once people realize the supply of cryptocurrencies is indeed infinite, demand will falter, as indeed there is no such thing as infinite demand for any commodity, real or imagined.