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Bitcoin mania looks a lot like dot-com mania—and that’s OK

By Joon Ian Wong

In case you haven’t noticed, cryptocurrencies are all the rage.

Bitcoin’s wild ride this week—trading between $10,000 and $17,000, with plenty of volatility in between—left some major exchanges struggling to cope. Over in the world of ethereum, the second-largest cryptocurrency,  a robust trade in digital cats known as CryptoKitties accounted for more than 10% of all transactions at one point. Some of the blockchain-based felines have been sold for more than $100,000 in recent days.

Meanwhile, Venezuela said it will launch a cryptocurrency backed by oil and diamonds, the Australian stock exchange announced it will rip out its plumbing and replace it with a blockchain-based alternative, and a major derivatives exchange in Chicago prepared to launch the first bitcoin futures contracts this weekend, potentially ushering in a wave of institutional money.

Indeed, it has been a big week for cryptocurrencies and the technical idea they popularized: the distributed ledger known as the blockchain.

In 2014 the venture capitalist Marc Andreessen argued that bitcoin most closely resembles the early commercial internet. It was a clunky plaything for geeks and computer scientists, and generally laughed at by the corporate bigwigs of the day. Then the first dot-com boom begat a stock market bubble and, eventually, spectacular flameouts like Pets.com and the frenzied Beanie Baby market enabled by eBay.

So far, so bitcoin.

But out of the dot-com rubble emerged the companies that would alter the way we live a short while later. An online bookseller became the world’s largest retailer. A has-been from the PC era introduced an “internet communicator” that transformed it into the world’s most valuable company. And the stage was set for the search engine and social network that would grow so powerful that the fates of nations now hinges on their secret algorithms.

If Andreesen is right, we could well be in the throes of something like dot-com mania again. Just substitute Beanie Babies for ethereum kittens, WebVan stock for the bitcoin price, and online brokerage accounts for the Coinbase app. It could end in tears, for both speculators and true believers alike. But it could also mean that in five, 10, or 20 years, we’re all living in the world first described in an anonymous PDF document and published to a cryptographers’ mailing list nine years ago.

This was published in the weekend edition of the Quartz Daily Brief, our news summary that’s tailored for morning delivery in Asia, Europe and Africa, or the Americas. Sign up for it here.