Panic, mania and crashes. Older investors know such asset cycles all too well. The recent collapse in the values of bitcoin and other digital currencies is likely to introduce the millennial generation to this eternal circle of investment life. This time will be no different. Having almost touched US$20,000 in 2017, bitcoin has dropped to about US$4,000. For all the hype about replacing fiat money and revolutionising the way people trade, cryptocurrencies such as bitcoin are proving to be too volatile in value, difficult to exchange and mistrusted by many.

Central bankers who issue normal currencies despise them and law enforcement agencies hate them for their untraceable uses in money laundering, drug trafficking and terrorist financing. It did not help that a number of initial bitcoin offerings in China and elsewhere turned out to be problematic, if not outright frauds. Meanwhile, public confidence took a further dive after the recent “civil war” within the bitcoin community. Led on one side by Wu Jihan, co-founder of Beijing-based Bitmain Technology, the world’s biggest maker of cryptocurrency mining rigs, the rift saw the bitcoin split into two trading entities.

To go mainstream, an asset needs to be – or at least must be seen to be – a store of value and easy to use. Most cryptocurrencies, however, currently provide neither. Their high volatility has been great for speculators. It is unfortunate that bitcoin and its underlying blockchain technology have become so closely associated in many people’s minds. Even if all the current cryptocurrencies go under, blockchain is still a valid technology for finance and trade.

As often happens, great technologies can spawn new investments, many of which will prove useless or worse. When the last dotcom bubble burst, many online companies imploded, but not before being treated as investment darlings by many. Yet, the underlying internet and fibre-optic technologies have created one of the great commercial revolutions in history and helped drive globalisation.