Over the Christmas break I came across my sons no-longer-used fidget spinner; a device I could not see a use for, but my son desperately wanted to have at the time. It reminded me of my own childhood must have – the yo-yo – and the lengths we used to go to ensure we had the coolest sort at the time, learning the ‘must do’ tricks (which I can barely remember).

Moving forward to my business life, I distinctly remember questioning my own interpretation of basic business fundamentals when the first internet bubble was occurring. I gave a lecture on the fact that despite this hype about “build it and they will come” we still must have, at the end of the day, more money coming in than going out to be sustainable. It was a large lecture hall and I recall a sizable number of students strongly disagreeing with me stating that the internet was the “new economy” and it has changed these fundamentals for good.

We agreed to disagree, of course when later that year the bubble burst (as all inevitably do) the students were surprised and said that this has never happened before. I then recommended that they read a book by Tom Standage titled The Victorian Internet (1998) – which talks about the similarities between what at that time was the internet and the electric telegraph during the second half of the 19th century. It’s quite uncanny and I recommend you pick up a copy and read it.

Of course, many of these bubbles are compared to the Dutch Tulip Mania case of the 1630s, where entire fortunes were lost when the cost of the bulbs fell almost overnight from astronomical highs. Good reading on this is Tulipomania written by Mike Dash and published in 1999, about the same time as The Victorian Internet.

“I suggest if you are holding bitcoin or thinking of purchasing, you google ‘bitcoin bubble burst’”

Shortly after my yo-yo contemplation I listened to an interview with someone who was selling a house and was only accepting Bitcoin as payment. The interview focused primarily on the mechanisms of the payment method and how that might be achieved. The seller discussed how this was the currency of the future and how it was appreciating as supply was strictly controlled. The article ended with a summary of the phenomenal rise in the value of the currency, I thought of the number of junk emails I was receiving about them at the time and how this would probably turn out to be another “bubble”.

That was before Christmas, and as we know the value continued to rise until, in the new year, when a gentle slide from some $17k USD to around $14k occurred. At the time of writing the “value” per coin appears to be closer to $10k USD; representing a sizeable slide in value during the month of January. On 8 December last year CNN published an article comparing Bitcoin to Tulip Mania, the south Sea Bubble, the Wall Street Crash of 1929 and the dotcom boom. The premise was that if the bubble bursts it would be more spectacular than any of these other financial events, and would also be very sudden.

It does look like we have another bubble beginning to burst; publications such as the Guardian, News.com and the Sydney Morning Herald have even predicted that this slump in value is evidence that the bitcoin bubble is bursting. I suggest if you are holding bitcoin or thinking of purchasing, you google “bitcoin bubble burst” and make your own judgement as to its direction and future. The phenomena of the bitcoin certainly shows all the signs of a classic bubble where many, with little knowledge of what the underlying premise is, are jumping on the bandwagon and purchasing once the value has escalated. In these issues we tend to listen to people like Warren Buffet who has predicted that cryptocurrencies will “come to a bad end” (news.com.au 11 Jan 2018).

Closer to home I see signs of a strengthening local economy starting to show, and with this business confidence is starting to return to our region. We still have many challenges in our local area and I wish you all every success in 2018.