To paraphrase Ronald Reagan, "Here we go again."
Bitcoin is on everyone's lips this week and the price has gone nuts--- shooting past $17,000 per bitcoin in Thursday's trading.
It has rocked up $5,000 in less than a week, prompting wall- to- wall news coverage that is giving Sen. Al Franken, D-Minn., Russia, the FBI and even President Donald Trump a run for their money. The value of the digital currency - or cryptocurrency- is up about 15 times this year.
If you were around during the frenzy of the late 1990s dot-com bubble, the bitcoin mania might have a familiar cast: A new technology that was misunderstood yet sprawning hundreds of companies and resulting in speculative trading.
Here's a primer that might help demystify the new phenomenon for you investor types.
What is bitcoin?
It is an electronic form of currency that has no physical presence anywhere in the world. There are no physical"coins" like dimes, nickels and quarters. Bitcoins, like other cryptocurrencies, exit on the internet.
"It is fundamentally a piece of computer code and software that verifies transactions," said JR Lanis, an attorney with Drinker Biddle .
"It can be any kind of transaction. It serves a purpose and derive its value by verifying transactions. That is the technology ." Essentially, it is code that says, "that is what it is ."
BITCOIN lives on the internet, not as physical currency but that hasn't stopped traders from driving up the cryptocurrency's value.
Why has the prize gone crazy?
This one is easy.
Limited supply. And, apparently, unlimited demand_ at least for the moment.
People are buying up bitcoins, driving up the price of the 16.7 million coins in circulation to a total value of $265 billion as of midday Thursday. That's not quite the size of bank of America, but getting there.
"It's speculative," Lanis said. "People think that the price is going to continue to go up indefinitely."
Can it be hard to buy bitcoins?
Yes. This isn't like going on Charles Schwab, Scottrade or E-Trade and buying and selling stocks.
Not all the cryptocurrency trading sites, known as coin exchanges, are built for average folks like me.
"The platforms aren't great," Lanis said. "The sites you go on to buy it are fairly rudimentary. They aren't set up like the stock market sites."
David Drake, chairman of LDJ Capital, a family office, said that a money transfering license and other regulatory licenses are necessary to operate a business with cash transfers and escrow. Most bitcoin platforms don't have that license.
What can I use it for?
Right now, storing value and speculating--mostly.
"People are seeing it much more as an investment than as a daily form of currency," Lanis said.
Bitcoins can be used to buy merchandise anonymously, without a middle-man and involving lower or no fees and no banks, but it's not that widely used.
It's not easy when you have a "currency" whose value fluctuates wildly.
"There are a few places and vendors in the software business who accept it as payment more than anything else," Lanis said. "Even some law firms. But it's not that functional yet."
Websites such as Coindesk. com and 99Bitcoins.com list businesses that accept bitcoin as payment.
Should I invest in it?
"I wouldn't," said Daniel P.Wiener, chief executive of Adviser Investments, a Newton, Mass-based firm that manages more than $5 billion in assets.
"Bitcoin speculation in 2017 is equivalent to tech stocks on 2000 and real estate in 2007. All ended badly." "It's speculative," Wiener said. "I don't really understand where the value is, and I always look askance at something that goes up 11 times in three weeks. It does manufacture anything. It doesn't pay interest. I would not recommend anyone buying it."
Drake said he is personally invested in 50 different cryptocurrencies.
And "if you don't mind a lot of risk, then it's worth a flier," Lanis said. "This is something that is extremely, extremely speculative. It's not something I would bank my retirement on."
That may be so, but Yusupov is a happy camper as of Thursday. Last summer, she invested in four bitcoins through a BitIRA retirement account.
She also bought some coins for her personal account for just plain investment. She is up tens of thousands in each.
"In life, you need to take risks," Yusupov said. "I want to see my money grow. I don't want the cash to say there and erode. Bitcoin is going to go up. It's the currency of the future."
Jay Blaskey of BitIRA, not surprisingly, is bullish on the cryptocurrency's prospects as a long-term holding.
"Technology moves in a given direction," Blaskey said. "We are not going back to the horse and buggy, bitcoin is a solution built for the world we have, not the world we had."