The debate about bitcoin rumbles on, but both sides in the debate overlook some key points.

The bitcoin collapse continues – sort of. The price is down around 28 per cent since early December. By the standards of most assets, that is a crash – and indeed a crash is normally described as a fall of 20 per cent or more over a short period of time

It is just that for bitcoin, such a fall is not so strange.

Back in November it fell by around 20 per cent, but then recovered, and went on to hit new highs within a few weeks.

Looking back to 2008, when bitcoin was first launched, and falls of 20 per cent plus over a few weeks are not unusual. It is just that the trend has been up, and up at an extraordinary rate.

Over last year, even after allowing for recent falls, the price has risen 13-fold. Since November 2015, the price has risen 50-fold or so, over the last five years the rise has been more like 150- fold.

If you had invested $10,000 five years ago, then today the assets would be worth around $1.5 million.

This, of course, means people are tempted to jump on board. In this respect, there is nothing new. Back in the early years of the 19th century, we saw what has become known as the South Sea Bubble. Shares soared, all sorts of reasons were advanced for why it was good idea, but the real motivation for investors was that they put their money in because other people who did that had made a fortune,

It all ended in tears, eventually, of course.

Isaac Newton was among the victims. He was an early investor, he wisely liquidated his stock, only to see South Sea stocks continue to rise in value. So he jumped back in, losing £20,000, a fortune in that time. He later remarked: “I can calculate the movement of stars, but not the madness of men.”

Another company issued a prospective saying: “For carrying-on an undertaking of great advantage but no-one to know what it is!!.”

But is bitcoin really like that?

There are those who claim they have not only spotted a bubble with bitcoin and blockchain, but a wider bubble, they cite Amazon and Tesla as examples of over-valued stocks – a market gone mad.

The thing about bubbles it that they are hard to spot until after the event. Look at the valuation of Google at the time of its IPO – it looked absurdly expensive – an example of madness returning, suggested some. Yet look at the profits the company is now making, and the IPO price looks like a bargain basement price

The real problem here is that many investors, both bulls who are buying and bears who are selling, don’t really understand the market.

Blockchain, because of its distributed ledger, is a good idea and may yet transform many industries. You can see how blockchain, for example, could change online voting, the dealing in shares, the lending of digital music and movies, and of course the transfer of money.

These are all really important areas.

But that is not why bitcoin is surging or indeed Ripple and Ethereum.

They are surging because people are jumping on board because they do not want to miss out, in much the same way Isaac Newton did with the South Sea Bubble. As such, their motivation is little different from that which persuades people who invest in a pyramid scheme.

Then again, by that definition, the property market is little different.

But the main advocates of bitcoin are not supporting it for reasons many of us would agree with. They are typically libertarians, who hold the view that central banks have debased the money system by artificially keeping interest rates low and via policies such as quantitative easing. But most economists believe that low-interest rates and quantitative easing stopped the global economy from falling into a catastrophic economic depression.

In an age of accelerating technology, it may ultimately prove essential for central banks to kick demand into the economy by printing money – under bitcoin this would be impossible. If we move to a bitcoin global money system, as many of its advocates suggests, this may be a recipe for economic Armageddon

But this is not the same thing as saying Ethereum is not a viable technology

And if you think bitcoin is a bubble, this does not mean you have to argue Amazon, with its plans to dominate global shopping and Tesla, with its speciality in energy storage and AI, are bubble stocks.

But markets are fickle things – if they go into a bitcoin created panic, they may be unable to discriminate between technology that could genuinely change the world, and technology that is just a hyped up fad.