Bitcoin is all over the news, it is one of the most divisive and most intriguing financial stories of recent years and is something even someone with no interest in finance has heard of. When it first appeared it seemed utterly bizarre, a currency that you could not touch, see or even really own, how was that ever going to work? People like coins and cash, even with cards being used a lot more, it is still reassuring you can go to a hole in the wall and pick up some hard cash in case the machines ever decide to rise up or your bank goes bust.

For some, investing in bitcoin is the greatest idea in the history of investing and will end with you as a billionaire laughing all the way to the bank. There are so many stories of people who invested early and are now very wealthy. You even have Mark Zuckerberg suggesting it will be on Facebook sooner rather than later.

For others it is a quick fad that will die down and collapse. It is, for some, a classic financial bubble. For these people, you would be better off spending your money at an online real money casino than investing it in bitcoin. Especially now as you can get something for nothing with so many great bonuses at an online casino, click here for more infos on that. Whereas with bitcoin you do not get any kind of bonus and the initial investment and the level of trust is a much bigger gamble than any spin of the roulette wheel or hand at the blackjack table.

As with many questions, looking to history can help us to understand the future. There have been a number of previous financial booms like this one with bitcoin that have ended up being bubbles. As history teachers are always fond of telling us, we have to learn from the past and thus it makes sense to take a look at the pitfalls and issues that can befall people when a boom goes to bust and a high flying bubbles bursts. Here are two financial bubbles that can help learn more about what may well happen with bitcoin.

The Dutch Tulip bubble

This is the classic bubble, the financial bust that is still the gold standard for discussing how what goes up fast must come down in terms of the financial industry. This period has now come to be known as tulip mania, so gripped were the Dutch by tulips that they became one of the most valuable commodities in the history of items having value. As with many bubbles it started with the commodity becoming a status symbol, tulips were seen as something wealthy people wanted and thus people began buying them hoping their value would rise and rise. They felt that they might well be able to sell them to foreigners who wanted this product that some people were now beginning to trade their houses for.

The problems began when people became spooked and began to sell. This could well be the issue with bitcoin, when enough people’s confidence takes a battering the floor can drop and people can begin to panic and sell. As more and people rushed to sell the price got lower and lower and the market became flooded. This is always a worry for fast rising commodities.

The Florida Real Estate Bubble.

Before the 1920’s Florida was still largely underdeveloped with a lot of swamp land and a low population meaning people had never really looked to Florida as a place to invest. Suddenly, with the roaring twenties filling investors pockets people looked to the South as a great place to look to grow their money and thus cash began to pour into the state. A great deal of Americans saw Florida as the perfect holiday spot and therefore began to covet land to build their new holiday homes in.

Unfortunately the market was not ready and thus demand well outstripped supply and the price of land simply skyrocketed to unstable levels. A number of issues befell Florida including a hurricane, a rail strike and a harbour blockage caused by a sunken ship. People began to pull their money away from Florida and developers left; leading to a crash in the local economy. The boom was not built on solid foundations, bitcoin could meet a similar fate if the technology underpinning it does not continue to grow.