Bitcoin Pizza Day is May 22nd. On that day in 2010, a programmer named Laszlo Hanyecz posted on an Internet bulletin board that he would give 10,000 bitcoins – then worth about $30 total -- to the first person who could get two pizzas to him in Jacksonville, Florida. Toppings immaterial.

Someone in the UK read the post on the bulletin board, called the local Papa John’s, had two pizzas delivered to his address, and bitcoin as a viable currency was born.

Fast forward to today, and it turns out that that $30 pizza was probably the most expensive meal ever consumed. As of this writing, October 12th – that $30 worth of 2010 bitcoin is now worth over $61 million.

Let’s put it in pizza terms: If the pizza plopped in the middle of Manhattan had grown in size at the same rate as bitcoin increased in value over the last seven years, it would stretch to New Haven, Connecticut and beyond.

Yes, there’s crazy volatility in the bitcoin world. But Bitcoin – and the hundreds of other cryptocurrencies now being rolled out – are now big enough to make a dent in the global economy.

Consider: The gross world product (GWP), the combined annual activity of all the countries in the world combined, is about US$78 trillion in nominal dollar-denominated terms. Global growth is increasing at a rate of about 3.5 or 3.6 percent.

At this time a year ago, the total market value of all cryptocurrency in existence amounted to less than half the size of the economy of El Salvador – about $12 billion. Since then, the total value of cryptocurrencies, in the aggregate, has exploded over 1,100 percent.

Put another way, the total dollar value of all cryptocurrencies in existence amounts to more than $153 billion. That’s about the size of the total stock markets of Malaysia, Norway or Thailand.

With a total market value, as of today, of $178.7 billion, the cryptocurrency market as a whole is right between the stock market capitalization of Toyota ($185 billion) and Merck ($176.4 billion).

If cryptocurrencies continue to expand over the next year at the same pace they’ve expanded for the past twelve months, the total market cap will exceed US$1.7 trillion.

To put it in perspective, if cryptocurrencies continue to grow at the rate they grew over the past 12 months as of this writing, that little yellow ball in the graphic, representing all cryptocurrencies would grow to roughly the size of the Chinese stock market. And Bitcoin, with a total value now about the size of the market capitalization of the stock markets of Austria or New Zealand, would comprise the vast majority of that moon.

Does that mean it will?

Not by a long shot.

Consider: When issued its own token auction last April, it managed to raise over $12 million in cash. But investors purchased only 5 percent of the total number of tokens Gnosis controlled – leading to a total valuation of nearly a third of a billion. By more traditional measures, a simple multiplication of market value by the total number of coins in existence, Gnosis was valued at more than $2 billion. Two months later, Gnosis was worth $3 billion, prompting some observers to call it a bubble – even a “super bubble.”

Gnosis isn’t even operational yet. It’s a potential platform that may, at some point in the future, become a prediction market fueled by Etherium, the second largest cryptocurrency as defined by market cap, and one designed for e-commerce purposes.

It hasn’t shown a dime of operating profits as yet, but Gnosis’ lofty valuations at this stage have prompted market watchers like Forbes and even the Vice President of the European Central Bank compare it to the Dutch Tulip Bulb Mania of the early 1600s, during which the price of prize viceroy tulip plants were bid up to nearly ten times what a skilled tradesman in 1637 Amsterdam could expect to earn in a year.

Governments are nervous

With bitcoin rising so far, so fast, and other cryptocurrencies right behind it, governments are getting very nervous, and some powerful interests would like to knock cryptocurrencies down a peg.

The cryptocurrency market is still the Wild, Wild West of global markets. For example, just last April – on the same day that Gnosis was conducting its token auction, as it happens, a group of marketers pushing a concept OneCoin was right in the middle of a big sales presentation outside of Mumbai, India, when government regulators raided the place and shut it down. The Indian government jailed 18 OneCoin employees and executives and seized over $2 million in investors’ money.

But it was too late for most investors. Officials in multiple countries had already characterized OneCoin as a Ponzi scheme, but not before OneCoin executives had laundered over a third of a billion dollars through a payment processor in Germany.

Then, last September, China’s central bank announced that it was formally banning initial coin offerings (ICOs or coin capital raises) within its borders– an event significant enough to cause a 20 percent swoon in bitcoin prices, and swatting it down some 40 percent off of its record high last August.

In the few weeks since then, though, the granddaddy of all cryptocurrencies has fully recovered and is now trading at record highs around $5,600 per bitcoin as of the evening of October 13th, 2017.

Volatility in this market is extremely high: Ethereum, the second largest cryptocurrency with a market cap as of this writing of $32.249 billion, has gained 11.05 percent in a single day’s trading. And that’s not terribly unusual. Cardano, a relatively small cryptocurrency with about 871 million, has gained 29.47 percent over the last 24 hours. And MonaCoin, with a market capitalization of $256.27 million, is on the move, gaining 68.56 over the last 24 hours. All market data is from

So the cryptocurrency market is not for the risk-averse. Markets are still subject to sickening single-day movements and weekly swings that would cause most investors to be reaching for the Dramamine.

And of course, with small sums of money capable of causing big swings in cryptocurrency prices – especially with smaller cryptocurrencies, the market is nearly irresistible to pump-and-dump con men and boiler room flim-flam artists.


So should investors jump in?

Perhaps with play money, but not with any money that you intend to rely on in the future.

There’s little doubt that the blockchain technology that leads to bitcoin will catch on, outstripping the others. For the moment, Bitcoin itself has the inside track, accounting for some 54 percent of the total cryptocurrency market. But Etherium isn’t far behind, and for technical reasons, Etherium may well be better suited to routine small transactions.

But ask anyone who bought a Sony Betamax videocassette recorder in 1985: The first technology to market isn’t always the winner. Nor is the second technology. In fact, the big winner may not even have been developed yet.

Meanwhile, a number of experienced investors and market watchers are warning retail investors away from Bitcoin and other cryptocurrencies.

Jamie Dimon, the current head of Citibank, has slammed Bitcoin as a fraud and a bubble waiting to pop. "It's creating something out of nothing that to me is worth nothing," he said. "It will end badly," he told an India news station last month.

Dimon did draw a distinction between bitcoin and the so-called ‘clone’ cryptocurrencies and the blockchain programming technology that makes cryptocurrencies possible, which he acknowledges has significant potential. But as for the pure-play currencies, Dimon dismisses them as foolhardy. “It’s worse than tulip bulbs” he has said, referring to an infamous market mania that gripped Holland in the 17th century and drove the price of a Viceroy tulip to more than ten times what a skilled tradesman at that time could earn in a year. "The only value of bitcoin is what the other guy'll pay for it," says Dimon. "Honestly I think there's a good chance of the buyers out there are out there jazzing it up every day so that maybe you'll buy it too, and take them out."

Indeed, in the worst-case scenario, cryptocurrencies could possibly be an even bigger bubble:

"The price activity and manic sentiment that led to present prices have dwarfed even the Tulip mania of nearly 400 years ago," wrote Elliott Prechter, author of The Elliott Wave Newsletter” last July. "The success of Bitcoin has spawned 800-plus clones (alt-coins) and counting, most of which are high-tech, pump-and-dump schemes… "Nevertheless, investors have eagerly bid them up," Prechter added.

Now that we’ve heard from the nay-sayers, what are the bulls saying? Michael Novogratz, a former partner at Goldman Sachs and late of Fortress Capital, is going long and going big, putting up $150 million of his own money and raising another $350 million from investors by next January.

But even then, Novogratz’s investment thesis is purely tactical – based on the expectation of a massive overvaluation of bitcoin as the bubble continues to inflate. “This is going to be the largest bubble of our lifetimes,” Novogratz has said. “Prices are going to get way ahead of where they should be. You can make a whole lot of money on the way up, and we plan on it.”

One possible approach for investors is the asset allocation approach: Simply treat cryptocurrencies as an asset class, along with stocks, bonds, cash, precious metals and real estate. While it may not be realistic for people with relatively small investment portfolios, an allocation of perhaps 2-3 percent to bitcoin or other cryptocurrencies might be too small to hurt the investor too badly if the market should correct or even collapse. But if the cryptocurrency continues to perform the way it has over the past several years, it can really provide a boost to overall returns.

Just be sure to rebalance once in a while to keep your overall risk exposure.

Sidebar: “How Cryptocurrencies Work”

Cryptocurrencies are just one possible application of an emerging computer programming and networking innovation called blockchain. The concept was the brainchild of a programmer working under the pseudonym Satoshi Nakamoto.

Blockchain allows information to be distributed among thousands or even millions of computers, but without copying it. That is, every data point has some common elements shared by all computers on the network, but also some private elements are known only to one computer.

This innovation is starting to affect commerce in a variety of ways. For example, it allows vendors to create self-executing “smart contracts.” If you ever rent a car by standing next to the car you want to rent, enter your credit card number or ApplePay information and upload it to the cloud, and the car unlocks itself when you’re standing there, and shuts down automatically when your contract expires, you’ll be using a “smart contract,” and a technology enabled by blockchain.

The same technology that allows information to be transmitted and stored across an entire computer network without being copied also allows individuals to store wealth in purely digital form. If you buy or receive bitcoin (or any other cryptocurrency) through your computing device (the only way to acquire it) Thousands of computers in the blockchain network register the transaction, ascribe a unique bitcoin to your computer account, and they remember you have it, until you send it to someone else – generally for goods or services.

The computer system then registers who you sent your bitcoin to, and adds another “block” on the chain for that individually-numbered bitcoin.

Because the information is distributed on hundreds of thousands of computers worldwide, it’s nearly impossible to hack or corrupt. Governments cannot seize it or control it. They have a hard time controlling it. Records (other than your private encryption information that makes it impossible for people to steal your bitcoin from some other computer) are public, and transactions are verifiable from the distributed database. There is no possible single point of failure unless it’s a planetary-wide disruption.

This makes cryptocurrencies a very attractive option for people with technical acumen who live in countries where the rule of law is not respected, or where governments are likely to seize assets.

“Blockchain solves the problem of manipulation,” says Vitalik Buterin, the 23-year-old co-founder, and creator of Ethereum, another cryptocurrency and currently the second largest cryptocurrency by market capitalization. “When I speak about it in the West, people say they trust Google, Facebook, or their banks. But the rest of the world doesn’t trust organizations and corporations that much — I mean Africa, India, the Eastern Europe, or Russia. It’s not about the places where people are really rich. Blockchain’s opportunities are the highest in the countries that haven’t reached that level yet.”