Illustration: Aïda Amer/Axios

This was the year that Bitcoin and most other blockchain currencies turned out to be the new tulip — a mania that led otherwise sensible people to suspend their better judgement and become poorer by piling in.

Be smart: Similar fads pop up every few years — always accompanied by the phrase, "this time is different," until it ends in tears.

  • That psychology has now changed decisively: Bitcoin’s price shot up to record prices artificially, only to plummet about 70% this year.
  • "[O]f 573 digital coins launched since 2017," according to The Wall Street Journal, "89% are trading at a loss compared with their offering price and worth a total of about $2.1 billion — $8.4 billion less than the $10.5 billion initially invested."

For cryptocurrencies, 2018 was the correction to 2017, which was basically a big free for all. Then, regulators and reality came calling.

  • Initial coin offerings (ICOs), it turns out, are not a magical and regulation-free fundraising mechanism: A bad white paper does not a viable digital token make.
  • "The SEC and state regulators have brought more than 90 crypto cases over the past two years," but have only managed to claw back about $36 million for duped investors, The Journal reports (subscription).
  • "One of the attractions of digital currency is its anonymity. That ... can also make it hard for investigators to trace funds."

Predictions for next year: more regulatory guidance, and more realistic applications of the tech.

  • Look for other uses of blockchain technology to flourish. One big possibility is supply chain — tracking goods from one point to another.
  • Commodity traders are also eyeing the technology in their quest for an edge.

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