In December, as the bitcoin price neared $20,000, a friend asked me whether she should invest. I said that I hadn’t the faintest idea. Today, with the price below half that, my reply remains the same.

Over the next year, the bitcoin price could double, soar tenfold, or collapse by 95% or more, and no economic analysis can help predict where in that range it will lie. Its value is arbitrarily determined by the collective psychology of the mass of investors; it goes where, on average, they think it will. Like other cryptocurrencies, bitcoin serves no useful economic purpose, though in macroeconomic terms, such currencies probably also do little harm.