When Warren Buffett met Katy Perry last month, apparently the main thing she wanted to ask the world’s greatest living investor was his opinion about Bitcoin.
No doubt he stuck to what he said about the cryptocurrency three years ago: “The idea that it has some huge intrinsic value is just a joke."
Back then he explained it was just an anonymous money order or check to transfer money. But since that time Bitcoin and its 1,500 plus "me-too" cryptocurrencies have become possibly the biggest speculative bubble in history, big enough even to interest a pop star.
What on Earth happened?
As I wrote in this column last summer it is a matter of historic fact that whenever conditions of excessive liquidity prevail - like the ultra-low interest rates we have been enjoying - then a speculative investment bubble will emerge to suck up this liquidity.
Before Bitcoin we had the dot-com stocks that boomed in the late 90s - making a few early sellers very rich - and then crashed, losing a lot of money for everybody else.
This has been happening for centuries. Tulips in 16th century Holland were possibly the first such speculative mania.
I first heard about Bitcoin at an investment conference in Vancouver in 2010 from a young guy called Joel Bowman, who used to work in Dubai as a journalist.
One of his former colleagues told me he now lives in Fiji having made millions as an early Bitcoin miner. That's my Bitcoin millionaire story, a guy who once used to envy my own modest success in the Dubai dot-com world.
But as we all know from the dot-com days, this does not end well for everybody. The early pioneers who sell out at the right time do well; for the latecomers to the party it is a completely different story.
Imagine for example, you woke up one morning last December and thought: "I’m going to do it, I will buy Bitcoin", so you paid out almost $20,000 per coin.
That now looks to have been the top of the market, a classic price spike, signaling the end of a trend, although admittedly it went on longer and got far higher than most thought possible - about 20-fold last year, that’s a record breaker for an asset price bubble. Then things went wrong.
By the end of January you had lost around half your money, and by the middle of February you hit what so far looks to have been the bottom at $6,000.
Then somebody posted a story, which never appeared to be validated, that a major investor was putting $400 million into Bitcoin and prices started to rise again.
Bitcoin did indeed do a classic "dead cat bounce" back to $12,000, and then it began to tumble again last week before picking up again.
Ready for another roller coaster ride? Be careful it could get very rough from here; a broken investment price spike is almost impossible to repair as confidence will never be as high as before it happened.
Nouriel Roubini, the professor who correctly called the US subprime lending crisis in 2006, recently said Bitcoin has an intrinsic value of zero, just as the most successful investor alive, Mr Buffett, did three years ago.
There have been plenty of warnings. I came across a transcript of remarks by Mr Buffett's 94-year old business partner Charlie Munger, from the Daily Journal's annual meeting last month.
He said: "Well you’re of course right to suspect that I regard the Bitcoin craze as totally asinine. To create some manufactured currency … A different payment system could happen like WeChat in China. It’s a better payment system than the one we have in America. So something like that could happen.
"But Bitcoin where they’re creating an alternative to gold … and then make a big speculative vehicle? … I never considered for one second having anything to do with it. I detested it the moment it was raised, and the more popular it got, the more I hated it. On the other hand, I expect the world to do insane things from time to time."
Indeed, it is impossible to find an older, serious commentator anywhere in the world with a good word to say about Bitcoin and the cryptocurrencies. That in itself ought to be a huge red-letter warning to any potential investor.
Mr Munger is right about the pseudoscience of Bitcoin. It stinks. Blockchain technology is nothing like the worldwide web.
Mr Roubini correctly points out that blockchain has been around for 10 years and the only application anybody has found for it is in creating cryptocurrencies. It’s commonplace to nod to the blockchain as the future, but it is a completely false god.
Just look at the huge amount of energy blockchain takes to create a single Bitcoin; annually Bitcoin production currently consumes enough electricity to power Iceland. Imagine if it was powering health records worldwide.
Cryptocurrencies are simply a series of old-fashioned pyramid investment or Ponzi schemes, each being assiduously promoted and manipulated so that the founders make a fortune and pretty much everybody else is a loser.
It’s a totally unregulated $700 billion market, and a gold mine for financial conmen with a tech qualification, most of them located in China and South Korea.
That’s why Bank of America’s wealth management arm Merrill Lynch has banned its 17,000 financial advisers from buying Bitcoin-related investments for clients. It also won’t allow clients to buy cryptocurrencies on their credit cards.
Goldman Sachs is telling clients it expects most cryptocurrencies to go to zero. The world’s largest asset manager, BlackRock says holders should be ready to "stomach complete loss".
Last week, the US Securities and Exchange Commission announced it is investigating the cryptocurrency initial coin offerings market and has issued "scores of subpoenas".
This is not another dot-com technological revolution, it’s a pure speculative mania whose bubble has, almost certainly, already burst. Caveat emptor, buyers beware.
Peter Cooper has been writing about finance in the Gulf for more than 20 years