Bitcoin: this is what a bubble looks like

Not if, but when, the bubble will burst.

This is what a bubble looks like:

That's the market capitalisation of Bitcoin, an innovative fiat currency which relies on some fancy cryptography to create a perfectly decentralised and unhackable store of value. The graph shows the total value of all bitcoins in circulation — and it's currently peaking at a little over half a billion dollars.

In a sense, Bitcoins are the ultimate fiat currency. There is absolutely nothing valuable about them except the extent to which others are prepared to take them as payment for goods and services. The willingness relies on a certain level of trust that the currency will stay a useful store of value, measure of exchange and unit of account in the near future; but whereas normal currencies derive the trust from the fact that they are backed up by respectable governments and independent central banks, Bitcoin derives it from a complex, and essentially permanent, set of rules which issue new bit coins at a steadily declining rate until the early 22nd century, when the total quantity of bitcoins in circulation will be fixed forever.

Currently, bitcoin is very useful for fringe-legal transactions, and as a digital-native currency, it has potential to be used in a wide array of web services. But that's not why the value of the total economy has more than tripled since January. For that, look to lessons we learned over four hundred years ago.

The South Sea bubble is one of the most famous boom-and-bust cycles in history. At the peak of the madness, famously, a huckster appeared public advertising stock in "a company for carrying out an undertaking of great advantage, but nobody to know what it is". Naturally, he disappeared soon after.

But looking back at contemporary sources reveals something else which is just as important: very few people caught up in the madness thought that they were buying something innately valuable. These weren't naïve investors spending exorbitant sums on stock which they thought would vest unrealistic rewards; instead, they knew full well the bubble they were buying into, but thought that they could sell out of it at profit before the whole thing came crashing down. Some did; but inevitably, many others failed.

Much the same seems to be at play in the Bitcoin ecosystem. It's not just people like Hugo Rifkind, who accidentally made £41 from his foray into bit coin investing; Timothy Lee, a writer for Ars Technica, holds nearly a tenth of his investment portfolio in bitcoin, having bought in last January and seen a ten-fold increase in value.

But while there's been a massive increase in bitcoin price, there's not been anywhere near an equivalent increase in the currency's use. A glance at, which displays all transactions, shows that the vast majority of bitcoin transactions—by number, if not by value—are made at the site SatoshiDICE, a gambling organisation. In fact, the ever-increasing value of bitcoins is like to act as to depress the bitcoin economy, as people decide to hold on to their money rather than exchange it for services, knowing that it will surely increase in value.

The crash will come. At the heady peaks it's at right now, only the slightest spark will be required to turn the trend negative. In 2011, the previous bubble burst when Mt Gox, then the most popular bureau d'exchange for the fledgeling currency, was disastrously hacked. This time, I doubt it would take that. The peaks are so high, and so many people have so much money "invested" in the currency, that the rush to be the first out of a bear market will be vicious to behold.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Want to know how you really behave as a doctor? Watch yourself on video

There is nothing quite like watching oneself at work to spur development – and videos can help us understand patients, too.

One of the most useful tools I have as a GP trainer is my video camera. Periodically, and always with patients’ permission, I place it in the corner of my registrar’s room. We then look through their consultations together during a tutorial.

There is nothing quite like watching oneself at work to spur development. One of my trainees – a lovely guy called Nick – was appalled to find that he wheeled his chair closer and closer to the patient as he narrowed down the diagnosis with a series of questions. It was entirely unconscious, but somewhat intimidating, and he never repeated it once he’d seen the recording. Whether it’s spending half the consultation staring at the computer screen, or slipping into baffling technospeak, or parroting “OK” after every comment a patient makes, we all have unhelpful mannerisms of which we are blithely unaware.

Videos are a great way of understanding how patients communicate, too. Another registrar, Anthony, had spent several years as a rheumatologist before switching to general practice, so when consulted by Yvette he felt on familiar ground. She began by saying she thought she had carpal tunnel syndrome. Anthony confirmed the diagnosis with some clinical tests, then went on to establish the impact it was having on Yvette’s life. Her sleep was disturbed every night, and she was no longer able to pick up and carry her young children. Her desperation for a swift cure came across loud and clear.

The consultation then ran into difficulty. There are three things that can help CTS: wrist splints, steroid injections and surgery to release the nerve. Splints are usually the preferred first option because they carry no risk of complications, and are inexpensive to the NHS. We watched as Anthony tried to explain this. Yvette kept raising objections, and even though Anthony did his best to address her concerns, it was clear she remained unconvinced.

The problem for Anthony, as for many doctors, is that much medical training still reflects an era when patients relied heavily on professionals for health information. Today, most will have consulted with Dr Google before presenting to their GP. Sometimes this will have stoked unfounded fears – pretty much any symptom just might be an indication of cancer – and our task then is to put things in proper context. But frequently, as with Yvette, patients have not only worked out what is wrong, they also have firm ideas what to do about it.

We played the video through again, and I highlighted the numerous subtle cues that Yvette had offered. Like many patients, she was reticent about stating outright what she wanted, but the information was there in what she did and didn’t say, and in how she responded to Anthony’s suggestions. By the time we’d finished analysing their exchanges, Anthony could see that Yvette had already decided against splints as being too cumbersome and taking too long to work. For her, a steroid injection was the quickest and surest way to obtain relief.

Competing considerations must be weighed in any “shared” decision between a doctor and patient. Autonomy – the ability for a patient to determine their own care – is of prime importance, but it isn’t unrestricted. The balance between doing good and doing harm, of which doctors sometimes have a far clearer appreciation, has to be factored in. Then there are questions of equity and fairness: within a finite NHS budget, doctors have a duty to prioritise the most cost-effective treatments. For the NHS and for Yvette, going straight for surgery wouldn’t have been right – nor did she want it – but a steroid injection is both low-cost and low-risk, and Anthony could see he’d missed the chance to maximise her autonomy.

The lessons he learned from the video had a powerful impact on him, and from that day on he became much more adept at achieving truly shared decisions with his patients.

This article first appeared in the 01 October 2015 issue of the New Statesman, The Tory tide