One of the simplest lessons of stock market history is that innovations often lead to bubbles and busts, from new tulip bulbs through canals and railways to the internet. Less well understood is that financial innovations count for double, as new tools expand the supply of what looks like money, allowing the bubble to grow larger—and the bust to be even more serious.

The cryptocurrency implosion currently under way followed rampant creation of new digital money, something that never ended well in the traditional world either.

The question for crypto enthusiasts is which lesson they should take from history. Are bitcoin and other crypto tokens crashing because of the usual excesses that accompany advances in finance? Or do they have some sort of fundamental flaws.