Michael J. Casey is the chairman of CoinDesk's advisory board and a senior advisor for blockchain research at MIT's Digital Currency Initiative.

The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.

The financial bubbles of 17th and 18th century Europe are favorite references for those, among both believers and detractors, who warn of the excesses in crypto-asset markets.

The events of those times long past capture the same problems of information asymmetry and irrational speculation that leave many seasoned observers concerned about this moment. The South Sea Bubble, the Mississippi Bubble, and Tulip Mania were all examples of how, during money-crazed manias, unscrupulous entrepreneurs and early investors exploit their privileged access to information to do great harm to an ill-informed investing public. This, at its essence, describes the risk inherent in initial coin offerings (ICOs).

But the historical context behind those centuries-ago events is also important: they were a direct, almost unavoidable side effect of the invention at that same time of limited liability companies, stock markets and derivatives, some of the most game-changing financial innovations of all time.

On the one hand, these inventions – spearheaded by the Dutch – created vast new opportunities for a growing middle class to engage in wild, ill-conceived speculation. But on the other, they unlocked a giant, previously unavailable pool of collective capital, offering a much more efficient way for entrepreneurs to fund their ventures.

Vast worldwide enterprises were launched on the back of these new money-raising tools. They gave us the global capitalist economy we now take for granted.

This context is important because everything that looks like investor mania in cryptoland today – the 2017 bubble in token prices, the scam coins, the vaporware, the 10-figure ICO raises without a line of code written – might similarly be viewed as the unpleasant but unavoidable side effect of a major technological transformation.

If crypto-assets, smart contracts and blockchain technology fulfill their potential to decentralize the economy, the change they promise could be just as profound, if not more, as that sparked by those inventions during the Dutch renaissance. This technology represents a radical re-imagining of record-keeping, fundraising, organizational design and of money itself.

At times like this, you just can't stop the unsavory, get-rich-quick types.

As I've noted elsewhere, if you examine moments through history when a new, general-purpose technology upended the economic order, they were almost always accompanied by periods of intensified financial speculation.

It was the case with railroads, with electricity and, of course, with the rise of the internet in the late nineties. The Venezuelan economist Carlota Perez has even argued that the social phenomena of bubbles and speculation are necessary elements in how societies fund and build the infrastructure upon which transformative technologies become entrenched in the economy.

But the opposite causal relationship does not necessarily hold true.

Tracing every moment of hype and speculation that has been associated with a new technology will not at all find that it's always associated with the successful deployment of a powerful new technology. History is rife with supposedly "revolutionary" ideas that captured people's imaginations but weren't ultimately deployed in a widespread, society-altering way.

The past 50 years are full of them: the Segway, Google Glass, Betamax, the Concorde, to name a few. Note: all of these were impressive technologies and some have gone on to be important components of subsequent inventions. But for various reasons – the cost of production, marketing, fashion, etc. – they never took off in a way that matched the hype.

I was thinking about all this as I read about Augur's impressive launch of its prediction market. In one day, its ethereum-based decentralized application processed $400,000 in bets on everything from U.S. elections to the World Cup.

The question to me is whether the initial enthusiasm for decentralized prediction markets – in which contracts can be written for payouts between parties on the outcome of any particular event – will go beyond human beings' natural proclivity to gamble and ultimately deliver on Augur's real promise to society: a crowd-sourced, market-based forecasting system and an incentive, reputation token model for rewarding honesty.

In this case, the market Augur is developing literally requires speculation to function. Gambling is not just a byproduct; it is integral to its success. But just because people want to bet in this way does not mean that the price discovery around their predictions will be widely used by society at large to process and value information about occurrences that matter. Only time will tell on that one.

You could ask similar questions about other sectors of the crypto industry that attract significant speculation but also represent potentially powerful, cutting-edge ideas. While I'm convinced that the underlying concepts of incentivized consensus, cryptographically secured distributed ledgers, digital assets, and decentralized exchange will succeed in some form, I see no guarantees yet that any of the various manifestations of those ideas – including bitcoin – will necessarily survive and make an impact on the world.

So, let's ask these questions:

These and others like them are vital questions to answer if we are to ensure that blockchain technology's vast potential plays out to the benefit of matters to society at large.

Answering these questions comes down to how the technology itself is integrated into the wider economy.

That notion itself can refer as much to a new type of market as any other kind of technology. (The early Dutch stock markets offer a good analogy here for Augur's prediction markets – organizational technologies in their own right.) Regardless, there still has to be broad-based value to society if the technology (and the market it supports) is to survive and prosper.

Here the history of Europe's early capital markets is again valuable. The fallout from the disastrous South Sea Bubble didn't kill the idea of public capital markets for funding new ventures, but it did bring order and societal interest into play. These came in the form of new rules from governments on who could issue public stock and how. From that evolved the entrenched, regulated stock exchanges and related asset markets that we use today.

This is not at all to say that government regulation must be the answer to crypto's aspirations to go mainstream – the very concept of a censorship-resistant system tends to run counter to it. But it does mean that those of us involved in developing this technology should encourage protocols, best practices, standards and norms of behavior that have at their core the interests of society at large.

History suggests that naysayers like Nouriel Roubini who scoff at the hype and speculation in crypto communities could be blind to the major transformational moment that underpins it. But it equally offers a warning to crypto enthusiasts: don't get lost in the hype; create something that lasts; build something that matters to everyone.

South Sea Bubble image via Wikimedia Commons.