I was at a potluck Sunday evening, standing in a circle of 20-and 30-somethings who live in Brooklyn, when the topic of Ethereum came up. Ethereum is a bitcoin-like platform with a digital currency called Ether that has been seesawing in value since hitting a high of around $400 in June before plummeting down to $130 this week. “I lost $700 on that shit,” said a friend who works as a video editor, pulling out his phone to check the latest price.

“Oh no,” I said.

“I bought some too,” another friend, who used to work in Vice’s digital video department, said.

“No, no, no,” I said.

“I bought a little just to check it out,” said another, who also works in Vice’s video department.

“No,” I said softly.

“It’s fun,” said another person who does not work at Vice.

This wasn’t the first time Ethereum came up in casual conversation. A few weeks ago, I was at a bar when a friend mentioned buying about $700 worth of Ether after reading something about it on a blog. This friend is a documentary filmmaker who keeps a modest lifestyle and does freelance video editing to pay rent, so I was surprised that he would invest in a digital currency. “I didn’t invest more than I would be comfortable losing,” he assured me.

Why are all my friends investing in a digital currency that’s currently exhibiting all the classic signs of a giant bubble? Let’s first consider Ethereum’s backstory. It was conceived of by a 24-year-old programmer named Vitalik Buterin, a recipient of the Thiel fellowship who now lives in Singapore. Ethereum is more complex than bitcoin: It includes a programming language, a system for negotiating contracts over the internet, and a digital currency called Ether. It was much-hyped by programmers before a bare bones version of the network debuted in July 2015. Ethereum was so anticipated that it raised $18 million — yes, in real money, for a piece of a system that did not exist yet — in an online “crowdsale” in 2014 in which Buterin and his team presold Ether in exchange for bitcoin. People who bought in received Ether tokens that would theoretically be usable to pay for transactions, such as the negotiation of a contract, once the Ethereum network launched.

At the time, Buterin warned people not to speculate with Ether. “Ether is a product, NOT a security or investment offering,” Buterin wrote in a blog post announcing the Ether presale, emphasis his. “Ether is simply a token useful for paying transaction fees or building or purchasing decentralized application services on the Ethereum platform.” In other words, Ether is meant to be redeemed for computing time on the Ethereum network, in the same way that programmers buy keys from Amazon in exchange for server power and storage on its cloud services platform.

Of course, speculation happened anyway. Ether is traded on most digital currency exchanges, such as Coinbase and Kraken, and can be bought for bitcoin, U.S. dollars, and other world currencies. It was worth $1.35 in September 2015, according to the ethereumprice.org price tracker, and inched up in value until earlier this year when it started skyrocketing. On March 1, it was $15.91. On April 1, it was $49.96. On May 1, it hit $79.79. And on June 1, it was up to $228.64. People started talking about “the flippening,” the day that the value of all Ethers on the market exceeded the $34 billion worth of bitcoins. Again, this is supposedly a real-dollar value for what is basically a Chuck-E-Cheese token.

We talked about this story on our daily podcast, The Outline World Dispatch. Subscribe on Apple Podcasts or wherever you listen.

For weeks, I’ve been trying to figure out what was driving this bubble. Who was possibly paying close to $400 in real, U.S.-government backed money — or even in bitcoin, which is another stateless digital currency but has at least been around since 2009 and can be used to buy real stuff — for a digital currency that came out of nowhere and whose inner workings are extremely dense for nontechnical people?

Could the answer be… my friends? My friends and people like them — under 35, college-educated, internet-savvy, and thoughtful with their money — are inflating the Ether bubble. They became aware of it through word of mouth, or from reading about it in the news, in the past few months. They understood the risks of investing but felt optimistic enough to spend hundreds of dollars on something that seemed to promise a chance at profit. After all, it’s easier to invest in Ether than in regulated markets like the stock exchange or Silicon Valley, and the promised returns are alluring.

There is a lot of exciting possibility around Ethereum, which like bitcoin is built around a blockchain — essentially a distributed ledger where all users of a network verify what each other are doing. Ethereum could theoretically power everything from artist-run music stores to encrypted voting, for example — but it needs a robust buy-in from programmers, entrepreneurs, and actual users of the system, rather than from people specualting on just the currency. The only explanation for the run-up in price is the fact that new people were suddenly buying into the economy and driving up demand. I believe those speculators are non-technical people who are savvy enough to understand the gist of Ethereum but not the nuts and bolts, who have cash to spare, and who remember the stories of people getting rich off bitcoin.

The exact number of people who made money off bitcoin is unknown, but there are dozens of documented stories of those who mined or invested in bitcoin when it was cheap and held on to it long enough to make substantial profits (some of those stories are in New York Times reporter Nathaniel Popper’s book, Digital Gold). I asked my friend if the tales of bitcoin millionaires were a factor in his decision. “Oh of course,” he said. “100 fucking percent. Multiple people I know made good money back in June or whenever that shit went hog wild.” Redditors we interviewed said the same thing: They thought Ethereum could be the next bitcoin, and didn’t want to miss out again.

Buyers are acting on hype and a hunch

As for whether he understood the technical aspect of Ethereum, he admitted he doesn’t fully grasp all the concepts. “I’ve certainly tried to,” he said. “I’ll be honest, I’ve tried really hard to understand the blockchain in general and it’s still well outside my wheelhouse.”

As a tech reporter who covered the many booms and busts of bitcoin, and witnessed the rush of speculators buying it up whenever it peaked, the idea that my friends were blowing money on a hype-y internet technology they didn’t fully understand stressed me out. I jokingly posed the question on Quora: “How do I get my friends to stop buying Ethereum?” which actually garnered five answers and dozens of votes. Most of the answers said to let my friends decide what to do with their money, which is fair and basically what I am doing anyway.

There was one person who was bearish on Ether: Zac Sand, who had received 12 upvotes at the time of writing. “The banker kleptocurrency Ethereum, is designed to fleece suckers who think ‘all digital money is the same,’” he wrote.

Ether peaked on June 13 at $395.13, then started to fall. Ethereum could end up having the staying power of bitcoin, and the potential upside of investing in Ether is certainly higher than traditional, regulated investment vehicles like stocks or startups.

I am not saying that Ethereum won’t be big, or that Ether won’t go up in price again, or that you should not invest if you have a few hundred bucks you’d like to creatively get rid of, and I’m not qualified to give investment advice. But the fundamentals of the asset — Ethereum’s codebase — cannot justify the price, because the buyers of the asset have no ability to evaluate those fundamentals, and are basically acting on hype and a hunch. Furthermore, Ether was not supposed to be an independent currency; it’s a way to incentivize a distributed network of programmers to write apps for Ethereum and keep the network running. And finally, the people rushing into Ether seem to be violating the most common sense principle of investing, which is buy low, sell high. When you buy high, all you’re doing is making other people rich.