The one fundamental truism of investing, and the one most often ignored, is this: the higher the returns, the higher the risk.

The past is littered with examples of when that rule was ignored. The stocks of dot-com companies raced to stratospheric heights in the late 1990s, until they came crashing to the ground. After a decade of astonishing growth in value, junk bonds defaulted en masse in 1989. Values in the housing market zoomed for years, until they grew unsteady in 2006 and then collapsed in 2008. The bottom-line message of history is that, if you’re doubling and tripling your money in record time, you’re also more likely to lose it all.

Which brings us to the Bitcoin craze and what is almost certain to be the coming debacle.

For those who don’t know about Bitcoins, they are a brilliant technical concept designed to create a new, digital currency that essentially cuts out the middleman—values of Bitcoins are established online, peer to peer. There are no central banks, and at least for now, there is no government involvement. Like standard currency, Bitcoins can be traded or used for purchases, but only with those sellers who will accept them. Because it is a system independent of external meddling, there can be no sudden devaluation of Bitcoins through the actions of governments. (But make no mistake—there can be sudden devaluation of the currency through the actions of players in the Bitcoin market, and too many of them seem not to realize it. More on that below.) The values are not pegged to any existing currency; instead, members in the Bitcoin market establish the exchange rate through simple supply and demand—when the number of people wanting Bitcoins grows faster than the availability, the values go up.

Most of the discussion and commentary about Bitcoins focuses on the coolness of their creation and the operation of the market. And there is no disputing that those are cool. The currency and the technological means for using it were suggested in 2008 by a person or people who went by the pseudonym Satoshi Nakamoto—to date, no one has discovered Nakamoto’s true identity. (Warning No. 1: If you can’t find out who actually developed a financial instrument, steer clear.) The market became operational in 2009. In order to join the Bitcoin playground, users have to download some open-source software, which is then stored in a digital wallet. (Warning No. 2: If a hacker can steal all of your money by accessing your computer, steer clear.)

The means of conducting the transactions is highly complex—far beyond the scope of any single blog posting—but there are plenty of places online to learn the technical details. Still, one important element that needs to be understood is that the only means of producing more of the currency, and thus increasing the supply, is through operators of systems that validate Bitcoin transactions. These people, known as “miners,” use powerful computers within the Bitcoin network that perform complex mathematical calculations to establish the validity of transactions. The miners do this work voluntarily, but, at certain steps along the way, they are rewarded with 50 newly created Bitcoins. That adds to the available amount of the currency, but the total possible number of Bitcoins is capped at 21 million; there are now 11 million Bitcoins in circulation.

Like I said, very cool. But also very foolish.

The technology, coolness, and intricacy are all beside the point. You don’t have to understand the complexity of collateralized mortgage obligations in the real-estate market—and the fact that they contributed massively to the 2008 economic collapse shows that few people did understand them—to recognize that they are simply financial instruments following the valuation rules that have governed markets throughout history.