As the price of bitcoin keeps fluctuating and ICOs become the new black, it is easy to be distracted by the noise of the crowd. It's all a bubble, which by popular definition is completely a bad thing. However, I do not believe this to be the case. Here are a couple of key factors that illustrate why bubbles are an essential part of the business startup ecosystem.

Innovation:

Bubbles are times where a new emerging industry receives a disproportionate amount of attention and funding as there is excitement around the industries potential. This attention and capital are then harnessed to innovate and push the boundaries of what is possible. The dot-com boom gave us the annoying sock puppet, but it also gave us Google, iTunes, and cheap cabs.

Investment:

Don’t people lose money and aren’t there are loads of scams in bubbles? Yes, people lose money in bubbles, but many- including small investors-make very large amounts of it too. Yes, there are often more scams in bubbles as people take advantage of the excitement and the fear of missing out, so always make sure you do your due diligence and never invest more than you can afford to lose! Of course, if you had invested $1,000 in Google on its launch in 2004, you'd have almost $25,000 today. In comparison, the same investment in the 'safe and secure' S&P 500 would now be worth less than $2,500. Don't kick yourself too hard, Warren Buffet didn't buy into Google at first either! So, some investments are winners, some are losers, it was ever thus! From a big picture point of view, the huge sums of capital invested in digital and technology companies are why we have smartphones, high-speed internet, and millions of products that you can view, review, select and click a button to have it delivered to your door. Perhaps the biggest benefit of the dot-com era, however, is that business is now more focused on results than ever before. VCs and private and institutional investors are looking for companies that can show where the ROI will come from.

Conclusion:

From a financial perspective, bubbles are a risky time to invest in an industry as many of the ideas will not work out, but it can also be hugely financially rewarding if you pick a ‘survivor’. For innovation, bubbles are hugely important as they allow us to push boundaries, from that perspective the bigger the bubble the better; provided it fuels more diversity.

About the Author: Elliot La Cour is a co-founder of Crowd-Up, a startup that plans to change the way equity crowdfunding works by using the power of blockchain technology.