This is where we are.

The virtual currency boom has gotten so heated that it is throwing the list of the world’s richest people into disarray.

Consider what has happened to the founders of an upstart virtual currency known as Ripple, which has seen its value skyrocket in recent weeks.

At one point on Thursday, Chris Larsen, a Ripple co-founder who is also the largest holder of Ripple tokens, was worth more than $59 billion, according to figures from Forbes. That would have briefly vaulted Mr. Larsen ahead of Facebook chief executive Mark Zuckerberg into fifth place on the Forbes list of the world’s richest people.

To recap, someone wrote a piece of software code, called it a currency, and people invested hundreds of billions of dollars into it, making him one of the richest people on earth virtually overnight. The “currency” is not currently in use as anything other than a tradable asset on unregulated exchanges, nor is it decentralized in the way that Bitcoin is – it is centrally owned and controlled by the software company that created it.

So basically, it’s an American Express gift card with none of the reliability or utility and 10,000% the volatility.

It’s important to recognize what stage of the game we’re at in terms of risk appetites and investor sentiment.

Here’s the LA Times covering the IPO of three-year-old “business” TheGlobe.com in November of 1998:

An Internet-related company’s new stock offering Friday set a record for a first-day price gain, capping one of the wildest weeks ever for the red-hot Net stock sector.

After being priced at $9 to initial buyers Thursday, shares of Theglobe.com Inc., an as-yet-unprofitable company that helps people set up World Wide Web pages, shot up 606% to end at $63.50 on Nasdaq on Friday.

Theglobe.com’s founders, however, became extraordinarily wealthy immediately: Michael S. Egan, 58, the firm’s chairman and former chairman of Alamo Rent-A-Car, holds 6.01 million shares now worth $382 million, according to Bloomberg News.

Todd Krizelman, 25, the company’s co-chief executive, has a stake worth $47 million. Stephan Paternot, 24, the other co-CEO, has a stake worth $51 million.

There was nothing there other than a domain and some ideas about the potential bigness of the internet. Investors believed in the ideas and the bigness, which probably would have been vindicated if the company could have held out for 10 or 15 years and actually had some semblance of a business beyond the URL.

TheGlobe wasn’t unique. There were thousands of TheGlobes, many of which managed to find an underwriter and come public. The paper wealth created by the 1998 vintage of IPOs drove everyone mad throughout the course of 1999. I was there, an active participant in all of it – buying, trading, researching, relaying info, rationalizing, and, eventually, losing. Regular readers here know I despise casual analogies that oversimplify the similarities from one thing to another, but in this case it’s all practically identical. Only now the ideas are even more ludicrous and the dollar figures are all magnified by 10 or 20 times.

The names are different and the most fervent believers in what’s happening today were all in elementary school the last time around. They mostly don’t know that Amazon and Ebay are the sole survivors twenty years later, with virtually every other investable thing from that era now buried in a graveyard, or unceremoniously absorbed into some other entity.

The only thing that keeps me calm in the presence of this sort of activity is knowing my clients are diversified – both in terms of asset classes and in terms of strategies. You can shut your eyes and pretend that your fellow investors aren’t losing their minds, or you can be situationally aware and remember how periods like these have ended throughout market history.

And set yourself up accordingly.