Tulip Mania

[tinopener]

People often compare the speculative bubble of Tulip Mania hundreds of years ago with that of Bitcoin. Gold also tends to have speculative bubbles when stock markets crash.

I've been pondering the Tulip thing and the whole concept seems flawed to me for one simple reason:

A Tulip bulb could cost many thousands of dollars, but wouldn't most people have planted it to gain more tulip bulbs with the aim of selling them, ultimately flooding the market and inevitably driving prices down again?

[merchantofzeny]

People often compare the speculative bubble of Tulip Mania hundreds of years ago with that of Bitcoin. Gold also tends to have speculative bubbles when stock markets crash.

I've been pondering the Tulip thing and the whole concept seems flawed to me for one simple reason:

A Tulip bulb could cost many thousands of dollars, but wouldn't most people have planted it to gain more tulip bulbs with the aim of selling them, ultimately flooding the market and inevitably driving prices down again?

The whole event was confusing because most of those that wrote about it were from decades after and many turned it into a moralistic tale. Recently there are researches saying it was not the bubble we thought it was. Regardless, yes, the possibility of just flooding the market would drive down the price. At its height though, it was not about the quantity. New cultivars show up, they fetch a high price, and then another one comes in and that becomes the new hot. Newer/rarer cultivars sell for more so there was an incentive for breeders to keep supply low for newer ones while they develop the next big thing.

[just_Alice]

People often compare the speculative bubble of Tulip Mania hundreds of years ago with that of Bitcoin. Gold also tends to have speculative bubbles when stock markets crash.

I've been pondering the Tulip thing and the whole concept seems flawed to me for one simple reason:

A Tulip bulb could cost many thousands of dollars, but wouldn't most people have planted it to gain more tulip bulbs with the aim of selling them, ultimately flooding the market and inevitably driving prices down again?

It is flawed. The situations are way different. The Tulips were popular among rich people and they were selling them to one another, the price was rising, but then the war consequences and the market place has fallen, therefore people began to sell all the tulips they had for low price, which caused price rising again. Eventually they price became that big, that no one could afford to buy those Tulips. Due to this some people sold poor grade Tulips for low price, while others were in speculative activity, they were selling product they didn't have to people who didn't have money to buy it - they concludes contracts, called "futures". At the same time children of a flower gardener found his Tulips of premium variety and set them for an auction. That day was crucial. People began to buy those Tulips (again, they didn't have money, they were just hoping to sell those Tulips for much bigger price on the next day) and the value increased by many times. Because of that the overall Tulip price increased and all those people, who concluded contract could barely pay off compensation for termination of a contract. Since all parties to contract were close related people they just got into quarrels. As a result, no one ever wanted to buy those Tulips. Bitcoin is different, because it can't be set for an auction, it is popular among people from all over the world and there's a limited amount of it.

[andamers]

I think BTC is the future Tulip, but it makes sense. But Tulip is meaningless.
Because BTC is the cornerstone of the entire digital currency and decentralized transactions, it may no longer be suitable for current transactions, but it provides a vision and foundation for future growth that will drive us to build a better currency and system of transactions in the future .
Now a lot of crypto coin, is a rapid iteration base on BTC.
The future one, not Tulip.

[cynical]

People often compare the speculative bubble of Tulip Mania hundreds of years ago with that of Bitcoin. Gold also tends to have speculative bubbles when stock markets crash.

I've been pondering the Tulip thing and the whole concept seems flawed to me for one simple reason:

A Tulip bulb could cost many thousands of dollars, but wouldn't most people have planted it to gain more tulip bulbs with the aim of selling them, ultimately flooding the market and inevitably driving prices down again?

As far as I can remember, the tulip mania thing was actually caused by a variety of tulip which developed a virus which
affected the colour of the petal, it was quite unique and highly sought after, but was just a flower.
Bitcoin on the other hand has a real world use.
Here is an interesting thread, why is Bitcoin valuable - https://bitcointalk.org/index.php?topic=2773148.msg28764408#msg28764408
and a quote from that thread

What is Censorship Resistance and Why Would It Make Bitcoin Valuable?

Cash being an exception, payments usually run through central payment processors such as PayPal, VISA or your local bank.

This works fine, until it doesn't. PayPal is known for more or less randomly freezing merchant accounts, essentially locking them out of their money. Credit Card providers such as VISA have blocked payments in the past -- look up what happened to Wikileaks as an example. Local banks can go bust during bank runs and shut down accounts if they find your transaction suspicious -- whatever that may mean.

Nothing of the above apply to Bitcoin. Bitcoin takes the power and responsibility away from third parties and puts it back in the hand of the actual owner. Hence it being censorship resistance, an attribute that has been rather unusual for a currency -- until now.

[AK47-]

See tulip mania is also used as a symbolic representation of rise in asset price because of speculation without intrinsic value. And people saying BTC tulip mania in that sense is still okay. But direct comparison to the situation is baseless because of so many factors. Tulip didn't solve any particular problem. BTC aims to be a single decentralized easy to use currency, a problem that is still relevant. This alone makes BTC valuable which tulips weren't.

[faatipoke]

There is no similarity between bitcoin and tulip mania, this is totally ridiculous. You can think bitcoin is bubble such as dotcom bubble, or some bubbles in stock exchanges. However tulip mania is completely a different thing. Tulip was used as a luxury and statue among the rich people 500 years ago. However bitcoin is used for real purposes. I can use bitcoin to invest a project by sending bitcoin to initial coin offerings on the other side of the world. I can easily turn bitcoin into fiat money or other cryptocurrencies. Tulip mania is really irrelevant thing

[richardsNY]

You can think bitcoin is bubble such as dotcom bubble, or some bubbles in stock exchanges.

Not even that. If we look at the overall market during the dot com internet bubble, the majority of the businesses not making a single penny in profits, were capable of attracting millions and millions, and some of them even hundreds of millions in funds, which is mind boggling. If you realistically look at this, it will become clear that it was just a matter of time before that bubble (yes, it was a legit bubble) would burst, and it did. In no shape or form should businesses be able to raise that much capital without cash flow or cold hard profits, and if it does, the probability of it going horribly wrong is on the far higher side. And regarding stock bubbles in recent times, the term bubble is something that shows up as soon as the market or a specific stock increases with like 20-25% in a short period of time. It's funny and pathetic at the same time, seriously, what is 20-25%? No wonder they believe that Bitcoin is a bubble.

[guy369]

Most of the "Tulip Mania" high pricing came from one VERY large purchase at the time, and near the end of the 'mania'

It's not like the movie "Wall Street" would have you believe

Also, Crypto as a total market cap is still a small % of what the dot com bubble was at the time it popped


Many people are calling crypto (BTC specifically) the pin to the fiat bubble

[uslfd]

OK - have they compared Amazon / Google to tulip mania?
The whole "comparing it to tulip" argument rests of presumption that bitcoin is absolutely a bubble that will burst to nothing.

[skyline247]

Bitcoins are not Tulips. This is not a bubble.

[The_Dark_Knight]

You can think bitcoin is bubble such as dotcom bubble, or some bubbles in stock exchanges.

Not even that. If we look at the overall market during the dot com internet bubble, the majority of the businesses not making a single penny in profits, were capable of attracting millions and millions, and some of them even hundreds of millions in funds, which is mind boggling. If you realistically look at this, it will become clear that it was just a matter of time before that bubble (yes, it was a legit bubble) would burst, and it did. In no shape or form should businesses be able to raise that much capital without cash flow or cold hard profits, and if it does, the probability of it going horribly wrong is on the far higher side. And regarding stock bubbles in recent times, the term bubble is something that shows up as soon as the market or a specific stock increases with like 20-25% in a short period of time. It's funny and pathetic at the same time, seriously, what is 20-25%? No wonder they believe that Bitcoin is a bubble.

Bubbles are not necessarily such a bad thing as long as it does not come from governments printing too much money, without the dot com bubble it is unlikely we would have gotten all the big companies that today we take for granted like Google or Amazon, also the infrastructure of the Internet grew at a faster rate than it could have done so if investors were prudent instead of taking risks like they did, the dot com bubble was different than the market crash of 2007 where the crash was mostly a bunch of bets that banks created that they had no hope of repaying.

[BillCoin]

Tulip Mania was a different situation.

First of all, at the time of Tulip Mania, there wasn't real money ot something issued by the government, people were desperetely searching for a way to pay and receive payments for things and they found Tulip Mania.

Also, Bitcoin provides us a new technology to transfer data over the internet, while Tulip Mania didn't provide us anything , and there wasn't a real reason for it's price increase.

I believe it's stupid to compare bitcoin to Tulip Mania because it's much different by situation.

[Andrej Peiboski]

It seems to me incorrect to compare Tulip Mania with bitcoin, because it implies that - once the mania will stop - bitcoin will lose its value.
This happend of course countless times (think about the crazy prices achieved by Swatch wristwatch in '80, or the rush for dotcom domains in 2000).
But with wider acceptance, and with its resistance to inflation, this is very unlikely to happen with bitcoin.

Eventually, there is the possibility that bitcoin could be replaced by another cryptocurrency, but this is another discussion.

[jseverson]

A Tulip bulb could cost many thousands of dollars, but wouldn't most people have planted it to gain more tulip bulbs with the aim of selling them, ultimately flooding the market and inevitably driving prices down again?

That's just one flaw of the whole tulip 2.0 argument. You can clearly see that the situation is completely different supply-wise, with Bitcoin being limited to a fixed amount, and tulips being possible to be "mass produced" without a real ceiling.

The most glaring one though, in my opinion, is a matter of utility. Sure, tulips are pretty, but they're largely decorative, and they wilt. Bitcoin doesn't have a physical form, but it doesn't expire, and it actually aspires to solve real-world problems. They're comparing decorative flowers to a peer-to-peer digital cash system that foregoes trust and lets wealth move around freely without censorship. We're also speculating its value now, yes, but it could easily be worth much much more than it is right now.

[Lupus Solitarius]

You can say that something is a bubble - or a tulip mania - only after its explosion.
At present, even after the recent correction, bitcoin is still something that made more than a 1000% growth in a year.
Of course, tomorrow it could be zero (but this is true for every currency), but for now it's the best investment of all time.
(If you bought it in the past, of course...)

[The_Dark_Knight]

Tulip Mania was a different situation.

First of all, at the time of Tulip Mania, there wasn't real money ot something issued by the government, people were desperetely searching for a way to pay and receive payments for things and they found Tulip Mania.

Also, Bitcoin provides us a new technology to transfer data over the internet, while Tulip Mania didn't provide us anything , and there wasn't a real reason for it's price increase.

I believe it's stupid to compare bitcoin to Tulip Mania because it's much different by situation.

If I member correctly the Tulip mania was mostly a new way to bet on the market, it was the first time the futures contracts appeared where tulips were sold even before they existed, yes the very same thing that has been recently introduced in bitcoin was responsible for the bubble, which means the futures market is only going to bring even more volatility to bitcoin, and then when people lose their money they will be able to blame bitcoin for their losses, it seems like a good plan to try to discredited bitcoin in the eyes of the general public.

[JetSet11]

People often compare the speculative bubble of Tulip Mania hundreds of years ago with that of Bitcoin. Gold also tends to have speculative bubbles when stock markets crash.

I've been pondering the Tulip thing and the whole concept seems flawed to me for one simple reason:

A Tulip bulb could cost many thousands of dollars, but wouldn't most people have planted it to gain more tulip bulbs with the aim of selling them, ultimately flooding the market and inevitably driving prices down again?

We're in the middle of a market crash. Bitcoin has dropped over 1/3 since December. Some altcoins have lost 40-80% of their market value. The peril of tulip mania should be rather self-evident.

That being said, crypto moves a lot faster than other markets, so we'll be back up quite soon. And to be fair, a lot of people are still in profit from early 2017.