Tulip Bubble & Bitcoin

[iamTom123]

I have been reading so many posts comparing the past Tulip Bulb Bubble and the possibility that Bitcoin can be suffering the same fate. So what was this tulip bulb mania all about and how come they are using this is a warning to all Bitcoin enthusiasts and investors? Let's find out...

So, what is the story with the tulip mania? Well, as some may be aware, the tulip is a national symbol of the Netherlands. The country is affectionately known by some as “the flower shop of the world.” If you’ve ever been to the Netherlands, you’ve probably seen some or visited some of the beautifully cultivated fields of colorful tulips lining the landscape of the Dutch countryside.

How much would you pay for a tulip? In 17th century Holland, it may have cost you your entire home, and you probably still would have paid up.

There have been a lot of economic bubbles and subsequent crashes over the years such as, the dot com bubble, the stock-market bubble, the real-estate bubble, but one you may have never heard of is the Tulip Bulb Market Bubble of 17th century Netherlands.

As any commodities trader will tell you, futures and options trading involves substantial risk of loss and is not suitable for everyone. Tulip mania is a perfect example of a cautionary tale of price speculation in what was one of the first economic bubbles and crashes before futures exchanges were even an organized market.

Source here.

Of course, there are many of us here who can easily defend Bitcoin against the insinuation that it can just be another tulip bulb mania and can soon collapsed leaving many people holding empty bags. Tell me why you think Bitcoin could never be suffering the same fate like that tulip bulbs above...

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[Pursuer]

the difference is very simple actually:
nothing about bitcoin's supply has changed so far. but the demand for bitcoin has increased substantially. this is clearly noticeable by the increase in volume, how packed the orderbooks are and the fact that awareness about bitcoin has grown a lot. not to mention all the increase in merchant adoption.
this simply means a big real rise not a fake bubble.

also, rises like this are not at all strange or unheard of. there are a lot of things in the world, specially stocks market, that had the same rises. big and fast. it doesn't have to be a "tulip bubble" just because it went up fast!

[Kyraishi]

the difference is very simple actually:
nothing about bitcoin's supply has changed so far. but the demand for bitcoin has increased substantially. this is clearly noticeable by the increase in volume, how packed the orderbooks are and the fact that awareness about bitcoin has grown a lot. not to mention all the increase in merchant adoption.
this simply means a big real rise not a fake bubble.

also, rises like this are not at all strange or unheard of. there are a lot of things in the world, specially stocks market, that had the same rises. big and fast. it doesn't have to be a "tulip bubble" just because it went up fast!

I only somewhat agree with you.

It is true that bitcoin's supply has stayed relatively the same, and the supply can't be brought up just by someone printing more bitcoins because that's just not possible. It is also true that the rise of bitcoin is probably a lot less crazy than the rise of tulips back when the bubble happened, but bitcoin is still a bubble.

Every bubble is going to crash, sooner or later. It's just that the magnitude of the bubble isn't as great as the tulip mania.

[alyssa85]

It all depends on whether bitcoin actually gets used in the real world. If it does, then it is very cheap at the moment. If people find it unusable, then it's as unusable as a rare tulip and the price will fall.

BTW - the earliest and best book on financial manias was Charles MacKay's classic Extraordinary Popular Delusions and the Madness of Crowds.

You can read it free at the gutenberg library, and I recommend every investor to take some time to read about all the financial manias and scams that have taken place over the centuries:

http://www.gutenberg.org/files/24518/24518-h/24518-h.htm

[btcney]

It all depends on whether bitcoin actually gets used in the real world. If it does, then it is very cheap at the moment. If people find it unusable, then it's as unusable as a rare tulip and the price will fall.

BTW - the earliest and best book on financial manias was Charles MacKay's classic Extraordinary Popular Delusions and the Madness of Crowds.

You can read it free at the gutenberg library, and I recommend every investor to take some time to read about all the financial manias and scams that have taken place over the centuries:

http://www.gutenberg.org/files/24518/24518-h/24518-h.htm

This is very, very accurate.

In the long term, if bitcoin gets widely adopted(which i think will be the case, easily), then $4000+ per coin would be considered to be extremely cheap. However in the short term, bitcoin has achieved 1000% growths yet in does not have an equal amount of growth in users or adopters.

This is the primary reason why i think that it is in a bubble. Not to the extend of the tulip mania, but definitely a very sizable bubble. Whether or not it pops this year is entirely up to debate, i would say yes.

[HeRetiK]

The tulip mania is one of my favourite silly arguments against Bitcoin as it utterly ignores that you can't meaningfully compare markets of commodities that are inherently different.

Both Bitcoin and tulips saw an unprecedented price appreciation but that's where the similarities end. The only reason Bitcoin gets compared to the Dutch tulip bubble is because it's funnier and gets better headlines than comparing it to the south sea or the dot-com bubble. Both of which would arguable be better (if still bad) comparisons.

Luckily, as years move on and the nature of Bitcoin is starting to dawn on people, the tulip comparisons are getting less and less.

[zokora]

Every time I read another tulip buble compare against bitcoin, I get more and more angry about how people can be so stupid about comparing things. Tulip is a flower, it can die-literally- throughout time, you can produce as much as tulip you want. Bitcoin can not die, it can stay in the wallet forever and its supply is limited. You can transfer bitcoin from europe to japan instantly however you have to send tulip with ship in 1 year (at that time in holland) with ship to japan.

This is really ridiculuos for me to explain the differences between tulip and bitcoin. Bitcoin is the future. Tulip never claimed that it is the future. It was just a luxury that ended. That's all.

[Ibian]

Because they were fucking tulips.

[Mallyx]

If Bitcoin is a tulip,
what is Berkshire Hathaway ?

[Proton2233]

Tulip dies when it gets cold, but he leaves the land of his bulb and as soon as spring comes let new sprouts. If you compare with bitcoin it is possible to see the bitcoin at the time has no value. It's winter. Then it grows in value reaches its maximum - is a beautiful flower. Then it repeats, but it is always there.

[Pursuer]

the difference is very simple actually:
nothing about bitcoin's supply has changed so far. but the demand for bitcoin has increased substantially. this is clearly noticeable by the increase in volume, how packed the orderbooks are and the fact that awareness about bitcoin has grown a lot. not to mention all the increase in merchant adoption.
this simply means a big real rise not a fake bubble.

also, rises like this are not at all strange or unheard of. there are a lot of things in the world, specially stocks market, that had the same rises. big and fast. it doesn't have to be a "tulip bubble" just because it went up fast!

I only somewhat agree with you.

It is true that bitcoin's supply has stayed relatively the same, and the supply can't be brought up just by someone printing more bitcoins because that's just not possible. It is also true that the rise of bitcoin is probably a lot less crazy than the rise of tulips back when the bubble happened, but bitcoin is still a bubble.

Every bubble is going to crash, sooner or later. It's just that the magnitude of the bubble isn't as great as the tulip mania.

why do you say it is a bubble?  that is the question that you should be answering.

if your reason is only because price seems big to you or if your reason is just because it went up faster than before or faster than you expected, these are not reasons to call bitcoin a bubble.

the picture posted above my comment is actually a pretty good example. Berkshire Hathaway stock used to be less than a dollar back in 1990s and it grow with the same speed as bitcoin, even faster and in a couple of years (less than bitcoin's 8 year) it were over $5000 and it is currently worth more than $200,000 per share.
you see just having a big number as price doesn't mean something is a bubble. the same way as any drop is not a dump and the end of the world or bubble popping,....

[thecodebear]

the difference is very simple actually:
nothing about bitcoin's supply has changed so far. but the demand for bitcoin has increased substantially. this is clearly noticeable by the increase in volume, how packed the orderbooks are and the fact that awareness about bitcoin has grown a lot. not to mention all the increase in merchant adoption.
this simply means a big real rise not a fake bubble.

also, rises like this are not at all strange or unheard of. there are a lot of things in the world, specially stocks market, that had the same rises. big and fast. it doesn't have to be a "tulip bubble" just because it went up fast!

I only somewhat agree with you.

It is true that bitcoin's supply has stayed relatively the same, and the supply can't be brought up just by someone printing more bitcoins because that's just not possible. It is also true that the rise of bitcoin is probably a lot less crazy than the rise of tulips back when the bubble happened, but bitcoin is still a bubble.

Every bubble is going to crash, sooner or later. It's just that the magnitude of the bubble isn't as great as the tulip mania.

Why do you think bitcoin is a bubble?
Where are the signs it is a bubble? If you're talking long term the idea of it being in a bubble now is laughable when there are only on the order of 10 million people with bitcoin. About 1 out of every 1000 people on earth have some bitcoin. In a few years that'll be more like 1 out of 10. And some years after that maybe 1 our of 5. When the price of bitcoin is 100x more than it is now then MAYBE we can talk about it being in a bubble. until then its just absurd.

[RoommateAgreement]

it is good to be cautious when it comes to your investment and be aware of the bubbles and their deffinition. you should always have it somewhere back in your mind.

BUT you should also not forget the fact that people have been calling bitcoin a bubble and the comparison with Tulip bubble is nearly as old as bitcoin and each time someone compares these two, bitcoin price continues rising and they go silent until some other time to repeat the same thing again.

[NUFCrichard]

the difference is very simple actually:
nothing about bitcoin's supply has changed so far. but the demand for bitcoin has increased substantially. this is clearly noticeable by the increase in volume, how packed the orderbooks are and the fact that awareness about bitcoin has grown a lot. not to mention all the increase in merchant adoption.
this simply means a big real rise not a fake bubble.

also, rises like this are not at all strange or unheard of. there are a lot of things in the world, specially stocks market, that had the same rises. big and fast. it doesn't have to be a "tulip bubble" just because it went up fast!

I only somewhat agree with you.

It is true that bitcoin's supply has stayed relatively the same, and the supply can't be brought up just by someone printing more bitcoins because that's just not possible. It is also true that the rise of bitcoin is probably a lot less crazy than the rise of tulips back when the bubble happened, but bitcoin is still a bubble.

Every bubble is going to crash, sooner or later. It's just that the magnitude of the bubble isn't as great as the tulip mania.

Why do you think bitcoin is a bubble?
Where are the signs it is a bubble? If you're talking long term the idea of it being in a bubble now is laughable when there are only on the order of 10 million people with bitcoin. About 1 out of every 1000 people on earth have some bitcoin. In a few years that'll be more like 1 out of 10. And some years after that maybe 1 our of 5. When the price of bitcoin is 100x more than it is now then MAYBE we can talk about it being in a bubble. until then its just absurd.

You realise that at the end of 2013 there were fewer people who owned Bitcoin than now.  The price was about 25% of what it is now.
Guess what, it was in a massive bubble!  That bubble popped and the price fell fairly consistently for 18 months or so.

That doesn't mean that the price will never rise again, but we could be sat with the price at $1000 in 2 months time, looking at this massive popped bubble and wishing we had sold at the top.

Or the price could be higher, who knows, you can't see a bubble until it pops, but your arguement against it is meaningless. 1 month ago the price was $2500. That is an increase of $60 a day on average.  That is a massive rise.

[Higher Altitude]

We'll see if we are in a bubble once we reach $4,827. 

[HTracer]

Basically, measurment is comparision an object to reference standard. If the object can't be measured directly due to complex or innovative nature, there are attempts to make assessment of the object or its attributes by comparison with somthing similar one. When it comes to analisys supply and demand or user base, "tulip bulb" and bitcoin attributes comparison are incorrect. Does bitcoin like tulip bulb? If it does not, then why there are talks about "tulip mania" as well as "how much bubble bubbled" over and over. All the talks could be regarded as an attempt to make assessment of future market price action. Actually it would be boiled dawn to two questions: Will bitcoin move down to zero level?  What level high will bitcoin achieve in the future?
Both questions have been discussed many times.

[orions.belt19]

it is good to be cautious when it comes to your investment and be aware of the bubbles and their deffinition. you should always have it somewhere back in your mind.

BUT you should also not forget the fact that people have been calling bitcoin a bubble and the comparison with Tulip bubble is nearly as old as bitcoin and each time someone compares these two, bitcoin price continues rising and they go silent until some other time to repeat the same thing again.

I agree with that, because its better to become cautious. Sometimes when fear creeps up, at the back of my head, a thought pops up like "What if Bitcoin suddenly crashes?" because I can't help but wonder how amazing Bitcoin is for its price to continue to increase over the years, and how fast and high its been increasing over a short period of time.

Tulips are definitely different from Bitcoin. There are a lot of factors that are different from the current situation of Bitcoin and the tulip bubble, from its tangibility to its use. But really, the similarities between bubbles and crashes were how it crashed. Most economists still ponder on how a crash happens, and continuously research on how is it that one day a market suddenly crashes and the price drastically goes down in the blink of an eye.

This happens when people lose confidence. They suddenly think for themselves "Oh this isn't worth buying" and at that moment when they choose to stop buying it, the price goes down and a crash happens.

The fate of Bitcoin lies on the hands of its users. Its up to us, and our trust on it. As some people have suggested, the price of bitcoin relies on the "trust" of people since no one actually dictates its price. If people choose to believe that its in a bubble, it may breed fear and this could cause a possible crash. We should continue to become confident.

[CoinCube]

Every bubble is going to crash, sooner or later. It's just that the magnitude of the bubble isn't as great as the tulip mania.

There is one type of bubble that does not crash over the short term. That bubble is a monatary bubble.

Gold is a shiny metal that does not corrode. It has limited utility as jewelry and in electronics. Most of its value, however, comes from its 5000 year history of acceptance as money.

The proper question to ask regarding bitcoin is not whether it is a bubble but if it is money. I believe the answer is a clear yes.

[Torque]

[dothebeats]

Unlike the Tulip bubble, bitcoin has a lot of genuine supporters backing it every single day and mind you, the number is growing. Also, there might be some corrections happening every now and then but that weren't enough to bring the price down by a significant amount. Everytime the price goes up by 20% a single day, a 'bubble' is what some people think bitcoin is and would soon be popped. The question is when? Almost a year of bullish trend and nothing happens.