2013-12-04 nutech.nl (ANP): Nout Wellink: 'Bitcoin worse than Tulip mania'

[cjp]

http://nutech.nl/internet/3645557/bitcoin-erger-dan-tulpenmanie.html (Dutch)

Translation:
(Edit 2: Refined the translation and added formatting)

Nout Wellink, former president of De Nederlandsche Bank (DNB) and current supervisor of the Chinese state bank, considers bitcoins to be worse than the tulip mania of 1636. According to him, the virtual currency is a hype.

"Back then, at least you got a tulip. Now you get nothing", Wellink said on Wednesday, during a meeting with students of the University of Amsterdam.

During the discussion meeting Room for Discussion, he described the virtual currency as a hype and found that "this structure" will collapse sooner or later.

Previously, the DNB and Finance Minister Jeroen Dijsselbloem warned for virtual currencies like the bitcoin. The exchange rate of the virtual currency is very volatile. Strong peaks are followed by deep valleys, often without any obvious reason.

During the Dutch tulip mania, around 1636-1637, the tulip bulb was hugely valuable. After a sudden decrease in price, many tulip traders were bankrupted. Economists see it as the first well-described economic bubble in history.

This news is already a couple of days old, but I thought it would still be relevant, since the article says this man is now a supervisor of the 'Chinese state bank' (actually the Bank of China according to Wikipedia).

[1713930139]

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[cfrm]

"Then you got at least a tulip. Now you get nothing ," said Wellink Wednesday of a meeting with students of the University of Amsterdam.

I like this quote. This is the whole point of the Tulip-mania. You only got a bloody tulip which looks pretty, but is basically useless.

With Bitcoin you get nothing, physically, but you basically buy the right to transfer value all over the world on your own terms. Again, we shouldn't be surprised when negative views are cast upon Bitcoin from banks, who are competitors.

[cjp]

Basically the same news on other sites:
http://www.theguardian.com/technology/2013/dec/04/bitcoin-bubble-tulip-dutch-banker
http://www.forbes.com/sites/timworstall/2013/12/05/central-banker-on-bitcoin-at-least-with-tulipmania-you-got-a-tulip-at-the-end/
They don't mention Wellink's current job in China, though.

[Rannasha]

Again someone who can only see the BTC/USD exchange rate and not the underlying money transmitting technology.

[Carlton Banks]

Meanwhile, modern banknotes are becoming so glossy (or totally plastic in some cases) that they're no longer much good for wiping your ass with. But at least you get a nice picture of a deceased head of state when it all comes crashing down! Do they still burn?

[bryant.coleman]

Nout Wellink? Oh... I remember. The guy who wanted to destroy the ABN Amro. He has proven many times that he represents those typical fat greedy bankers, not the common people whom he is intended to serve.

[zeroday]

Haven't heard mentioning tulips since April

I think it's good sign which means another chance of cheap coins for us.
That time I bought "tulips" at $50 and still happy with that

[LiteCoinGuy]

if you dont see value in the bitcoin network and then you dont understand it. that does not mean, that bitcoin will be a success at all (even bigger than now) , but i guess it will ;-)

[server]

Mr. Nout Wellink has been serving as Independent Directortroll in Bank of China Limited ...

(http://www.reuters.com/finance/stocks/officerProfile?symbol=601988.SS&officerId=2309610)

[eric345]

Why do people comparing tullips with bitcoin  ?.

Back in the 17th century, rich people in Holland bought tullips to show off their wealth. The tullips had to be imported from Turkey, they where rare.
Back then, having tullips in your garden is the same thing as having a Lamborgini in front of your house. Looks nice, but it's kind of useless. Nothing more, nothing less.

Oh btw, back then we had gold and silver coins. With other words, there was no reason to store your wealth in flower bulbs.

[cjp]

Mr. Nout Wellink has been serving as Independent Directortroll in Bank of China Limited ...

(http://www.reuters.com/finance/stocks/officerProfile?symbol=601988.SS&officerId=2309610)

That's an interesting page! What does the number "Total Annual Compensation, CNY" mean? It looks way too low (CNY is approx. $0.1 isn't it?), unless he spends only a really small part of his time on this, or there is some unofficial money stream that isn't mentioned here.

Anyway, back on topic: my personal view on this is that

• Bitcoins do have "intrinsic value", being scarce elements in a useful payments network that has unique benefits which can not easily be copied
• Bubbles have happened in the past in Bitcoin, what we've seen in the last months was (or is) a bubble, and there will probably be more bubbles in the future. However, underneath these bubbles, a part of the value increase is "real", coming from development of new Bitcoin technologies+infrastructure and increasing adoption by people. After every bubble, the minimum is higher than the nominal level before the bubble.
• The tulip mania itself is actually a good comparison. The bubble only happened because the tulip was really a new thing in the Netherlands: almost nobody had them and it took a full growing season to make more of them: besides being over-hyped, they were also really scarce. After the bubble popped, what was left is a large-scale tulip growing business, allowing anyone to buy tulips at reasonable prices. Being Dutch, Nout Wellink should know that flowers are still big business in the Netherlands, several hundred years after the tulip mania.
• Rapid growth of very new phenomena (such as Bitcoin) can not happen without lots of volatility.

[Gabi]

Please Nout Wellink tell me when i can use tulips for online purchases, thank you.