The Tulip Fever Was Exaggerated(smithsonianmag.com)
smithsonianmag.com
The Tulip Fever Was Exaggerated
https://www.smithsonianmag.com/history/there-never-was-real-tulip-fever-180964915/?no-ist
36 comments
This article had a big discussion when it came out a few months ago: https://news.ycombinator.com/item?id=15308824.
For the record, there was a speculative bubble around tulips that crashed suddenly and sharply. From the article:
merchants really did engage in a frantic tulip trade, and they paid incredibly high prices for some bulbs. And when a number of buyers announced they couldn’t pay the high price previously agreed upon, the market did fall apart and cause a small crisis
The article is more about how many of the anecdotal and narrative myths around it that weren't true.
merchants really did engage in a frantic tulip trade, and they paid incredibly high prices for some bulbs. And when a number of buyers announced they couldn’t pay the high price previously agreed upon, the market did fall apart and cause a small crisis
The article is more about how many of the anecdotal and narrative myths around it that weren't true.
And also that the popular retelling exaggerates its actual significance to the Dutch economy.
Much like the dot com bubble. I never met anyone that invested in incubation funds or high profile dot coms. I was working in the middle of the craziness at the time so it wasn't due to small sample size.
With bitcoin I know quite a few bitcoin bores, so fun times ahead.
With bitcoin I know quite a few bitcoin bores, so fun times ahead.
There are no shortage of baby boomers in Canada that over-extended themselves into Nortel, and anyone who worked in tech felt the effects of the layoffs from that single company across the economy.
Even people who believed in the future of technology and the long term impact of the internet and just invested a portion of their retirement savings in NASDAQ composite index funds watched them take 15 years to recover their value.
After a few years people stop talking about their bad decisions.
Even people who believed in the future of technology and the long term impact of the internet and just invested a portion of their retirement savings in NASDAQ composite index funds watched them take 15 years to recover their value.
After a few years people stop talking about their bad decisions.
My middle school teachers on the east coast spoke about the dot coms and how they lost most of their investments in it.
Maybe people don’t talk about it much these days. People in the company I’m with spoke about their experiences working during them. Some got lucky when their financial advisor told them to at least sell their first vesting (their stock would have dropped 80-90% by next sell window), others weren’t so lucky.
Maybe people don’t talk about it much these days. People in the company I’m with spoke about their experiences working during them. Some got lucky when their financial advisor told them to at least sell their first vesting (their stock would have dropped 80-90% by next sell window), others weren’t so lucky.
Ordinary people were taking out home equity loans to buy tech stock during the dot-com bubble. Online trading was fairly new (at least for ordinary people) and was taking off at the same time, which made things worse. When the bubble burst, it caused a national recession, which affected people who didn't invest in tech stocks.
That's quite a lot bigger than some merchants in the Netherlands losing their shirts in the tulip crash. It's also a lot bigger than the impact of a bitcoin crash would be if it happened today.
That's quite a lot bigger than some merchants in the Netherlands losing their shirts in the tulip crash. It's also a lot bigger than the impact of a bitcoin crash would be if it happened today.
The dot-com bubble did cause a recession for the US economy, from Mar 2001–Nov 2001. That affected a lot more people than dot-com investors or employees.
And then there's all the anti-bitcoin bores.
I _think_ the point of posting this article is to argue that bitcoin isn't a bubble? Not sure. I say that bc in every bubble/bitcoin thread people jump in and make this point.
I believe you are probably correct, and it is a tendency I really do not understand. People seem to be so profoundly invested emotionally in the specific success of bitcoin (as opposed to the broader technology of blockchain cryptocurrency) that they're out on the prowl to shout down anybody who threatens to pop their perceptive bubble. It's as if they're making a concerted effort to exclude any dissident opinion in the implicit belief that removing the dissenters will somehow ensure the success of the whole enterprise. I myself am hoping (as a macroeconomist and as somebody that preserves his objectivity by having no long or short position whatsoever in any cryptocurrency) that bitcoin will soon fail not because I have anything against those who designed it or who adopted it early but because as a fixed-quantity asset it is inherently noxious as a currency (which is why the world moved off the gold standard and bimetallism and representative currency progressively to begin with) and that it will be revealed to be what it is: an effective implementation of a new idea (blockchain) that solves a major computer science problem (the Byzantine Generals Problem) but was macroeconomically naive. Successors will be more pliant for the criteria of modern money.
It 'solves' the computer science BGP only by reframing it as a decision science problem and iteravely testing a particular hypothesis about the supremacy of personal enrichment over all other incentives in a giant, uncontrolled public gambling experiment.
> as a fixed-quantity asset it is inherently noxious as a currency
Why?
Why?
Not to blow my own horn excessively, but I get asked this a lot, so here’s my standard response (written about ten days ago, YMMV): https://medium.com/@jamesjunghanns/my-0-00000173120-btc-a-pr...
It leads to deflation, which Bitcoin supporters seem to view as a good thing, for some reason.
The article points to that oft parroted comparison:
"But before you even attempt to apply what happened in the Netherlands to more recent bubbles—the South Sea Bubble in 1700s England, the 19th-century railway bubble, the dot-com bubble and bitcoin are just a few comparisons Goldgar has seen—you have to understand Dutch society at the turn of the 17th century."
"But before you even attempt to apply what happened in the Netherlands to more recent bubbles—the South Sea Bubble in 1700s England, the 19th-century railway bubble, the dot-com bubble and bitcoin are just a few comparisons Goldgar has seen—you have to understand Dutch society at the turn of the 17th century."
Everybody by now should realise that Bitcoin is a bubble and it is going to crash. Don't buy Bitcoin: https://www.youtube.com/watch?v=XbZ8zDpX2Mg
I suspect that a lot of people aren’t buying bitcoin. I think the price is largely driven by one insolvent exchange counterfeiting dollars so they can stay afloat, and bots arbitraging in and out of that exchange to make quick profits. They’re up to printing a 100 million worthless tokens a week now to keep the price afloat and aren’t going to be able to keep the charade up for much longer.
Nothing in your remark makes any sense. 100 million tokens? Printing fake money?
Bitfinex stopped trading with US Dollars after their bank accounts were closed / blocked / whatever. To workaround that, they invented a custom cryptocurrency called Tether, which they claim is pegged to the US Dollar by keeping 1 USD in their bank account for each Thether that is issues.
The really suspicious thing is that over the last couple of months almost 1 Billion Tethers have been issued, which is highly suspicious because we wouldn't expect sane people to send such a gigantic amount of money to a shady Bitcoin exchange in the other end of the world, in exchange for a crypto token of dubious value. The most likely thing is that Bitfinex is using these unbacked Tethers that they are printing to purchase bitcoin in their exchange and push up the price.
It feels similar to the last bubble, which started out in MtGOX. MtGOX was insolvent (due to having a good chunck of their deposits lost to hackers and fraud). Eventually, they stopped letting people withdraw their US dollars so the only option people had was to purchase bitcoin and withdraw that instead. This extra demand pushed up the price which attracted outside speculation (the bitcoin price was higher than average in MtGOX but also quickly rose elsewhere) and kept MtGOX afloat for a bit longer than it should (because new investors kept throwing money on the dying exchange to get into the action).
For more Bitfinex news, I would recommend following https://medium.com/@bitfinexed
The really suspicious thing is that over the last couple of months almost 1 Billion Tethers have been issued, which is highly suspicious because we wouldn't expect sane people to send such a gigantic amount of money to a shady Bitcoin exchange in the other end of the world, in exchange for a crypto token of dubious value. The most likely thing is that Bitfinex is using these unbacked Tethers that they are printing to purchase bitcoin in their exchange and push up the price.
It feels similar to the last bubble, which started out in MtGOX. MtGOX was insolvent (due to having a good chunck of their deposits lost to hackers and fraud). Eventually, they stopped letting people withdraw their US dollars so the only option people had was to purchase bitcoin and withdraw that instead. This extra demand pushed up the price which attracted outside speculation (the bitcoin price was higher than average in MtGOX but also quickly rose elsewhere) and kept MtGOX afloat for a bit longer than it should (because new investors kept throwing money on the dying exchange to get into the action).
For more Bitfinex news, I would recommend following https://medium.com/@bitfinexed
I suspect you're talking about the Tether situation, which is something I've seen alluded to in several places but never really explained well. Can you point me in the right direction ?
Bitfinexed has been covering the Tether situation for a while: https://medium.com/@bitfinexed
This makes no sense. How would printing worthless tokens bolster Bitcoin? Someone would have to value said worthless tokens (Tethers) in order to be willing to hold them in trade for Bitcoin.
The simple truth is, an increasing number of people are buying Bitcoin whether those holding on to the past like it or not.
The simple truth is, an increasing number of people are buying Bitcoin whether those holding on to the past like it or not.
The trick here is that it is currently impossible to sell Tethers for USD. The only Bitcoin exchanges that trade Tethers do not trade in USD and artificially treat Tethers as being worth $1 USD. So instead of a devalued Tether resulting in a fall in the price of Tether it reflects as a rise in the price of Bitcoin.
The thing that is harder to explain is that if this theory is true we should expect that the price of Bitcoin in Bitfinex to be higher than in other exchanges. I suspect that what is happening is that the rising prices in Bitfinex are helping attract a new wave of speculation and/or price manipulation, which is what is pushing up the price elsewhere. (This is what happened in the MtGOX bubble)
The thing that is harder to explain is that if this theory is true we should expect that the price of Bitcoin in Bitfinex to be higher than in other exchanges. I suspect that what is happening is that the rising prices in Bitfinex are helping attract a new wave of speculation and/or price manipulation, which is what is pushing up the price elsewhere. (This is what happened in the MtGOX bubble)
The amount of fraud is staggering; painting the tape is well-documented when it comes to crypto-currencies. I'm not particularly bullish (or bearish) when it comes to BTC, but one thing is obvious: the only value it actually generates is for Russian money-launderers, drug dealers, and other shady agents (hackers, pornographers, etc.)
On the contrary. It generates massive value for people living in countries with unstable currencies and governments. I assume you're living comfortably in a country with a stable currency, but not everyone is.
http://www.cbc.ca/news/world/venezuela-bitcoin-1.4447568
http://www.cbc.ca/news/world/venezuela-bitcoin-1.4447568
This is an extreme edge case (and a commonly used, I would say flawed, argument). The great majority of BTC users/miners are not Venezuelans, Zimbabweans, etc.
Also, implying that BTC is somehow "stable" is extremely misleading.
Also, implying that BTC is somehow "stable" is extremely misleading.
Why is it a 'flawed' argument?
You specifically said 'the only value it actually generates is for X' and I showed that your claim was factually incorrect. Why do you think that is flawed? Because you were wrong?
You specifically said 'the only value it actually generates is for X' and I showed that your claim was factually incorrect. Why do you think that is flawed? Because you were wrong?
I think the point is that sufficiently-advanced economies manifest bizarre micro-economies, but that these aren't necessarily earth-shattering. Like, Etherium Cats might be the 21st century Dutch tulips, but perhaps nations don't rise and fall on the values of "delicacies."
Somewhat related: a friend and I created a service that sends your friends pictures of tulips when the crypto markets crash.
It started off as a joke over dinner, but now it's a fully functional product. More info here: sendcryotopeopletulips.com
It started off as a joke over dinner, but now it's a fully functional product. More info here: sendcryotopeopletulips.com