Do you continue to make comparisons between Bitcoin and the tulip bubble?
Stop!
While cryptocurrency is still in its infancy, with NFTs and DeFi, blockchain is clearly
the future of fintech, not just a bubble.
Comparing Bitcoin (BTC) to the Dutch tulip bulb bubble is a fallacy that must be perpetuated.
Nature evolves at a faster rate than technology, and decentralised networks provide more financial
utility than a bouquet.
Bitcoin is a technology, and tulips are a flower, and no astute observer would extend
the analogy much further.
Tulipmania, a 17th-century market bubble in which the price of the flower bulb skyrocketed
due to speculation by Dutch investors, ended in a catastrophic crash.
Prices were six times the average annual income at the time.
The rarest of bulbs became among the world's most expensive items.
Even though the Bitcoin network has been operational since 2009, the tulip bubble comparisons continue
unabated.
Last February, when speaking about Bitcoin, British economist and European Central Bank
council member Gabriel Makhlouf reminded us tritely: "Three hundred years ago, people
invested money in tulips believing they were making an investment."
Tulipasm
Bitcoin sceptics frequently invoke Tulipmania to justify their pessimistic expectations.
Scottish journalist Charles Mackay popularised tales of tulip mania in his 1841 book Memoirs
of Extraordinary Popular Delusions and the Madness of Crowds.
As Mackay put it, "a golden lure drew the crowds in like flies to the tulip-marts."
"Nobles, citizens, mechanics, seamen, footmen, maid-servants, and even chimney sweeps and
old clothes-women dabbled in tulips," he continued.
However, Mackay asserts that when the tulip bubble burst in 1637, havoc was wreaked on
the Dutch economy.
While the absurdity of the situation makes for an entertaining story, scholars have noted
that Mackay's retelling of tulip mania may not be true at all.
This particular version of events is not supported by historians.
Anne Goldgar, an Early Modern History professor at King's College London and author of Tulipmania:
Money, Honor, and Knowledge in the Dutch Golden Age, explains why Mackay's version does not
add up.
"It's a fantastic story, and the reason it's fantastic is that it makes people look stupid,"
Goldgar laments, noting that even a serious economist such as John Kenneth Galbraith parroted
Mackay's account in A Short History of Financial Euphoria.
He goes on:
"However, the notion that tulip mania precipitated a severe depression is completely false.
As far as I can tell, it had no discernible effect on the economy."
The bubble of the dot-com era
Along with the Dutch tulip mania, bull markets in blockchain technologies are occasionally
dismissed as a bubble comparable to the dotcom bubble.
This is a more accurate, if not perfect, comparison.
The internet of money, in any of its manifestations, including crypto, DeFi, or nonfungible token,
has yet to reach a bubble stage or demonstrate all of its use cases.
We're in the mid-1990s equivalent of the dot-com bubble, but nowhere near it.
Additionally, the dot-com bubble's impact on humanity was far less than the internet's,
a pattern that blockchain will almost certainly follow, particularly when compared to tulip
bulbs.
Previous bull markets in cryptocurrency have had far more far-reaching consequences than
price gains.
In 2013, the world acknowledged the existence of Bitcoin.
They acknowledged the existence of cryptocurrency in 2017 and 2018.
Due to the fact that far too many projects from 2017 proved to be nothing more than money
grabs, it appears as though many projects were in it solely to raise funds, that period
serves as nothing more than a preview of what's to come.
There is no match for tulip mania
The recent 2020–2021 bull market, the first since the initial coin offering (ICO) craze,
was never the massive bull market that so many anticipated.
Rather than that, much like 2017–2018, it was another showcase of what the future could
be, highlighting blockchain even more.
Leading institutions will incorporate DeFi and crypto during the upcoming bull market,
which is likely a couple of years away.
This procedure has already begun.
Meanwhile, employees at FAANG (Facebook, Amazon, Apple, Netflix, and Google) see the writing
on the wall and leave in droves, seeking to expand the crypto landscape through intuitive
products.
Anyone in finance should be investigating DeFi and thinking, "If I am not careful, I
am going to lose my job."
The Winklevosses previously stated that each FAANG company would develop its own cryptocurrency,
a process dubbed hyperbitcoinization.
This migration to DeFi demonstrates that blockchain is the future of fintech, not a fad.
We are still in the early stages.
During the dot-com boom, individuals in the technology industry began to leave the companies
for which they worked and began developing their own ideas and challenging the prevailing
user experience (UX) and user interface (UI) standards.
Subsequent enhancements and user experience and user interface design simplified the internet
and eventually brought it into every home.
Innumerable verticals are being disrupted by brilliant blockchain programmers and developers.
However, far too few companies are pushing the boundaries of UX and UI.
That is the next step.
Due to the fact that the blockchain UX and UI are not particularly user-friendly, the
average institution will be unable to adopt and integrate the system into their pre-existing
processes for the foreseeable future.
After migrating to blockchain's greener pastures, Silicon Valley and Wall Street talent will
begin to accelerate progress.
For the upcoming showcase, top-tier funds and projects are considering ways to improve
the user experience and user interface of blockchain.
Once technologists accept that blockchain is the future, they will bring a unique skill
set to bear on pushing the boundaries of the crypto-powered internet's user experience
and user interface.
As with the dot-com era, technology will become more accessible and integrated into daily
life.
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