Thursday, September 14, 2017

The Financial Times on Bitcoin and the Tulip Bubble: "Tulipmania at least left their owners with flowers to enjoy."

From the FT Lex column:
Like the technologists drawn to the elegance of bitcoin after its 2008 invention, bulb trading in the early 1630s was initially confined to aficionados. Financial innovation then made it easy for novices to trade bulbs. For the “colleges” — social gatherings in pubs across Holland where trading became popular — see online forums today.
Ahead of the peak of Tulipmania in early 1637, Amsterdam suffered a two-year plague and lost a fifth of its population. That put the risks of a little speculation in context. In the same way, recent financial crises might lead some to think: why not?

The character of bitcoin suggests a more 20th century phenomenon, however: the Ponzi scheme, where early investors are paid with money from new recruits. Claims for bitcoin’s value are self-referential and contain a contradiction: it cannot be a speculative investment prone to quintupling and simultaneously a useful currency for making or receiving payments.

If it cannot be both, it must be neither. Bitcoin’s price is supported only by the recruitment of new enthusiasts to use or hoard it. Tulipmania at least left their owners with flowers to enjoy. Cryptocurrency buyers simply get a chance to relearn the lessons of history.


  1. Because the production and sale of flower bulbs has so much in common with a digital distributed accounting ledger, that is secured with some of the strongest cryptography known to man, making it impossible to artificially inflate the supply. Now that FT has spoken on the matter, we can go back to ignoring the ever increasing market cap of digital currencies.

  2. LOL! Because MSM has been so prescient in their predications! Because you know a private system for transferring value among consenting adults (i.e. free market exchange) has no value. And in the increasing number of cases where cryptocurrencies are being linked to assets such as gold, real estate, etc including distressed assets that market which worldwide is at least $600 trillion again there is no value in being able to trade those assets privately without government intervention. Yes, the FT is a real bastion of free market thinking!?!

  3. MSM and mainstream financial idiots are complete morons. But the group that is even more clueless and utterly stupid are so called "libertarians" that do not get Bitcoin or cryptocurrencies. These Dinosaurs will keep chanting "MUH Mises and MUH Rothbard" until they are headed directly to the gas chamber without ever once learning about the exit routes, which are cryptocurrencies/BTC.