The Bitcoin craze has often been compared with the 17th-century “tulip mania” bubble. Whether such a comparison is valid, one thing we can do is to look at the actual levels and percentage gains.

As illustrated in the chart below, produced by Convoy Investments, the Bitcoin bubble has exceeded “Tulip” levels.

Convoy-2-300x198 Why The Bitcoin-Tulip Comparison is Problematic

But comparing tulips to Bitcoin is like comparing apples and oranges. The comparison itself is problematic. Here are a couple of things to think about:

Too many people focused on the “mania” when they should have been focusing on the “intrinsic value” of the tulips.”

Today, tulips still have the same “intrinsic value” as they had before and after the “mania.” Tulips are decorative “flowers.” They did not present any new technological (i.e. medical) applications” nor did they engender any approaches that would have impacted industries, driving demand beyond sentiment. The mania may have inflated tulip prices, but it did not change the “real” value of tulips.

Bitcoin’s price may be in a massive bubble, but its fundamental value–as a viable technology, currency, and global disruptor–remains.

Bitcoin has its own unique kind of value as both a currency and technology. Its comparison with “Tulip mania” is a bit problematic: unlike tulips, Bitcoin is a new technology, it engenders new technologies and uses, and it has the power to disrupt industries (via blockchain) and entire monetary systems on a global scale.

Tulips have a use with relatively limited potential. Bitcoin, on the other hand, exhibits pure potential.

Lastly, the world cannot use Bitcoin or blockchain without changing the fundamental nature of the world itself. As we can see, this effect on how we perceive (the future of) money and data technology is already changing.

In the end, Bitcoin, blockchain, and cryptocurrencies–whether you like them or not–are no longer things to be ignored, lest you risk obsolescence.

 


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