It is a mistake to compare Bitcoin (BTC), to the Dutch tulip bulbs bubble. Technology is more dynamic than nature and decentralized networks offer more financial utility than a bouquet. Bitcoin is technology; tulips, on the other hand, are plants. No one would disagree with that comparison.
The 17th century market bubble known as Tulipmania saw the price of the bulb rise due to speculation by Dutch investors. This led to a major crash. Six times the average annual income at the time, the prices surpassed the average by six. The most rare bulbs were among the most valuable on the planet.
Although the Bitcoin network is operational since 2009, it continues to be compared with the tulip boom. Gabriel Makhlouf (British economist, European Central Bank member), spoke of Bitcoin last February. He said, “Three hundred year ago, people put money in tulips because it was an investment.”
Related: Part 4: Predicting Bitcoin’s price using quantitative models
Bitcoin contrarians have used Tulipmania time and again to justify their naive expectations. Charles Mackay, a Scottish journalist, wrote Memoirs of Extraordinary Popular Delusions. Mackay stated that a golden lure was placed before the people and they ran to the tulip marts like flies around honey-pots.
The absurdity of the story makes for a great story. However, scholars have pointed out that Mackay’s account of tulipmania may not be true. History doesn’t support this version of events. Anne Goldgar, a professor at King’s College London of Early Modern History and the author of Tulipmania, Money, Honor and Knowledge during the Dutch Golden Age explains why Mackay’s explanation doesn’t make sense.
“It’s an amazing story, and the reason it’s great is that it makes people seem stupid,” Goldgar says. He laments that even a serious economist such as John Kenneth Galbraith recited Mackay’s account in his book A Short History of Financial Ephoria. He continues:
“But the notion that tulipmania causes a major depression is totally false. It had no effect whatsoever on the economy, as far as I am aware.
The dot-com bubble
Bull markets in blockchain technologies can sometimes be compared to the dotcom bubble. This is a more accurate, but not perfect, comparison. The internet of money in all forms, crypto, DeFi, or any non-fungible token, has yet to reach a bubble stage. We are in the mid-nineties equivalent of the dot-com boom, but nowhere near the bubble stage.
Related: Crypto is approaching its “Netscape moment”?
The impact of the dot-com boom on humanity was much less than the impact of internet. This pattern will be followed by blockchain, especially when it is compared to tulip bulb. The impact of past bull markets in crypto has been far greater than the price gains. The existence of Bitcoin was recognized by the entire world in 2013. They recognized crypto existed in 2017 and 2018. Many projects that were created in 2017 and 2018 turned out to be nothing but fads. This period is a glimpse of what’s ahead.
There is no match for tulipmania
Although the recent bull market 2020-2021 was the first since the initial coin offering (ICO mania), it wasn’t the bull market many had hoped for. It was, instead, like 2017-2018, another example of the future, putting blockchain in the spotlight.
Leading institutions will include DeFi and cryptocurrency in the upcoming bull market. This is likely to be a few years away. This is already happening. FAANG employees (Facebook. Amazon. Apple. Netflix. Google) are beginning to see the signs and have quit. They want to help build the crypto ecosystem with intuitive products. Any finance professional should explore DeFi and think, “I’m going to lose my job” if they don’t take precautions. According to the Winklevosses, every FAANG company will have its crypto project. This process is known as hyperbitcoinization.
The DeFi exodus suggests that blockchain is not just a bubble, but the future of fintech. It is still early. People in tech started leaving their companies during the dot-com boom and began to create new ideas and challenge the current user experience (UX and UI). These improvements in UX and UI design made the internet more accessible to everyone. In so many verticals, blockchain developers and programmers are innovative. Too few people are pushing the boundaries in UX and UI. Next is the next.
Related: We must improve the user experience in order to accelerate cryptocurrency adoption
The average institution will not be able to integrate blockchain UX or UI into their existing processes because it isn’t user-friendly. The Wall Street and Silicon Valley will be pushing things forward, having left blockchain’s more greener pastures. For the upcoming showcase, top-tier projects and funds are looking to improve blockchain’s UX/UI.
When technologists see blockchain as the future, they’ll bring a unique skill set to the UX and UI crypto powered internet. Technology will be easier to use, and more prominently in our daily lives, just like the dot-com boom.
This article is not intended to provide investment advice. Every trade and investment involves risk. Readers should do their research before making any decision.
These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.
Steady State’s founder and CEO is Jonathan Libby. Jonathan is currently creating a new standard in DeFi insurance. He enjoys memes and researches the global opportunities crypto offers. Jonathan spent the majority of his college career researching crypto coverage and yield farm. He also assisted and educated the United States Senate on crypto and other solutions.