Is the cryptocurrency craze our very own “Tulip Mania” of the 21st century?

For those of you that don´t know, Tulip Mania happened during the 17th Century, whereby the contract prices for tulip bulbs skyrocketed to insane levels. At once instance it was said that one bulb could buy you a whole house.

Several types of bulbs appeared, each with its own distinctiveness and special characteristics. Some more exotic types where really beautiful indeed, take this one for instance:

The “Semper Augustus” said to have been the most expensive tulip sold. (credits to: https://en.wikipedia.org/wiki/Tulip_mania - by the way the content on this wikipedia page is great, if you have the time, please do read).

And then, all of a sudden, when more and more people where buying, cultivating, investing in the bulbs, it all came crashing down, to never recover.

Tulip Mania is also referenced to in the movie Wallstreet where Gordon Gecko points to a painting and says:

“This is the greatest bubble story of all time… they call it the Tulip Mania.”

Several other economists use this example to, in short, incite carefulness when entering into the markets, especially the cool, hip and exotic types of markets.

Ever since I came in contact with cryptocurrency this “Tulip Mania” feeling (a.k.a. “TMF”) keeps nagging on my head and hence, I decided to create this post to share this nagging in my head with whomever should direct their attention to this.

The recent ETH flash crash has specially hit this nagging TMF right in my head again.

However, to relax my TMF I keep saying to myself that things are different now than they where in Europe in the 1600s.

The blockchain is actually something that can create a lot of value to the world, rather than just being pretty and scarce like the beautiful bulb in the above figure.

My bet is that block chain is here to stay, and all the goodies that come with it (i.e. cryptocurrencies). Nevertheless, the main question that this points to now, is which of the cryptos will survive the long one? And which will have the same fate as that lovely bulb mentioned before, and just be left for dead in somebody’s basement.

I´ll try to figure out some ideas to answer this in the next posts.

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BTC: 1FPxTwJ1HZPjuAmHNFd9nswWgPpVLGr4JC

ETH: 0xC18786B231c5A779DdF6B1df1E7ED7403b485087