6 ms·

The Tulip Fever Was Exaggerated

55 points by sharjeelsayed 9y ago

michaelchisari 9y ago
For the record, there was a speculative bubble around tulips that crashed suddenly and sharply. From the article: merchants really did engage in a frantic tulip trade, and they paid incredibly high prices for some bulbs. And when a number of buyers announced they couldn’t pay the high price previously agreed upon, the market did fall apart and cause a small crisis The article is more about how many of the anecdotal and narrative myths around it that weren't true.
- azernik 9y ago
  And also that the popular retelling exaggerates its actual significance to the Dutch economy.
  - Theodores 9y ago
    Much like the dot com bubble. I never met anyone that invested in incubation funds or high profile dot coms. I was working in the middle of the craziness at the time so it wasn't due to small sample size. With bitcoin I know quite a few bitcoin bores, so fun times ahead.
    - withdavidli 9y ago
      My middle school teachers on the east coast spoke about the dot coms and how they lost most of their investments in it. Maybe people don’t talk about it much these days. People in the company I’m with spoke about their experiences working during them. Some got lucky when their financial advisor told them to at least sell their first vesting (their stock would have dropped 80-90% by next sell window), others weren’t so lucky.
    - greglindahl 9y ago
      The dot-com bubble did cause a recession for the US economy, from Mar 2001–Nov 2001. That affected a lot more people than dot-com investors or employees.
    - krrrh 9y ago
      There are no shortage of baby boomers in Canada that over-extended themselves into Nortel, and anyone who worked in tech felt the effects of the layoffs from that single company across the economy. Even people who believed in the future of technology and the long term impact of the internet and just invested a portion of their retirement savings in NASDAQ composite index funds watched them take 15 years to recover their value. After a few years people stop talking about their bad decisions.
    - jcoffland 9y ago
      And then there's all the anti-bitcoin bores.
    - twblalock 9y ago
      Ordinary people were taking out home equity loans to buy tech stock during the dot-com bubble. Online trading was fairly new (at least for ordinary people) and was taking off at the same time, which made things worse. When the bubble burst, it caused a national recession, which affected people who didn't invest in tech stocks. That's quite a lot bigger than some merchants in the Netherlands losing their shirts in the tulip crash. It's also a lot bigger than the impact of a bitcoin crash would be if it happened today.
- nerflad 9y ago
  Then I hope the mods change the title to something like "Much of what you hear about Tulip Fever is exaggerated".
  - dang 9y ago
    Sure, done.
tardo99 9y ago
I _think_ the point of posting this article is to argue that bitcoin isn't a bubble? Not sure. I say that bc in every bubble/bitcoin thread people jump in and make this point.
- wsc981 9y ago
  Everybody by now should realise that Bitcoin is a bubble and it is going to crash. Don't buy Bitcoin: https://www.youtube.com/watch?v=XbZ8zDpX2Mg https://www.youtube.com/watch?v=XbZ8zDpX2Mg
  - empath75 9y ago
    I suspect that a lot of people aren’t buying bitcoin. I think the price is largely driven by one insolvent exchange counterfeiting dollars so they can stay afloat, and bots arbitraging in and out of that exchange to make quick profits. They’re up to printing a 100 million worthless tokens a week now to keep the price afloat and aren’t going to be able to keep the charade up for much longer.
    - figurehe4d 9y ago
      Nothing in your remark makes any sense. 100 million tokens? Printing fake money?
      - ufo 9y ago
        Bitfinex stopped trading with US Dollars after their bank accounts were closed / blocked / whatever. To workaround that, they invented a custom cryptocurrency called Tether, which they claim is pegged to the US Dollar by keeping 1 USD in their bank account for each Thether that is issues. The really suspicious thing is that over the last couple of months almost 1 Billion Tethers have been issued, which is highly suspicious because we wouldn't expect sane people to send such a gigantic amount of money to a shady Bitcoin exchange in the other end of the world, in exchange for a crypto token of dubious value. The most likely thing is that Bitfinex is using these unbacked Tethers that they are printing to purchase bitcoin in their exchange and push up the price. It feels similar to the last bubble, which started out in MtGOX. MtGOX was insolvent (due to having a good chunck of their deposits lost to hackers and fraud). Eventually, they stopped letting people withdraw their US dollars so the only option people had was to purchase bitcoin and withdraw that instead. This extra demand pushed up the price which attracted outside speculation (the bitcoin price was higher than average in MtGOX but also quickly rose elsewhere) and kept MtGOX afloat for a bit longer than it should (because new investors kept throwing money on the dying exchange to get into the action). For more Bitfinex news, I would recommend following https://medium.com/@bitfinexed https://medium.com/@bitfinexed
caser 9y ago
Somewhat related: a friend and I created a service that sends your friends pictures of tulips when the crypto markets crash. It started off as a joke over dinner, but now it's a fully functional product. More info here: sendcryotopeopletulips.com
- eecc 9y ago
  you got your link wrong :)
- 21 9y ago
  I will create a service which sends you pictures of dollars each time Bitcoin hits a new high.
dang 9y ago
This article had a big discussion when it came out a few months ago: https://news.ycombinator.com/item?id=15308824 https://news.ycombinator.com/item?id=15308824.

55 points by sharjeelsayed 9y ago

For the record, there was a speculative bubble around tulips that crashed suddenly and sharply. From the article: merchants really did engage in a frantic tulip trade, and they paid incredibly high prices for some bulbs. And when a number of buyers announced they couldn’t pay the high price previously agreed upon, the market did fall apart and cause a small crisis The article is more about how many of the anecdotal and narrative myths around it that weren't true.

azernik 9y ago
And also that the popular retelling exaggerates its actual significance to the Dutch economy.
- Theodores 9y ago
  Much like the dot com bubble. I never met anyone that invested in incubation funds or high profile dot coms. I was working in the middle of the craziness at the time so it wasn't due to small sample size. With bitcoin I know quite a few bitcoin bores, so fun times ahead.
  - withdavidli 9y ago
    My middle school teachers on the east coast spoke about the dot coms and how they lost most of their investments in it. Maybe people don’t talk about it much these days. People in the company I’m with spoke about their experiences working during them. Some got lucky when their financial advisor told them to at least sell their first vesting (their stock would have dropped 80-90% by next sell window), others weren’t so lucky.
  - greglindahl 9y ago
    The dot-com bubble did cause a recession for the US economy, from Mar 2001–Nov 2001. That affected a lot more people than dot-com investors or employees.
  - krrrh 9y ago
    There are no shortage of baby boomers in Canada that over-extended themselves into Nortel, and anyone who worked in tech felt the effects of the layoffs from that single company across the economy. Even people who believed in the future of technology and the long term impact of the internet and just invested a portion of their retirement savings in NASDAQ composite index funds watched them take 15 years to recover their value. After a few years people stop talking about their bad decisions.
  - jcoffland 9y ago
    And then there's all the anti-bitcoin bores.
  - twblalock 9y ago
    Ordinary people were taking out home equity loans to buy tech stock during the dot-com bubble. Online trading was fairly new (at least for ordinary people) and was taking off at the same time, which made things worse. When the bubble burst, it caused a national recession, which affected people who didn't invest in tech stocks. That's quite a lot bigger than some merchants in the Netherlands losing their shirts in the tulip crash. It's also a lot bigger than the impact of a bitcoin crash would be if it happened today.
nerflad 9y ago
Then I hope the mods change the title to something like "Much of what you hear about Tulip Fever is exaggerated".
- dang 9y ago
  Sure, done.

tardo99 9y ago

I _think_ the point of posting this article is to argue that bitcoin isn't a bubble? Not sure. I say that bc in every bubble/bitcoin thread people jump in and make this point.

wsc981 9y ago
Everybody by now should realise that Bitcoin is a bubble and it is going to crash. Don't buy Bitcoin: https://www.youtube.com/watch?v=XbZ8zDpX2Mg https://www.youtube.com/watch?v=XbZ8zDpX2Mg
- empath75 9y ago
  I suspect that a lot of people aren’t buying bitcoin. I think the price is largely driven by one insolvent exchange counterfeiting dollars so they can stay afloat, and bots arbitraging in and out of that exchange to make quick profits. They’re up to printing a 100 million worthless tokens a week now to keep the price afloat and aren’t going to be able to keep the charade up for much longer.
  - figurehe4d 9y ago
    Nothing in your remark makes any sense. 100 million tokens? Printing fake money?
    - ufo 9y ago
      Bitfinex stopped trading with US Dollars after their bank accounts were closed / blocked / whatever. To workaround that, they invented a custom cryptocurrency called Tether, which they claim is pegged to the US Dollar by keeping 1 USD in their bank account for each Thether that is issues. The really suspicious thing is that over the last couple of months almost 1 Billion Tethers have been issued, which is highly suspicious because we wouldn't expect sane people to send such a gigantic amount of money to a shady Bitcoin exchange in the other end of the world, in exchange for a crypto token of dubious value. The most likely thing is that Bitfinex is using these unbacked Tethers that they are printing to purchase bitcoin in their exchange and push up the price. It feels similar to the last bubble, which started out in MtGOX. MtGOX was insolvent (due to having a good chunck of their deposits lost to hackers and fraud). Eventually, they stopped letting people withdraw their US dollars so the only option people had was to purchase bitcoin and withdraw that instead. This extra demand pushed up the price which attracted outside speculation (the bitcoin price was higher than average in MtGOX but also quickly rose elsewhere) and kept MtGOX afloat for a bit longer than it should (because new investors kept throwing money on the dying exchange to get into the action). For more Bitfinex news, I would recommend following https://medium.com/@bitfinexed https://medium.com/@bitfinexed

caser 9y ago

Somewhat related: a friend and I created a service that sends your friends pictures of tulips when the crypto markets crash. It started off as a joke over dinner, but now it's a fully functional product. More info here: sendcryotopeopletulips.com

eecc 9y ago
you got your link wrong :)
21 9y ago
I will create a service which sends you pictures of dollars each time Bitcoin hits a new high.

dang 9y ago

This article had a big discussion when it came out a few months ago: https://news.ycombinator.com/item?id=15308824 https://news.ycombinator.com/item?id=15308824.