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> The world has never seen an economic phenomenon like crypto. There is no historical analogous technology trend or investment craze that comes close to capturi

by IncRnd 4y ago

> The world has never seen an economic phenomenon like crypto. There is no historical analogous technology trend or investment craze that comes close to capturing the sustained and frenzied momentum of crypto that has engulfed so many and that will continue to do. Never say never. Greed and speculation have a long and robust history. This crypto speculation and greed reminds of of the price of tulips. [1] During that craze a single tulip bulb could purchase a mansion. [1] https://www.investopedia.com/terms/d/dutch_tulip_bulb_market_bubble.asp https://www.investopedia.com/terms/d/dutch_tulip_bulb_market...

UnpossibleJim 4y ago
Great minds and all that, we seemingly posted this same article at the same time =)
upupandup 4y ago
You don't even need to go back that far: e-gold, liberty reserve. Fun fact, bitcoin client had a poker lobby in it, and it was announced mere weeks after Liberty Reserve court ruling jailing its founder for 20 to life for money laundering. Individual or groups behind bitcoin were watching that Liberty Reserve trial very very closely and e-gold/liberty reserve was very popular amongst the online poker industry ;) There's many more interesting facts you can discover but I won't spoil them.
- deadbunny 4y ago
  [citation needed]
  - upupandup 4y ago
    you know how to use google right?
    - deadbunny 4y ago
      Yep and I can't find any reference to the bitcoin core client ever having anything to do with poker.
      - IncRnd 4y ago
        It did. https://github.com/trottier/original-bitcoin/blob/master/src/uibase.cpp https://github.com/trottier/original-bitcoin/blob/master/src... https://news.ycombinator.com/item?id=28830211 https://news.ycombinator.com/item?id=28830211
        deadbunny 4y ago
        Thanks. Looks like it was more GUI code copied from something else then removed a few commits later rather than it actually having a "poker lobby" feature as implied though.
      - upupandup 4y ago
        You better work on your Google skills more
thesausageking 4y ago
"Tulip Mania" wasn't real. The "bubble" was a very small group of speculators and it did not have any larger affect on the industry. The stories about it were made up and come from propaganda pamphlets published by Dutch Calvinists who were worried that consumerism was causing societal decay: https://www.smithsonianmag.com/history/there-never-was-real-tulip-fever-180964915/ https://www.smithsonianmag.com/history/there-never-was-real-...
- IncRnd 4y ago
  According to your link it was real. "That’s not to say that everything about the story is wrong; 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—but only because it undermined social expectations." In the link I posted is this gem: "Peter Garber in the 1980s published an academic article on the Tulipmania. First, he notes that tulips are not alone in their meteoric rise: 'a small quantity of ... lily bulbs recently was sold for 1 million guilders ($480,000 at 1987 exchange rates),' demonstrating that even in the modern world, flowers can command extremely high prices." I wasn't making a point about the degree of societal collapse from tulip mania. I made the point that there is a long history of greed and speculation.
  - thesausageking 4y ago
    You were responding to a claim that there have never been other cases of sustained momentum of speculation. The price spike for Tulipmania took place over about 18 months. Bitcoin launched 13 years ago and was first above $1k in 2017. They're not at all similar. I agree with the parent comment.
    - IncRnd 4y ago
      No, that wasn't the claim I responded to. Twice, my comment explicitly mentioned the novelty of greed and speculation as the claim.
xhkkffbf 4y ago
There are other more practical examples too. For a time, the banks in the United States would issue their own paper currency that could be redeemed at the bank. The paper money traded up or down based upon the reputation of the bank and, to some extent, the distance to the nearest branch. It's pretty much an exact analogy to the world of alt coins, except the physical details like the location of the bank made a difference.
datadata 4y ago
Whenever this comparison is drawn, it must also be pointed out that after the speculative bubble, the Netherlands has remained for centuries the center of a profitable and stable flower industry that was born in that time. The collapse was real and the speculation was real, but the emergence of a new industry was also real. This is also similar example to the dot com bubble.
- bendtheblock 4y ago
  nice rebuttal - but the "profitable and stable flower industry" is the trade of an underlying commodity with utility value i.e. the flowers. there is no such underlying asset with crypto. the part that is parallel is the rife speculation that left many bust.
  - datadata 4y ago
    Flowers were not a commodity before there was a market for them. Internet did not have commercial value before the speculative wave, in fact very little profits were made even by the end of the dot com boom. Agree there is rife speculation in crypto, but rife speculation does not prove that there won't be future sustained value. When dot com boom imploded it was because people similarly thought there was no value in the internet.
    - bendtheblock 4y ago
      Flowers are used for decoration, dies, teas, scents. Sometimes they may be overvalued. Crypto doesn't have any underlying value. It's just greater fool investing, there is no underlying cashflow, asset or company. Future cash flow comes from greater fools buying in. When you say "the internet" I think you mean the wave of web1 companies? Same as flowers above, there are real uses and value creation, which can be priced in many ways.
      - datadata 4y ago
        In 1999, what web1 companies had cash flows or even a business model that could become profitable? In hindsight it is obvious because we know that things worked out, but at the time it was just speculation, and the crash was the market calling it worthless. Similar objections then around what underlying value is and how the tech was useless. The ways to monetize often were invented much later (eg search ads). If you were a middle age farmer, sure you might like to look at or smell a flower but you would be crazy to say stop growing wheat and plant tulips. But as society advances markets can emerge to serve needs of people that were not possible before. I agree crypto tokens is just speculative investing. But that doesn't imply that the value doesn't stick-- it doesn't have to either collapse to zero or go up forever. Monetary premium is a real thing and necessary for humans to transact. You can't predict what money we will use in the future.
bendtheblock 4y ago
the history of this type of speculation and others like it, that leaves many bust, was documented in Extraordinary Popular Delusions and the Madness of Crowds published in 1841 https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions_and_the_Madness_of_Crowds https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusion...
mattwilsonn888 4y ago
Do bubbles, after popping, collect and reconstitute themselves in analogy or reality? Tulips certainly didn't. Bitcoin really is a slow motion multiplicitis analogy to your "muh Tulips."
- IncRnd 4y ago
  Not sure why you wrote that. You are responding to a comment about the history of greed and speculation, which many who tout crypto also share.

by IncRnd 4y ago

UnpossibleJim 4y ago

Great minds and all that, we seemingly posted this same article at the same time =)

upupandup 4y ago

You don't even need to go back that far: e-gold, liberty reserve. Fun fact, bitcoin client had a poker lobby in it, and it was announced mere weeks after Liberty Reserve court ruling jailing its founder for 20 to life for money laundering. Individual or groups behind bitcoin were watching that Liberty Reserve trial very very closely and e-gold/liberty reserve was very popular amongst the online poker industry ;) There's many more interesting facts you can discover but I won't spoil them.

deadbunny 4y ago
[citation needed]
- upupandup 4y ago
  you know how to use google right?
  - deadbunny 4y ago
    Yep and I can't find any reference to the bitcoin core client ever having anything to do with poker.
    - IncRnd 4y ago
      It did. https://github.com/trottier/original-bitcoin/blob/master/src/uibase.cpp https://github.com/trottier/original-bitcoin/blob/master/src... https://news.ycombinator.com/item?id=28830211 https://news.ycombinator.com/item?id=28830211
      - deadbunny 4y ago
        Thanks. Looks like it was more GUI code copied from something else then removed a few commits later rather than it actually having a "poker lobby" feature as implied though.
    - upupandup 4y ago
      You better work on your Google skills more

thesausageking 4y ago

"Tulip Mania" wasn't real. The "bubble" was a very small group of speculators and it did not have any larger affect on the industry. The stories about it were made up and come from propaganda pamphlets published by Dutch Calvinists who were worried that consumerism was causing societal decay: https://www.smithsonianmag.com/history/there-never-was-real-tulip-fever-180964915/ https://www.smithsonianmag.com/history/there-never-was-real-...

IncRnd 4y ago
According to your link it was real. "That’s not to say that everything about the story is wrong; 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—but only because it undermined social expectations." In the link I posted is this gem: "Peter Garber in the 1980s published an academic article on the Tulipmania. First, he notes that tulips are not alone in their meteoric rise: 'a small quantity of ... lily bulbs recently was sold for 1 million guilders ($480,000 at 1987 exchange rates),' demonstrating that even in the modern world, flowers can command extremely high prices." I wasn't making a point about the degree of societal collapse from tulip mania. I made the point that there is a long history of greed and speculation.
- thesausageking 4y ago
  You were responding to a claim that there have never been other cases of sustained momentum of speculation. The price spike for Tulipmania took place over about 18 months. Bitcoin launched 13 years ago and was first above $1k in 2017. They're not at all similar. I agree with the parent comment.
  - IncRnd 4y ago
    No, that wasn't the claim I responded to. Twice, my comment explicitly mentioned the novelty of greed and speculation as the claim.

xhkkffbf 4y ago

There are other more practical examples too. For a time, the banks in the United States would issue their own paper currency that could be redeemed at the bank. The paper money traded up or down based upon the reputation of the bank and, to some extent, the distance to the nearest branch. It's pretty much an exact analogy to the world of alt coins, except the physical details like the location of the bank made a difference.

datadata 4y ago

Whenever this comparison is drawn, it must also be pointed out that after the speculative bubble, the Netherlands has remained for centuries the center of a profitable and stable flower industry that was born in that time. The collapse was real and the speculation was real, but the emergence of a new industry was also real. This is also similar example to the dot com bubble.

bendtheblock 4y ago
nice rebuttal - but the "profitable and stable flower industry" is the trade of an underlying commodity with utility value i.e. the flowers. there is no such underlying asset with crypto. the part that is parallel is the rife speculation that left many bust.
- datadata 4y ago
  Flowers were not a commodity before there was a market for them. Internet did not have commercial value before the speculative wave, in fact very little profits were made even by the end of the dot com boom. Agree there is rife speculation in crypto, but rife speculation does not prove that there won't be future sustained value. When dot com boom imploded it was because people similarly thought there was no value in the internet.
  - bendtheblock 4y ago
    Flowers are used for decoration, dies, teas, scents. Sometimes they may be overvalued. Crypto doesn't have any underlying value. It's just greater fool investing, there is no underlying cashflow, asset or company. Future cash flow comes from greater fools buying in. When you say "the internet" I think you mean the wave of web1 companies? Same as flowers above, there are real uses and value creation, which can be priced in many ways.
    - datadata 4y ago
      In 1999, what web1 companies had cash flows or even a business model that could become profitable? In hindsight it is obvious because we know that things worked out, but at the time it was just speculation, and the crash was the market calling it worthless. Similar objections then around what underlying value is and how the tech was useless. The ways to monetize often were invented much later (eg search ads). If you were a middle age farmer, sure you might like to look at or smell a flower but you would be crazy to say stop growing wheat and plant tulips. But as society advances markets can emerge to serve needs of people that were not possible before. I agree crypto tokens is just speculative investing. But that doesn't imply that the value doesn't stick-- it doesn't have to either collapse to zero or go up forever. Monetary premium is a real thing and necessary for humans to transact. You can't predict what money we will use in the future.

bendtheblock 4y ago

the history of this type of speculation and others like it, that leaves many bust, was documented in Extraordinary Popular Delusions and the Madness of Crowds published in 1841 https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions_and_the_Madness_of_Crowds https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusion...

mattwilsonn888 4y ago

Do bubbles, after popping, collect and reconstitute themselves in analogy or reality? Tulips certainly didn't. Bitcoin really is a slow motion multiplicitis analogy to your "muh Tulips."

IncRnd 4y ago
Not sure why you wrote that. You are responding to a comment about the history of greed and speculation, which many who tout crypto also share.