Bitcoin Price Compared to Tulip Bubble, According to BBC Tech Correspondent
As the prices increase, new conjectures arise from the “specialists”. On August 14, BBC technology correspondent Rory Cellan-Jones became the latest in a long line of mainstream financial analysts and reporters to compare the rise of bitcoin to 17th-century Dutch Tulipmania. As he stated on Twitter, on several occasions.
Making a little flashback, in relation to the tulip bubble. The tulip bubble, which took place from 1634-1637, was sparked when a non-fatal virus infiltrated the Dutch tulip crop. This virus resulted in a variety of beautiful petal patterns, and tulips–which were already rare in Holland–grew in value according to the scarcity of their patterns.
Demand outstripped supply, causing prices to skyrocket and speculators to begin buying tulip bulbs as investments. Tulipmania became so pervasive that people even traded their homes and life savings for tulip bulbs. At one point, tulip prices increased twenty-fold in a single month.
Then, eventually, early investors began selling their tulips to secure their profits, creating a chain reaction of decreasing tulip prices as people rushed to sell before the price went down further. Soon, people began to panic sell, causing the price to crash and the Dutch economy to sink into a depression.
The question arises Is Bitcoin a digital tulip bulb? Tulipmania is the quintessential example of a price bubble, and cryptocurrency critics have lobbed this analogy at bitcoin for years. Whenever the bitcoin price breaks through a new barrier, they rush to explain to mainstream news outlets that the bubble is going to burst, killing bitcoin once and for all.
The implication behind this analogy is that, like the Dutch tulip bulbs, bitcoin has little or no inherent value and derives its price entirely from speculation. It is true that bitcoin, like any asset, has experienced price bubbles in the past and will continue to see them in the future. It is also true that some people invest in bitcoin on speculation alone, without understanding or believing in the potential of its underlying technology.
But where the comparison of the tulip bulb diverges from reality, and is that the bitcoin has recovered from multiple corrections of the market, despite the predictions of naysayers. On the other hand, what critics disingenuously refuse to admit is that cryptocurrency has a myriad of use cases, and more are being developed every day. Tulip bulbs have a limited, well-defined use case, and that use case did not justify its rapid (and localized) price increase. Bitcoin adoption, on the contrary, is a global phenomenon fueled by a truly revolutionary technology.
In summary blockchain technology with its bitcoin power, has a place in economics and finance, this technology helps solve society’s problems, so the price of bitcoin is on the rise, only time will tell Will be the maximum ceiling you can take. New announcements are expected.
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