Bitcoin Is No Tulip: Legacy Supporters Resist Finance's Paradigm Shift - Bitsonline

Bitcoin Is No Tulip: Legacy Supporters Resist Finance’s Paradigm Shift

A trendy way for bankers and governments to dismiss Bitcoin over the years is by comparing it to a relatively obscure 17th century event known as “Tulip Mania”. But does it actually contain any useful lessons for cryptocurrency investors?

Also read: I’ll Show You How On-Chain Scaling Can Work, Says Dash Founder

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Comparing Bitcoin’s Success to Tulip Mania

Earlier this month, UBS economist Paul Donovan made waves when he pointed out that CME’s recent decision to add Bitcoin futures mirrored a turning point in history, one that ultimately led to a bubble and a subsequent crash.

This event has become known as Tulip Mania, and it’s mostly studied in finance circles for being the poster child for irrational, speculation-driven bubbles and crashes.

BitcoinSome would see this as a quirky similarity — but nothing more than that, given the differences between Tulip Mania and Bitcoin’s recent growth. But in Donovan’s mind, the resemblance is more than just an interesting coincidence — he believes history is repeating itself.

We should note that comparing Bitcoin speculation to Tulip Mania isn’t a new thing — it’s been happening for as long as BTC has had real value, or 2011 at least. Dutch Central Bank president Nout Wellink grabbed headlines for saying it in December 2013, and others have been repeating it ever since.

Tulip Bubble Aftermath

The introduction of cash-settled future contracts soon succeeded the tulip bubble burst in the 1600s. Paul Donovan commented on this fact, drawing parallels to the CME announcement, saying that we’ve “been here before.”

Interestingly, just a month prior, The European Central Bank vice-president, Vitor Constancio, made a similar comment comparing Bitcoin’s growth to Tulip Mania during a Frankfurt conference he was attending.

JPMorgan CEO Jamie Dimon also referred to the tulip bulb bubble when discussing the future of bitcoin at conference, where he also called the digital currency a “fraud.”

Bitcoin is a Disruptor, Not Just a Passing Fad

However, despite the fact that both bitcoins and tulip bulbs have been characterized by rapid price growth and speculation — the two situations couldn’t be any more different.

For one, Bitcoin is a decentralized currency and payment network that has vastly different use-cases than that of a tulip. Second, Bitcoin’s success has not been driven by speculation alone — people have turned to it time and time again as a way to mitigate risk and protect their savings.

Alan Greenspan

Furthermore, Bitcoin is a global phenomenon that didn’t just pop into existence yesterday, it’s nearly a decade old and BTC’s average upward price trend has been going on for about two years — non-stop.

Finally, unlike Tulip Mania, Bitcoin hasn’t just come and gone — it has slowly built confidence with users and investors alike as it continually defies odds. An entire economy has been built around Bitcoin and even though it’s also been frequently likened to a Ponzi scheme, it is now accepted by major retailers such as Steam and

Despite a few prominent opponents — who at this point are likely just a very vocal minority — many finance leaders have expressed a bullish sentiment about Bitcoin’s prospects. The most recent of them was former U.S. Trading Commissioner, Bart Chilton — who came out against Alan Greenspan’s recent comments questioning the currency’s sustainability.

Just as Bitcoin seems to be on its way out, it always rebounds — not dead, just lulled to sleep by a familiar trend: up and up and up…

What do you think of UBS’ Chief Economist comparing Bitcoin to Tulip Mania? Let’s hear your thoughts.

Images via Lars P. Syll –, UBS, Alan Greenspan

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