Flower Power 🌷 Using History To Predict the Future

Do you know the story of the first major financial bubble?

It all started with a flower🌷the bubble was called
“Tulip Mania”

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A tulip is a spring-blooming flower native to Central Asia.
It was first introduced in Europe around 1554 as a gift from Ottoman Empire🌷

Tulips became very popularity, people were attracted to their rich color & it's ability to grow in almost any climate

They soon became a status symbol for the rich. The one's with colorful flame-like streaks, were the most desired of them all (caused by a plant virus).

By the 1600s, Denmark was entering into a golden age due to its success from overseas trade & commerce.

Financial innovation also grew with Denmark's golden age. The first stock exchange was created & more importantly the first ever futures contract.

Tulips grow slowly & take up to 5 years to bloom, paper contracts were written that entitled buyers to future tulip harvests.

Contract trading grew out of control. So in addition to the physical market for tulip bulbs, a frenzied paper market also exploded into existence.

By 1636, the prices of tulip bulbs rose quickly. Traders met in special beer gardens & taverns where no bulbs ever changed hands, just the contracts.

Speculative buying (buying on the expectation of further price increases) became rampant.

The frenzy was on.

New companies & partnerships were created just to buy & sell tulips.

Rising prices beckoned new speculative traders into the market, which further drove up prices.

"Fear of missing out" set in & prices continued to skyrocket until February 1637.

At its peak, one tulip bulb in 1637 sold for roughly $514,670 US dollars in todays money.

But as quickly as the bubble started it would soon be coming to an end.

Slowly, traders who had paid crazy prices for tulip contracts were left with just pieces of paper.

Many refused to pay, arguing the paper contracts weren’t worth anything & didn't pay.

This led to further panic selling as the market sharply declined & crashed.

Although this story from history is filled with both facts & fiction which can not be corroborated due to the passage of time.

Does it sound at all similar to our current digital coin economy to you?

What do you think the biggest difference is between then and now? Did you notice any correlation between Tulips and NFTs?

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