On Friday, December 6, french economists Dominique Seux and Thomas Porcher on France Inter once again made the dubious comparison between Bitcoin and the Tulip Mania of the 17th century. To make matters worse, they incorrectly referred to 22 million bitcoins instead of the actual 21 million, a glaring error that highlights their lack of understanding of the topic. Just for you, Dominique and Thomas, here’s why this comparison is misguided and why Bitcoin and Tulip Mania have nothing in common.
Historical and Economic Context
In 17th century Netherlands, tulip bulbs became a symbol of social status, and their prices skyrocketed due to excessive speculation. This phenomenon occurred in a pre-industrial economy, where the tulip trade was based largely on informal agreements and had no enduring intrinsic value.
Bitcoin, created in 2009, emerged in a context of technological innovation and financial revolution. It operates on decentralized blockchain technology, with use cases that extend far beyond speculation, including payments, data management, and new economic models.
The Nature of the Asset
Tulips have no lasting economic utility beyond their aesthetic appeal. Their price surge was driven solely by speculative demand, with no underlying fundamentals to support their value.
Bitcoin is a digital asset, inherently scarce with a hard cap of 21 million units. It is designed as a store of value, a medium of exchange, and an alternative to traditional monetary systems. Its scarcity and increasing adoption by individuals, businesses, and institutions give it a utility and legitimacy that tulips never had.
Technology and Innovation
Tulip Mania left no lasting technological or economic impact. It was simply an episode of irrational speculation.
Bitcoin’s underlying blockchain technology represents a groundbreaking innovation, transforming industries from finance to logistics. It has inspired thousands of cryptocurrencies and projects, fundamentally reshaping how we think about trust and decentralization.
Longevity and Adoption
The peak and crash of tulip prices lasted only a few months (1636-1637). After the bubble burst, tulips quickly lost their significance.
Despite volatility, Bitcoin has endured for over 15 years and continues to see global adoption. It is accepted by businesses, recognized as legal tender in countries like El Salvador, and serves as a hedge for institutional investors.
Economic Systems at Play
The speculation was confined to a small part of the Dutch economy, with no systemic implications.
Bitcoin challenges traditional financial systems by offering a decentralized, censorship-resistant alternative. Its implications are geopolitical and economic, especially in nations facing monetary crises or strict capital controls.
Conclusion
Tulip Mania was a speculative bubble centered on an ephemeral and economically useless commodity. While Bitcoin also attracts speculation, it is rooted in transformative technology with lasting potential. Comparing the two demonstrates a fundamental misunderstanding of both history and Bitcoin’s utility. By perpetuating such flawed parallels and making factual errors like misrepresenting Bitcoin’s supply cap, commentators like Dominique Seux and Thomas Porcher fail to engage in an informed, nuanced discussion. It’s time for the media and economists to dig deeper into the subject before making comparisons that do more to misinform than enlighten.