Jamie Dimon, chairman and CEO of Wall Street banking powerhouse J.P. Morgan Chase, He called bitcoin a “fraud” in 2017.
Jaime Dimon : “It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed.” He also contended, “It’s just not a real thing, eventually it will be closed.”
What is the reason for Jaime Dimon saying `` It’s worse than tulip bulbs '' for Bitcoin?
The Tulip Mania Bubble
The Tulip Mania took place in the Netherlands, which lived its Golden Age in the 17th Century Age.
Rise of Tulip in Netherlands
The Netherlands ambassador to Istanbul bought tulip bulbs from the Ottoman Empire in 1554 and brought them to the Netherlands.
Tulips affected by a certain type of virus had different colors, fragrances and patterns. The new tulip varieties that emerged in this way attracted great attention.
The producers named the new varieties of tulips with great titles.
"Alexander the Great", "Scipio", "Admiral of Admirals", "General General" ...
The Dutch saw tulips as a kind of status symbol. A trading market was created, where infected tulips were sold.
Trade, Speculation and Bubble
70 years after the tulips were brought to the Netherlands in 1554, the tulip trade spread to all parts of the Netherlands.
Tulip has become one of the most important export products of the Netherlands.
In the 1630s, important traders started to participate in the production of tulip bulbs by using their strong economic opportunities. The demand for tulip bulbs began to increase rapidly in Europe.
In 1634, upon the demand from France, speculators began to enter the market. By 1636, Dutch traders created an official future market, where tulip contracts were bought and sold at the end of the season.
A new era started with the participation of speculators in tulip trade.
The tulip trade peaked in the winter of 1636-37, when some bulbs changed hands several times a day.
At the peak of tulip mania, in February 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsworker.
According to some reports, houses and estates were mortgaged to obtain the bulb for resale at a higher price.
In the book "Extraordinarily Popular Delusions and the Madness of the Crowd", written by British journalist Charles Mackay in 1841; It is written that 12 acres of land is offered for a Semper Augustus tulip bulb.
In February 1637, tulip bulbs contract prices suddenly dropped, and tulip trade came to a halt.
Similarities Between Bitcoin and Tulip Mania Bubble
- Bitcoin's trade is also affected by speculation like a tulip bulb
- Both Bitcoin trading platforms and tulip bulb trading guilds emerged independently from the state authority
- Both Bitcoin and tulip bulbs are used for future futures contracts.
The Difference Between Bitcoin and Tulip Mania Bubble
- The economic system in which Bitcoin was born and lived and the economic system in which Tulip Mania is located is completely different.
- The total supply of Bitcoin is limited to 21,000,000. Tulip bulbs have no total limit.
- Bitcoin has no life and can be stored forever. Tulip bulbs have a lifetime, they cannot be stored forever.
- In contrast, Bitcoin is digital and can be transferred within a global peer-to-peer network. Tulip bulbs can be transferred under risky transportation conditions.
- Bitcoin can be divided as satoshi in terms of value and Bitcoin can be taken piece by piece. The same is not the case for tulip bulbs.
- Bitcoin was created by Satoshi Nakamoto. Tulip bulbs were purchased by the Netherlands from another country. Bitcoin was born from 0, not the same for tulip bulbs.
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