In a question and answer session on Twitter, the Central Bank of Europe compared the price of Bitcoin to the 17th-century tulip bubble. Frank Elderson, current ECB vice-president at the time, was managing the account. Starting a question period that the European central bank proposed, a user took advantage of Elderson's jug of tulips on his desk to ask: “what are more worth , these tulips or a Bitcoin? ”
The ECB then tweeted: “Tulips are beautiful flowers. For those who remember the 17th Century Tulip Mania, they also serve as a reminder of what can happen when prices do not reflect intrinsic value. ”
The answer has led to numerous comments, after all, does it still make sense to compare Bitcoin's 12-year growth with a fever that supposedly lasted three months? The much-questioned history of tulips has more similarities to the euro itself, than to the cryptocurrency Bitcoin, some criticisms have suggested: “The beauty of a tulip flower is as subjective as the value of its bulb. There is no intrinsic value – it is an invalid concept. The value is completely subjective and relative to the parameter. The value of a commodity can only be found within a free market. ”, said the BTCBrisket profile.
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While Bitcoin may have objective characteristics of a strong currency, such as good divisibility, scarcity, transferability and liquidity, its value can only be defined by each individual. The euro as paper money is made of a fragile material and abundant in nature, having its utility solely based on the force of the law, which forces citizens to accept this money. Like tulips, state money does not have a limit on units and it can be replicated easily, which makes both options lousy as reserves of value. Governments impose arbitrary limits on the issuance of money, but they have proven to be unreliable over time with the massive money impressions they make mainly in times of crisis and to finance wars. It is also worth noting that, despite high volatility, Bitcoin's price has recovered from all its countless declines, and continues to increase its network effect as more people around the world adopt the technology. As Satoshi Nakamoto, the anonymous Bitcoin creator explained in a public email, the emergence of BTC as a currency could be a self-fulfilling prophecy, if enough people thought the same way.Comparison of Bitcoin with the bubble of tulips, dot-coms and Nasdaq. Source: Blocktown Capital, 2019. Even bank Wells Fargo, in a recent report, argued that Bitcoin would not be “just a craze”, taking into account its history and potential. For the investment bank's head of real assets strategy, Bitcoin is much more like a new “gold rush”.Read too: Bubbles don't last 12 years, comments Wells Fargo on Bitcoin