Bitcoin is scarce
Bitcoin is scarce. Satoshi Nakamoto has set the limit at 21 million Bitcoin so that the coin would remain scarce and exclusive with meme token.
Tulips were also scarce in the beginning, but over time more and more were grown, which destroyed the exclusive character. The supply thus increased, causing the price to fall. At the moment, about 19 million Bitcoin have been mined and the supply is getting smaller and smaller, so the price will increase. This is exactly the reverse situation of the tulip bulbs in the 17th century. Price predictions are therefore also made that Bitcoin could eventually become worth 1 million.
Bitcoin has more capacities
Perhaps the most important difference is that Bitcoin has much more capacities than a tulip bulb. It is often claimed that Bitcoin has no underlying value, just as it is claimed about the tulip trade at the time. It’s worth as much as a madman is willing to pay for it. Well that’s not true. Bitcoin does have underlying value.
While tulip bulbs only grow into a bouquet of flowers , Bitcoin offers a very decentralized and transparent online payment system as an alternative to the current financial system. Bitcoin is decentralized, operates independently and is programmable and the technology offers opportunities for new blockchain applications and projects. It is therefore a valuable innovation. Bitcoin thus has economic and technical capabilities and tulips do not, making the comparison between them curious in itself.
Bitcoin is international
While the tulip mania was almost limited to the Netherlands, Bitcoin trading is international. Bitcoin is also no longer limited to private investors, but more and more institutional investors and large companies are entering the Bitcoin market. Internationally, there are also more and more possibilities to pay with Bitcoin as a valid payment method. That has never been possible with the tulip bulbs.
Bitcoin is easy to trade
Given the digital nature of Bitcoin, you can buy. Sell or send Bitcoin all over the world with just a few clicks. So if there is a crash or if you want to get rid of your Bitcoin quickly for another reason. That is very easy and quickly arranged. Tulip bulbs did not offer that possibility.
Bitcoin is replaceable and divisible
Bitcoin is expendable and divisible. All Bitcoin are the same and can be exchanged for each other. As a result, the price of all Bitcoins is the same, so they are easily replaceable. And can be used as a means of payment. In addition, Bitcoin is divisible, which makes it a practical product. This means you don’t need a lot of money to buy Bitcoin. Because Bitcoin can be divided up to 8 decimal places. So you can also buy, sell or send a small part of Bitcoin.
Tulip bulbs differ from each other and are therefore not. If you have one particular tulip bulb and want to exchange it for another variant, these bulbs do not have the same value, so they are not replaceable. Nor are they divisible into small pieces. You can, of course, but then it won’t do you any good.
Bitcoin is always available
Aside from the scarcity, the Bitcoins on the market are always readily available. As soon as you pay and the transaction is executed, the Bitcoin will be delivered to you immediately in your digital wallet . This way you have direct access to it and you can do whatever you want with it: keep it, send it to someone else or trade with it. This was often not the case with tulip bulbs and you had to wait for delivery, or in the end you never received delivery at all.
Bitcoin does not perish
A final important difference is that Bitcoin cannot perish, because it does not consist of vulnerable raw materials. Tulip bulbs could rot, become moldy and eventually perish, thus entailing certain risks. So if you had paid a lot of money for it, you would eventually lose that money when the tulip bulb perished. Bitcoin is digital and does not have that problem.
Conclusion
The story of the tulip mania in the Netherlands is often compared to Bitcoin by critics. As explained in this blog, scientists point out that the tulip mania, as it is now often retold, is untrue and unlikely to have had a major impact on the economy. Even more unfair is the comparison with Bitcoin. Tulip bulbs and Bitcoin are two completely different products.
Bitcoin is decentralized and transparent , does not require intermediaries , is scarce , easily tradable , has been around for 14 years now and finally symbolizes the rise of cryptocurrencies and blockchain technology, which are increasingly being used in society. Bitcoin has thus proven itself in recent years and it therefore seems very inconceivable that Bitcoin will ever disappear.
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