NFTs, Tulip Mania, Gold Rush

tech innovation is not the end goal. tech is just a tool with a lot of economic promises

when an opinion is shared by a large enough, influential enough population, for a long enough time —— long enough that it gets passed down from generations to generations, they become facts.

and facts stay for a long time. no one questions facts.

-5/15/2021, on institutionalized anything

hai product freaks! 👁👋🏻👁

pov it’s summer of 1636 and you have just spent all your life savings to buy, not one tulip, but a piece of paper of someone’s promise of a ✨🌷tulip🌷✨, betting that 👏🏻 it 👏🏻 would 👏🏻 make 👏🏻  bank.


once upon a time, in the netherlands, 💐 tulips were worth more than real estate

not just any tulip. a very specific strand with saturated petal color. the appearance resembled ✨luxe status and the 📈rise of newly independent Holland trade fortunes. this rise just so happened to coincide with the dutch golden age where skilled workers are moving to the area and wealth of corporate finances were born

thank you, the OG tech bro personality trait 🧢

at the peak of tulip mania (feb 1637), some single tulip bulbs sold for more than 10 times the annual income of a skilled artisan but people still poured life savings into buying tulip future contracts anyway.

clarification:

what was scarce = 🌷 tulips, they were scarce bc 1) hard to import 2) takes forever to grow bulbs to flowers

what was being traded = 📜 tulip bulb future contracts, aka a piece of paper that promises to deliver the tulip bulb to you on a specific price on a specific day

why were people willing to pay ridiculous prices for tulip bulb future contracts? my wild guess:

people bought the contracts NOT because they believe a tulip bulb is worth the money

people bought the contracts because they believe other people believe a tulip bulb is worth the money

enough people believed in this asset price, and more importantly, enough people believed that other people believe in this asset price,

+ tulip bulbs are scarce

at one point the bulb contracts were being traded 10+ times a day (imagine people doing this without Robinhood App! 😂 you’d need to physically go to a crowd of people who literally yell prices in the air and trade physical pieces of paper)

but of course - no tulip bulb deliveries were actually made to fulfill these contracts because in feb 1637, tulip bulb contracts prices went straight down to basically zero.

people who got out early / before the price collapse made bank. but most people didn’t get out early enough and went bankrupt.

this is probably the first recorded speculative bubble in history. the term "tulip mania" is now often used metaphorically to refer to any large economic bubble when asset prices deviate from intrinsic values.

sound familiar?

don’t be silly. of course i’m not talking about hermes bags or air jordans or supreme chopsticks.

read more:

Crisis Chronicles: Tulip Mania, 1633-37

Extraordinary Popular Delusions and the Madness of Crowds

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one upon another time, 💰 gold was worth nothing

and then someone in egypt picked up a piece of gold one day and decided. hmm. this is going to be valuable. ✨ i’m going to make it into luxe decors! ✨ he says. and i’m going to make other people believe that it’s valuable and also make it in to luxe decors.

— that was my wild wild guess. i don’t actually know who came up with the consensus and how they came up with the consensus that gold could be used as money for exchange, or store of value, or other artifacts.

related: my other wild wild guess on 🥔 how much is a bag of potatoes

what we do know is, since ancient civilization, gold has held a special place of actual and symbolic value of humanity.

we can also think that gold has no intrinsic value 🤷🏻‍♀️ it’s just a barbaric resemblance which no longer hold the monetary qualities (but then we can also think that currency is also just a more recent barbaric resemblance which may or may not hold the monetary qualities....?)

people who participated in the 1848 - 1855 california gold rush would probably contend otherwise. when gold was found by a guy named james, the news brought >300k people to california.

the gold rush stimulated economies around the world, fast tracked the development of government and commerce, massacred native americans, planted a seed in both western and easter culture and impacted how our ancestors viewed the idea of money and how they passed down the idea to us.

this begs the question:

did people believe in the value of gold because they believe value of gold?

or do they believe in the value of gold because they believe other people believe the value of gold?

if it’s the latter, do the pretty stories passed down from generations after generations about what gold represents even matter?

read more: The Global Economic Significance of the California Gold Rush


once upon an NFT

tulips did not fulfill its economic promises. and the bubble bursted.

gold did. diamond kind of did. at least a significant amount of people still trust the value that’s assigned to a piece of mineral.

dotcome did.

now, will NFT fulfill its economic promises?

there are 2 kinds of people you can’t trust on this planet: people who spell ‘zuck’, and people who say ‘ofc it’s valuable! because! ✨technlogy!✨ tech will save the world!’

it’d be silly to assume NFTs’ intrinsic value is directly parallel to the success/failure of the adoption & utilization of of blockchain technology. it’d also be silly to assume NFTs’ intrinsic value is directly driven by how it’s helping a small number of large creators to monetize.

the real questions are -

will enough people believe in NFTs’ value

will enough people believe other people will believe in NFTs’ value

will this belief stay long enough

—— these are the key artifacts that will determine whether NFT will fulfill its economic promises.

when an opinion is shared by a large enough, influential enough population, for a long enough time —— long enough that it gets passed down from generations to generations, they become facts.

and facts stay for a long time. no one questions facts. duh.


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next week:

comment / DM / email me on what topics you want to chat about and i’ll post my thoughts on it! 💛 happy hump day product freaks.

-serena.li.here