[World Bubble Encyclopedia Vol.1] Tulip Rhapsody: Why do we dream of "flowers" that are worthy of a house?

There was a time when a house was exchanged for just three flowers.

It's hard to believe it suddenly. However, this is a record of history that actually happened in the Netherlands 400 years ago. People were enthralled on a flower called "tulips", as if they had received a divine revelation, and spent all their wealth, or even future income.

Let's be honest. We can't laugh at Dutch people in this era. We are excited and upset about the lottery for limited edition sneakers, and continue to spin the gacha until rare social games characters appear, and are in the midst of a thrill of a reshape of just changing shapes.

This is the story of "tulip mania," known as the first economic bubble in history. It is also a scathing self-analysis that uncovers the true nature of the "small bubble" that lurks in our hearts.

Roughly speaking

**People became enthralled by the "accidental pattern" produced by the virus, and the uncertainty itself became value. **
**The cutting-edge financial technology "futures trading" was born at bars, and unused bulbs were bought and sold on just a piece of paper. **
**One day, the enthusiasm suddenly collapses after a buyer is gone. But it was also the beginning of a new financial system. **

Act 1: God does not roll dice, viruses throw

Now, the story begins back to the late 16th century, when exotic flowers were brought to the Netherlands. Why was it a tulip among the many flowers?

The answer lies in "conciliation."

When a particular virus infects the bulbs of tulips, the petals create unpredictable "spots" patterns. They are not the same as two and cannot be artificially produced. It's truly a unique art created by nature. Maybe this is something you've heard somewhere? Yes, it is the very idea of "generative art" in modern NFTs.

People found value in "couldiness" that is beyond their stable beauty. Uncertainty itself was the moment when it became the subject of speculation.

The invention of the promissory note

The enthusiasm was fuelled by futures trading using "promised notes."

Originally, it was the simple wisdom of farmers to earn money to live on until the bulbs planted in autumn bloom in spring. However, speculators have seen through the true nature of this mechanism. You can buy and sell only the rights without moving the actual product. With just a piece of paper, you can trade the value of the future on the green ceiling.

This was a revolution in financial history. "value" released from physical constraints is brought to life by people's desires, and rises up as light as possible, and as high as ever. That wing was the promissory note.

Act 2: The first ever "billionaire" to be crafted at a bar

The trading was not on the fine stock exchange in Amsterdam. It's a common bar where common people gather. Frenzy always comes from the miscellaneous hustle and bustle, not from the elite meeting rooms.

There, a strange rule called "In Het Oce" was passed. Whether the transaction is completed or not, the seller has to pay for the alcohol. In that case, it would be humane to try and sell it at a high price no matter what. This small incentive is very similar to the structure of approval desire escalating into more radical posts in order to earn "likes" on modern social media. Everyone's only goal was to "sell over" and became an accomplice to raise prices.

The annual salary of a skilled craftsman is 10 times higher, and is even more expensive than a mansion in Amsterdam. Common sense no longer makes sense, and the only real thing was the fact that prices would go up today than yesterday and tomorrow than today.

Act 3: When the music of the chair-taking game stops

There is no eternal feast. In February 1637, music suddenly stopped at an auction held at a Harlem bar.

As usual, the bulbs were auctioned. But no one raises his hand. Even if the price is reduced, no buyers will appear. It was not enthusiasm that controlled the situation, but cold silence.

The cruel fact that there are no buyers. That means the last chair is gone. The news quickly roamed the whole of the Netherlands, and the promissory note, which up until yesterday, was worth the equivalent of a mansion, changed overnight to just scraps of paper.

What's interesting is what happened after that. The court also proposed "Why don't we settle for 10% of the contract price?" and most transactions were unsatisfied. There is no national level remedy. However, it is said that the impact on the economy as a whole was limited.

Why? This bubble was an experiment that occurred in a "sandbox" so to speak, isolated from the existing financial system. Many individuals went bankrupt, but the state was not hurt.

Conclusion: The only lesson we should learn from this foolish act

The story of the Tulip Bubble is too thought-provoking to end it with just "the stupid story of an old man."

Of course, the lesson that "value" and "price" are completely different things is important. Is the "price" that I believe in is backed by genuine "value"? The attitude of asking yourself this question is always the basis for protecting your assets.

But I want to take another step.

Perhaps a bubble is like an inevitable "fell disease" that will help implement new technologies and financial systems in society.

The tulip bubble caused many tragedy, but at the same time it presented society with the concept of "futures trading." The later dot com bubble caused many companies to go bankrupt, but the huge infrastructure of the Internet was born from the ashes. Without the enthusiastic overinvestment, society could have been much later.

If that's the case, then what we need is not to overlook the enthusiasm. It is probably a wisdom to identify the true nature of that enthusiasm and not be swallowed up by the waves, but to ride it wisely.

History doesn't give you the answer. It just teaches you to ask better questions.

"What is this enthusiasm really?"