by Misha Lepetic
"To be in the world like tulips in a garden,
to make a fine show, and be good for nothing."
—Mary Astell
It seems appropriate that, in its waning hours, the phantasmagoria that was 2017 should have delivered an investment bubble equal parts preposterous and inscrutable. And so we witnessed the stratospheric rise of bitcoin and a veritable menagerie of other cryptocurrencies. Even more appropriately, in a year that made an art out of ratcheting up the tension, this bubble has yet to pop, despite the near-vertical rates of appreciation, followed by a retrenchment that has itself stalled out, leaving us with a most unsatisfying denouement.
In a rush to make sense of it all, many people were happy to pronounce bitcoin (along with cryptocurrency in general, and blockchain as well, because sure why not) as just another episode of the madness of crowds. Knowing glances were cast back to past bubbles, epitomized by the pets.com sock puppet, JP Morgan's shoeshine boy, and of course tulipomania.
But such a rush to judgment can be its own form of madness. To be sure, in these binary times it's difficult to tread a subtler line. The suggestion that we should be pursuing far better questions isn't necessarily the same thing as claiming that ‘this time is different', even though the two stances are easily confused. Instead of dismissing cryptocurrency as the latest demonstration of humanity's inability to learn from its past mistakes, we may rather use it as an opportunity to inquire about the nature of value, and what difference the future may make in relation to the present.
Beginning with the ur-phenomenon of tulipomania, we can find both striking similarities and differences between it and the current situation. For one thing, tulips are a real thing – that is, a commodity. As Mary Astell implies above, flowers may not have much going for them, but they are pretty to look at, and in an affluent society, that counts for something (it ought to be noted that gold is similar, in that its practical value, as jewelry and an industrial metal, is far outstripped by its value as, well, gold). So it was for the Dutch, who saw in tulips a signaling mechanism that rapidly got out of hand.
