During the Dutch Golden Age, a phenomenon arose as fashionable bulbs of a tulip reached
exponentially high prices. This is known as Tulip Mania. This phenomenon was believed to be
the first speculative bubble recorded in history (Moore, Artz, & Ehlen, 2017). Tulip Mania was
introduced by a botanist named Carolus Clusius, who began the cultivation of tulips in the
Netherlands in the 1590s. He began his research and study of the tulips, and later discovered a
mysterious event called tulip breaking. Tulip breaking was an extraordinary occurrence in which
the color of the tulip's petals would begin to shift into various color patterns (Shulga,
Yakubovich, & Piskun, 2018). As a result, the multicolored patterns of the tulips began to
increase the tulip craze in the Netherlands exponentially. These "rare" tulips became valuable
than the common tulips, creating competition between Dutch botanists by promoting a new
hybrids and varieties of tulips. By the 1600s, the Dutch economy played a significant factor to
the mania as not only high-class aristocrats have the money for luxurious expenses, but also
tradesmen, merchants and middle-class artisans (Shulga et al, 2018). Prices began to
exponentially increase by 1620 that it was said that an entire townhouse was offered in an
exchange for only 10 bulbs (Shulga et al, 2018). But as this bubble began to inflate, it was
destined to pop. No one is completely sure what was the "x factor" as to what lead to the
demise of the phenom, but rather than a series of unfortunate events. People started to breach
contracts and people started realizing the prices significantly deviate from its intrinsic value,
creating this snowball effect as to everyone is trying to save themselves from this inevitable
downfall. The financial aftermath was foreseeable, knowing that the European economy,
especially the Netherlands, would be in financial ruin (Moore et al, 2017). This phenom is still
likened to today's economy. The Bitcoin craze in 2012 and cryptocurrency has been the hype of
the century, following the late story of the tulips. We may not know the end game of the
cryptocurrency bubble, but we are already seeing symptoms as how it is following the footsteps
of the unfortunate occurrence, the tulip mania.
Moore, A., Artz, J., & Ehlen, C. R. (2017). TULIP MANIA.
International Journal of the Academic Business
Shulga, D., Yakubovich, A., & Piskun, O. (2018).
Tulip Mania: When Tulips Cost as Much as Houses.