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Back in 17th century Europe, investors were crazy for tulips. The flowers were exotic and hard to grow, with any number of different varieties possible—and they were expensive. Soon after the tulip bulbs were imported from Turkey, rich people started buying them to show off their expensive flowers. Then they became investment vehicles, and that’s where the trouble started.
Tulip bulbs can be uprooted and moved around from June until September, so physical bulbs were bought and sold then, but during the rest of the year, investors would buy and sell future bulbs, effectively creating a kind of flower-based future commodity market. Soon the contracts for bulbs were bought and sold at a rate of up to 10 transactions per contract per day. Prices went to the moon—the most coveted bulbs sold for upwards of $750,000 in today’s money. People made fortunes and heavily leveraged themselves to get bulbs, which seemed like they would go up in value forever. But the Keynesian “animal spirits” that animated the market disappeared (partly because of the bubonic plague) and tulip millionaires suddenly found themselves heavily in debt, with their only possessions a few tulip bulbs. On the bright side, unlike NFTs, at least tulip bulbs can grow into flowers.
from Lifehacker https://ift.tt/tSYpV8D
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