Did you know in the past, a tulip can afford to buy a house, land and even a farm? It does not seem strange, but it is a reality that has happened in the Netherlands before.
The Tulip Mania phenomenon began around 1624 to 1637 during the Dutch Golden Age and was recorded as the world's first financial bubble.
Highlighting the history of that time, tulips were imported from Turkey and became the craze of the Dutch because they described the flowers as exotic apart from taking up to 7 years for a flower to bloom.
At that time, a plague hit the tulip plant and thus caused the color of the flower to be unique. Due to that factor, the price of tulips continued to soar due to high demand and limited supply.
In addition, tulips also symbolize wealth and high rank to the owner.
Because these tulips take a long time to grow and require close attention, the Dutch at that time were willing to buy the flowers before the flowers grow.
You must be wondering how the process of buying tulips at that time. Buyers will buy with a future contract agreement for tulips that will grow as proof of purchase.
When the flower blooms, then the buyer will get the flower. Since then, it has become easier for them to trade tulip transactions with just a piece of paper (future contract).
Imagine, a tulip can change hands up to 10 times in a day. The price of a tulip can reach up to 5,000 guilders, which is the value of a house at that time.
However, nothing remains in this world. The price of tulips fell during the auction event in Haarlem because no one was willing to buy at a high price.
At auction, buyers only dare to bid at low prices and this situation makes sellers panic, resulting in those who have tulip plants forced to make immediate sales.
Due to the situation, the owners of tulips had to lower the price to compete with each other. In 1637, the Tulip Mania phenomenon ended and in just a few weeks, the price of tulips was less than 1% of the price when the flowers were sold at expensive prices.
There is also a theory that says that unique types of tulips like Semper Augustus grew many times over the previous few years, causing the price of tulips to drop.
The Tulip Mania phenomenon can be attributed to the current bullish price trend of bitcoin. In 2017, the price of bitcoin approached US $ 20,000 and then fell but managed to reach the level of US $ 19,000 last month.
There are those who think this trend is similar to the financial bubble that exploded during the Tulip Mania phenomenon 400 years ago. But if this bitcoin bubble does not explode, the cryptocurrency will replace banknotes and revolutionize the world financial system.
