When Tulips Were Worth More than Gold
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Would you ever spend two hundred and thirty thousand dollars on an NFT? For some people, that’s a maybe. For me, it’s a little baffling. NFTs are, in essence, a case of the perceived value of a product and predicting how the market for that product will behave. People invest, hoping the market will boom, allowing them to profit before interest in that product wanes. It’s a delicate balance of speculation and gambling. And the historian in me can’t help thinking NFTs are a modern incarnation of Tulipmania, the period in the Netherlands in the early 1600s when tulips were more valuable than gold. From wealthy merchants to chambermaids, everyone invested their life savings into tulips, hoping to strike it rich. But they lost it all, and the Dutch economy collapsed when the tulip market crashed in 1637…
Ok, that’s not what happened. But tulips did indeed become so popular that some rare bulbs could sell for more than a nice house making tulips, briefly, more valuable than gold.
A quick primer on NFTs if you’ve managed to avoid this facet of the news for the last year or so. With an NFT, you buy a receipt of ownership of something. Take, for example, a piece of art, like this painting of aviatrix Jackie Cochran’s house that she used to own. I bought it, and it hangs in my house. The NFT would be proof of ownership without the physical painting. I bought it because after writing about Jackie in Fighting for Space, I wanted to have it in my house, to live with art that someone I studied and admire once lived with. I don’t expect someone else to want that experience, so I didn’t buy it hoping to profit.
Profit seems to be why people buy NFTs. Take the Bored Ape Yacht Club pieces, the NFTs of which are ownership of the piece without the physical print. With only 10,000 available and celebrities showing off their apes, there’s a sense of wanting to be part of an exclusive club. People buying those NFTs can hope to profit by selling theirs to someone else who values being part of that club before interest wanes.
Investing in a market hoping to profit is nothing new. It’s the speculation surrounding a market of intangible goods…
