Hacker News Reader

Comment by da-bacon | Hacker News Reader

Does not pass the Tulip test:

Also keep in mind the growth of Tulips as a whole. New wealth is being created and reinvested.

For example, I participated in a tulip offering 18 months ago which has produced a sizable value. I then took 20% of the gain and spread it across new tulip offerings.

At scale, think of everyone whom invested in Carolus Clusius early and Bizarden just after Ogier de Busbecq sent the first seeds. Their gains are used to reinvest into the tulip ecosystem at the earliest stages, thus, keeping their fortunes regenerating and growing.

View on HN

I completely agree. Many of the psychological principles that drove the tulip craze are present in the ICO ecosystem: scarcity, promises of skyrocketing value, a steady flow of new entrants, and early investors using gains to further fuel growth. We've seen this movie before. The human brain hasn't changed much since those days, and I have a feeling social psychology textbooks will be adding ICOs right next to the tulipmania section. I think everyone is hesitant to voice their concerns out of fear that they simply don't "get it." When you hear a panel of institutional investors say things like, "We're still figuring it out too, but we're going to make a ton of money!" that should make people gambling with their own money nervous. Early investors in multilevel marketing schemes and Ponzi schemes also make lots of money, but the whole thing ends up being a house of cards that stacks ever higher — often with increasingly financially-vulnerable investors entering the market as it gains a reputation of being a sure-fire way to make money fast. That said, I do think that some of the ICOs have solid teams and a good idea behind them, and the coins provide them with sufficient funding and network validation to have a good chance of building a company of real value. Many more don't have those ingredients and could very well end up imploding. But then again, I could just not "get it."

Easy to disregard via Tulip theory. I read that over two years ago with cryptocurrency, specifically Bitcoin.

Reply on news.ycombinator.com