Brazilian Bitcoin pioneer Samuel Maurer has claimed that Bitcoin cannot be compared to the Tulip bubble. Maurer regards this debate as an “outdated matter”, believing that even if the most seasoned economists want to draw analogies, there is no similarity between the Bitcoin and a tulip bubble.

Usually, in mainstream media and economic expert’s circles, Bitcoin is compared to the bubble described by the Tulip mania of the 1600s. A Tulip bubble is a term of economics that is used to describe an economic bubble. Those who are skeptical of the high volatility in the price of Bitcoin have been known to use this term to describe the digital asset

In an article he authored to present the justification of his claims, Maurer explains that upon analyzing the cost/price ratio in assets, one can see the differences between the two.

He added that a certain cost is associated with the Bitcoin creation, electric energy, equipment and the difficulties associated with mining. The high cost of Bitcoin attracts the miners, as it leads huge to profits. However, as the price goes high, the cost of mining also increases. Hence, the cost would always be tied to its price. Sometimes, the price might be lower than the cost of production, pushing miners not to sell until the price goes higher.

He maintained that the low price of Bitcoin in 2018 and then a brief recovery in 2019 proves the health and liquidity of the market. Therefore, it is incorrect to compare it with the Tulip bubble.

Maurer concluded that crypto-coins are completely different in nature and technology from any other commodity. Hence, due to their novelty, they should not be compared with any other commodity or investment, suggesting they instead be treated as an upmarket.

Maurer is a renowned analyst at the Bitcoin Banco Group based in Brazil. He is considered among the first in Latin America to support cryptocurrency-related businesses and invested a lot in it.

 

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