Crytpo-Currency as the Newest Snake Oil? Tulips, Beanie Babies and BitCoin

If you look at the similarities between tulips, Beanie Babies and Bitcoin you may find that the similarity is not how easy it is to move them, but the timing of the interest in them. The interest in Bitcoin may flux as people become nervous about the coming recession.

Investment bubbles are hardly new or novel. Some are old as dirt. Literally. One of the most impressive bubbles involved the tulip trade, with a record sale of 99 lots of tulip bulbs in 1637. That lot went for approximately $3.5 million in today’s U.S. dollars. A similar sale of tulips prize tulipswould gain $700 today.

And if flowers aren’t incredible enough, more recently the children’s toy Beanie Baby quickly became its own odd bubble of a possible investment. Beanie Babies came into popularity between to recessions in the United States, between 1991 and 1998. In fact, the highest grossing Beanie Baby, the Princess Diana Bear currently sells for $600,000. And lest you think bubbles are limited only to flowers and darling bears, bubbles exist for things as strange as low numbered license plates with some fetching into the thousands.

And now, we have Bitcoin. According to Motley Fool, Bitcoin blows the stock market out of the water in terms of the possibilities of returns. Apparently, Bitcoin has gained almost double its value in 2019. And that rise has captured a lot of attention. Back in December of 2018, 1 Bitcoin went for $3000. It now, as of early September of 2019, went for $10,534 according to Morningstar’s reports on Cryptocurrency. It’s not necessarily odd that a coin to have so much value. According to, a 1913 Liberty Head V nickel can fetch as much as $4.4 million.

What is Bitcoin? According to Coindesk, “Bitcoin is a cryptocurrency which isn’t managed by a bank or agency but in which transactions are recorded in the blockchain that is public and contains records of each and every transaction that takes place. The cryptocurrency is traded by individuals with cryptographic keys that act as wallets.”We’ve previously covered blockchain as the perhaps helpful part of the Bitcoin phenomenon. The key to Bitcoin is that it can be traded and there is limited supply of them. In other words, like tulips and Beanie Babies, it’s a good that can be moved easily. When compared to other investments that aren’t based on stock, that movability makes them easier to trade. Take real estate as an example. An apartment can hardly be moved to your kids closet when you have too many of them on the table. The same inability to move or transfer the investment also holds for investing in your neighbor’s pizza shop. Bitcoin can be sold quickly and relatively easily. And that may be part of its allure. A greater piece of the allure may be the stories of those who have retired on their investing and trading in it. These stories often feature celebrities and tend to be pitched more towards Millenials.  

So, if blockchain is a helpful system, and used by some pension systems even, is Bitcoin a useful investment or more of the same like tulips, Beanie Babies and Delaware license plates?

What might be more important to employees than the rise in value of Bitcoin is the timing of people’s interest in Bitcoin. If you look at the similarities between tulips, beanie babies and Bitcoin you may find that the similarity is not how easy it is to move them, but the timing of the interest in them. The interest in Bitcoin may flux as people become nervous about the coming recession. If so, then plan sponsors may serve their employees addressing employees’ fears about the recession through more education about the source of those fears.

Plan sponsors can help employees with their pre-recession jitters in investing towards retirement by addressing topics such as understanding risk management in investing.  Sponsors can also help employees address their fears about wanting to invest outside of the stock market by providing more education about the stock market and its historic trends, including how long term investing fairs. Finally, sponsors can also help employees learn more about investing in non-stock items.

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