How (and When) the Fortunes of the World Are Made

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How (and When) the Fortunes of the World Are Made

Tulip Mania

• Tulips and the Dutch Golden Era arrived in The Netherlands roughly around the same time.
◦ tulips – 1593
◦ Dutch Golden Era – roughly the 17th century (1600-1699)
• 1636 the demand for rare tulips grew so much, they were traded on Amsterdam’s Stock Exchange.
• Unknown at the time, the ‘most beautiful and rare’ tulips had a virus called the tulip mosaic virus
• 1635-1637 Tulip Bubble
◦ Average annual income = ~150 florins
◦ Prices for Rare Tulip varieties:
▪ [~480 perits = 1 ounce]
▪ Admiral Von der Eyk 1,260 florins
▪ Shilder 1,615 florins
▪ Viceroy 3,000 florins
▪ Admiral Liefken 4,400 florins
▪ Semper Augustus 5,500 florins
◦ Semper Augustus tulip cost the same as a luxurious house in Amsterdam
▪ Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds (1841)
• Short term value: Everyone imagined the passion for tulips would last for ever,
◦ The tulip bubble burst in 1637
◦ May 1638 litigation allowed tulip contracts to be annulled for 3.5% of the agreed price.
◦ “the commerce of the country suffered a severe shock, from which it was many years ere it recovered” (Mackay, 1841)
• Long Term value: The Netherlands Horticulture Industry today
◦ 24% share of world trade in horticulture
◦ 50% share of floricultural products worldwide
◦ 80% share in bulbs worldwide, that’s 4.32 billion tulip bulbs each year

Alternative Currency

• Bitcoin: Decentralized, Peer2Peer, Global, Digital currency
◦ No physical currency to protect or transfer
◦ No central point of failure
◦ Open source – anyone can use software
◦ No Banks, No inflation, No bank accounts needed
▪ 21 million total bitcoins, released slowly over time by computer ‘miners’.
▪ currently 12.25 million bitcoins
• No 3rd party fees for big business or individuals
◦ Direct 1-to-1 transfers on a global public ledger called the “blockchain.”
◦ 3rd parties charge roughly $7 to send $100 from US to Mexico
◦ bitcoin fees are between $0.08 and $3
• As internet access grows, so will bitcoin
◦ 3rd World has incentive to adopt secure decentralized currency, due to instability and political meddling.
• Impact value of investment:
◦ Jan. 2012 – $5.48
◦ Jan. 2013 – $20.41
◦ Jan. 2014 – a volatile $1040 high & $800 low within the first week
• Short term value:
◦ Is it a Bubble? Who cares?
◦ Future projections range from
▪ $10 per bitcoin by mid 2014
▪ $98,500 per bitcoin in 10 years
• Long term value:
◦ Impact investing:
▪ Intentionally creating both financial return and positive social or environmental impact
▪ Impact goal takes priority over financial gains
▪ Outcomes for both are actively measured
◦ Global impact investments exceeded $50 billion in 2010
◦ Invested capital is predicted $400 billion – $1 trillion by 2020

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Sources:

http://www.hollandtrade.com/sector-information/horticulture/?bstnum=4928
http://www.wearesocial.net/blog/2014/01/social-digit-mobile-worldwide-2014/
http://www.blog.panampost.com/joel-fensch/2014/01/02/bitcoin-set-to-boom-in-latin-america/
http://www.businessweek.com/2000/00_17/b3678084.htm
http://www.coindesk.com/bitcoin-price-reach-98500-say-wall-street-analysts/
http://www3.weforum.org/docs/WEF_II_FromMarginsMainstream_Report_2013.pdf
http://www.rockefellerfoundation.org/uploads/files/2b053b2b-8feb-46ea-adbd-f89068d59785-impact.pdf
http://www.businessinsider.com/williams-bitcoin-meltdown-10-2013-12