Bitcoin vs The Dot Com Bubble: Are the Comparisons Necessarily a Bad Thing?
Some things are worth remembering from history when discussing current cryptocurrency market. The infamous dot com bubble of 2000–2002 is undoubtedly one of them. You might wonder why I would bring this up in conjunction with the cryptocurrency market? Well, its actually quite simple: bubbles are guaranteed to occur when it comes to New Tech, and that’s a fact, at list according to the recent history. The likes of Warren Buffet, George Soros and Nobel Economist Robert Shiller, amongst many others, have all made a direct reference to Bitcoin resembling that of a bubble that is destined to burst. Moreover, such sceptics of the digital revolution argue that the technical red flags currently facing the industry have strong similarities to the Dot Com bubble.
Let’s start with the year 1997 and the beginning of the infamous dot com (.com) bubble with Amazon.com going public and a share value rose 31% in 1 day. Many other internet-based companies went public, and the investment frenzy has begun. Money was flowing-in left, right and centre and it seemed that this trend will never end…yet it did.
The dot-com bubble (also known as the dot-com boom, the dot-com crash, the Y2K crash, the Y2K bubble, the tech bubble, the Internet bubble, the dot-com collapse, and the information technology bubble) was a historic economic bubble and period of excessive speculation that occurred roughly from 1997 to 2001, a period of extreme growth in the usage and adaptation of the Internet by businesses and consumers. During this period, many Internet-based companies, commonly referred to as dot-coms, were founded, many of which failed.
During 2000–2002, the bubble collapsed. Some companies, such as Pets.com and Webvan, failed ultimately and shut down. Others, such as Cisco, whose stock declined by 86%, and Qualcomm, lost a large portion of their market capitalisation but survived, and some companies, such as eBay and Amazon.com, later recovered and surpassed their stock price peaks during the bubble.
How does this compare to the cryptocurrency market?
We see lots of similarities with the dot com bubble and trends that seem to repeat itself every time there is a new tech entering the market, that also applies to the blockchain adoption and the cryptocurrency boom in 2017. Blockchain revolution started by Bitcoin adoption, and it seems to be very similar to the dot com bubble.
While there can be no denying that these warning signs potentially exist, it is also argued that the cryptocurrency space is not set for redundancy per-say, more so that the industry is set for a significant long-term re-shape. Essentially, it is essential to note that while many Dot.com stocks are no longer here to tell their story, one only needs to look at the likes of Amazon, eBay and Priceline to understand that the technology stock crash at the turn of the century was not a demise in its entirety.
What can we expect from the cryptocurrency market as a whole then?
Statistically, some 90% of crypto projects will fail, for comparison, 92% of all start-ups will also eventually fail so nothing out of the ordinary specifically here. There are no straight forward answers on how it is it all going to shape up for the future, but one thing is certain, only the superior projects will remain and shape the future of the crypto market.
Will we Eventually see a Repeat of the Dot.com Revival for Leading Projects?
Ultimately, this beggars the question. Will the cryptocurrency market go the same way as the NASDAQ and its website-based stocks? If so, it is highly feasible that this will result in a significant transformation, insofar that in the long-run, the markets may eventually separate the wheat from the chaff.
To elaborate on this viewpoint, if the likes of Bitcoin, Ethereum, Ripple and other leading projects are the Amazon, eBay and Priceline of the Dot.com bubble, then are the never-ending tokens of ICO projects set for a similar fate as Pets.com, Geocities and Webvan?
In reality, there can only be so many “Ethereum Killers” or “Revolutionary Cross-Border Tokens” before the markets eventually come to the determination that most blockchain assets may never see their previous highs again. However, on the contrary, it is also reasonable to suggest that, at least in the case of Bitcoin, some projects will ultimately stand the test of time.
If this is the case, then those currently in receipt of extensive cryptocurrency holdings must remember the fundamental action of patience. Those that were personally involved in the Dot.com bubble would have no doubt carried a similar sentiment to the cryptocurrency portfolio holders of today.
Yes, it is correct that had you purchased Bitcoin in late 2017 you are now staring at a net loss of close to 80%, much in the say way that holders of Amazon stocks did in the preceding years of 1999. However, while there are no guarantees that the financial side of blockchain assets will ever repeat its previous successes, nor which projects, in particular, will succeed if the industry is here to stay, what can be argued is that it is potentially too soon to know.
The role of Geco.one in the market
Geco.one is a platform that enables you to safely invest in the cryptocurrency market using skills and knowledge of experienced traders. Our flagship service, called PAMM account, allows you to invest in cryptocurrency pairs by entrusting your resources to experienced traders as well as providing you with all the tools necessary to become a crypto-trader yourself. PAMM trading system is the safest way to do so because it also provides tools like futures trading, leverage as well as short & long positions for all traders alike.
At geco.one we are planning to bring new quality to the crypto trading, and with our GEC tokenomics, there is a bright future ahead of us.
Written by Jaroslaw Stankiewicz
“Blockchain is the tech. Bitcoin is merely the mainstream manifestation of its potential.”
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