Crypto Boom going back to the Dotcom Bubble


Back-forwarding two decades!

The Dotcom Bubble or the mania for technology stocks in 2000 had all the ingredients for a roller-coaster ride. It was driven by insane investor expectations surrounding — glamorous sounding products (Webvan- Selling groceries online and delivering them directly to customers’ home within a 30-minute window of a chosen timeslot), cupidity, an economy firing on all cylinders and the media peddling the line that the rules of business and our lives had been rewritten permanently.

These emotions hid behind a technology- the Internet. A new, innovative, and highly transformational technology that would change our lives for decades to come. There is a catch here, simple as it sounds, you couldn’t buy the internet then. Hence to be a part of the cult of inadvertently bullish investors, they dabbled and speculated in any ‘internet-related’ stock they could.

Just adding that one punctuation mark and three letters (.com .net or internet) used to send stock prices up, on average, 74 per cent. How frothy can things seem at their face value, right?

A wave of reality hit, most companies couldn’t sustain their valuations, were outright frauds or had questionable business models. Many of them lost 95% of their value or went bust. Did that mean the ‘internet’ would not change our lives forever?

Fast-forwarding two decades

Market was 100% accurate about the internet. Today, we breathe internet. Internet transformed the global economic landscape, but was it the same back then? Amazon — a prominent example from the 2000s — lost 90% of its value at 90% revenue growth. People envisioned it to change the world then, but they forgot the word process in the chaos. They were drugged on future expectations and completely missed the present. All in the hope to invest in something that was ‘uninvestible’… the internet.

Crypto Wonderland

Blockchain — a technology that’s ‘new’ and exciting today. The mechanics and concepts will surely change the global economic landscape. It will be embedded in our lives, no doubt.

As you couldn’t buy the ‘internet’ back then, you cant buy ‘blockchain’ today. Unable to buy blockchain, investors rushed to the next closest thing — Digital Currencies. Asking a random person on the street bullish on Blockchain, they invariably begin talking about how it will transform the world, almost neglecting the question about digital currency as a viable asset and a valuation to invest in.

Into the future…

Sometime in future, most of these digital currencies will be relegated to the trashcan of the history of bubbles. While perhaps some will stand out and transform the world as Amazon did.

First thought to mind will be that we have found the Amazon. But Yahoo was long before Google, but Google beat them and is the leader today.

Let’s leave this to the jury of investors out there. The downturn will expose projects and currencies that don’t have a true utility which is a long term positive for the industry and unleash the real leaders in time!