While Bitcoin has reached its tenth anniversary in January this year, it cannot help but be prey to a series of criticisms that question its true value. Influential People in the financial sector such as Warren Buffet, George Soros and Nobel Laureate economist Robert Shiller, along with others, have made a series of statements that give us the understanding that Bitcoin is a bubble, and worse, worthless.
But to justify these accusations, the skeptics in the revolution of the cryptocurrencies use technical arguments that ignite a pair of red alerts by finding certain similarities with the well-known Dotcom bubble.
We Cannot deny that these similarities exist, but we must bear in mind that although many of the companies created before the bubble of the Dotcom have disappeared, we find many others that have managed to survive and now integrate the rankings of the companies Most valuable in the world, as is the case with Amazon, eBay and Priceline.
With This we can argue that despite the fact that at the end of the TWENTIETH century there was an enormous enthusiasm for technological companies that then led to the collapse of the sector, this did not prevent those who really wanted to give value to society survive and prosper.
With This article we will immerse ourselves in the comparison between the potential of the boom and fall of the cryptocurrencies market and the relationship with the Dotcom bubble. We will Begin first by seeing a brief summary of how the latter happened and how he then recovered the maximum price line he had achieved.
Once this is understood, we can continue in detail with an attempt to determine whether the cryptocurrencies and blockchain industry in general are prepared to take the same path.
What was the Dotcom bubble?
If we seek to understand that it is a bubble in economic terms we can say that it refers to an asset or group of them of a certain sector in particular, for example the tulips, the gold, the technological actions and even the Bitcoin, that they get prices that exceed with You grow the intrinsic value of them.
For what they are familiar with the concept, they will also understand that these were fed by speculation, which in the cryptocurrencies industry is known as FOMO or fear to be missed.
According To an expert economist in the field, Schiller is one of them but we will take the example of another,.
Easy Money for Everyone
The Market is overheating
Experts leave the market
During the last years of the nineties, and thanks to the beginning of the age of digitalization, people began to see the great potential of the technological company in the Internet sector. So Much So that a large number of them went to buy their shares and create new ones.
The bubble experienced by all at the time was originated by the immense creation of quoted companies using the NASDAQ platform, the stock market par excellence for technology companies.
The problem with them is that they got an enormous amount of capital despite being new companies that did not even present benefits in their balance sheets, The investors were sure that the idea was too good for miss and that they will arrive sooner or later in the long run.
Comparison with the cryptocurrencies
The interesting Thing about studying bubbles like the Dotcom is that we can learn a lot from them and try to extrapolate the concept to other new markets. On The one hand we now understand that speculation can only reach certain levels, and then inevitably ends up collapsing.
Secondly, we can see that the companies that really offer a valuable use case for the real world are those that finally manage to overcome the test of time. You Only need to see the chart to understand that the total capitalization of the cryptocurrencies market follows a path similar to that of the NASDAQ during the Dotcom crisis.
Can We see a recovery like the Dotcom?
This is finally the question that everyone makes. If something like this happened, we would see not only a recovery until the maximum capitalization that this market has achieved, but in turn this will get new levels above.
Although the most interesting thing about the whole thing is that in the long run the market will end up removing those projects with little value and leaving those that really mean an improvement for society.
You would think that large projects with interesting use cases, such as Bitcoin, Ethereum and Ripple, within a few years can be considered the Amazon, eBay or Priceline cryptocurrencies market. All While there are a lot of projects that resemble the losers of the Dotcom and ultimately end up forgetting.
As much as there are a lot of tokens ready to revolutionize cross-border payments or intelligent contract platforms arranged to «assassinate» Ethereum, there is only room for a few. In General, the market itself will be responsible for determining which of them are the ones that survive to experience a better future.
This is where patience also comes into play, those cryptocurrencies investors like Bitcoin who really believe that this has something to offer the world, must be strong enough mentally to bear it all.
The times in the Dotcom bubble were not exactly short, and nothing tells us that in the cryptocurrencies things are faster.
Everything in life needs a process, and developing large projects with hundreds and thousands of features while these are adopted massively does not occur overnight.
The similarities between the two markets are very large, even the ones that are within the technological sphere. The main differences are the lack of regulation in the cryptocurrencies that allows people to interact with this in a simpler, but with greater risks.
You should Not think of a bubble as something bad, but simply a part of the history of the market that serves to ripen and evolve into a more important.
Considering that before the big indexes like the S&P 500 were composed by more traditional company and today Apple, Amazon and Google share the podium, it is not difficult to think that perhaps in the future to the companies of blockchain and the cryptocurrencies we see them in Important places in our lives and in the financial system.