Many say the dot-com bubble has changed and the year 2000 was a different time. While this is true in itself, similarities remain. Back then, most people didn’t understand what the Internet really was. The same can be said of cryptocurrencies. The hype was that this was the future, and people weren’t necessarily wrong.
Many say blockchain, the technology behind these currencies, is the future. The internet problem back then, with dot-com companies opening every day and being overvalued, looks like today’s cryptocurrencies and how most were ridiculously overvalued.
As with dot-com companies, people have invested in ghost startups without understanding their true valuation. Others arrived late and invested when prices were high. However, was the internet dead? This question makes us laugh today.
The resulting crash
While the 75% drop in bitcoin did not have a catastrophic effect on the economy, as it did with dot-com companies, the result has called into question the future of the currency in the market. global. But, like the internet-based startups of the early 2000s, these need to be assessed and valued separately, as some have survived and thrived.
Investors should therefore consider what each company does well and what it offers to the market. Do you remember the online bookstore named Amazon? And what about eBay and Paypal?
No one would reject these companies today, and all survived the bubble burst because their valuation was based on industry needs and market orientation. Amazons all over the world were truly the future, and that is indisputable today. Therefore, those who thought stocks, or in this case bitcoin, are worth what someone else is willing to pay for them, was right.
When people willing to pay ridiculous prices dried up, those who bought at a high price could not sell to other people willing to pay an even higher price. But, that doesn’t mean that blockchain technology is a fad or that cryptocurrencies are dead. The best crypto wallet will keep users’ assets safe through market fluctuations in all directions. The only thing to remember is that the market has corrected irresponsible and bad behaviour.
Opponents and the future
Many of those who suggest cryptocurrencies are dead focus on fear, uncertainty, and doubt. Nonetheless, these projects are based on startup ideas that either implement technology or support cryptocurrencies to some extent. Also, the death rate for these projects is not much higher than the standard death rate for any startup, which, according to a Harvard Business School report, is around 90%.
It is therefore difficult to predict the death of an entire industry based on normal business statistics. Sectors are generally more resilient than startups, and larger or more robust organizations will absorb market share.
The likelihood that the valuation of cryptocurrencies will return to previous highs is relatively low. It is also possible that currency volatility will remain for the foreseeable future. Nonetheless, volatility helps those who are actively trading the ups and downs. In addition, these coins and the concept behind cryptocurrencies, namely blockchain technology, are attracting the mainstream financial sector.
Many countries are seeking to integrate and regulate these currencies to take advantage of the benefits they provide. So while the industry has had tough months, it’s hard to declare it dead when the technology itself shows promise. The point is, the industry survived a major crash and is consolidating, much like the days after the dot-com crash.