“Crypto is just another Dot-Com bubble waiting to burst”…

Crypto being just another Dot-com bubble that is waiting to burst is a popular refrain that we hear across reddit subs, social media and from our uncle Larry at family dinner. Let's assume for argument's sake that this will turn out to be true, should this give us any reason to question why we are all here as active crypto investors? But first, a little bit about the Dot-com bubble.

In the early to mid 1990’s, the internet was rapidly evolving into a form that would be vaguely recognizable to the modern user today. The use of websites was shifting from a read-only model where you went to a site to read static content, into a more interactive model that allowed users to exchange ideas and content more freely with each other. The advent of e-commerce was also another huge paradigm shift that was enabled during this period. By the mid 1990’s it was becoming increasingly clear that there was a new and untapped revenue stream emerging that could be harnessed via e-commerce. What was not clear however, was how to appropriately value these new opportunities.

Fueled by an mass influx of venture capital, superbowl ads and wishful thinking, the late 1990’s saw massive internet company IPOs created out of virtually nothing with little to no viable products to provide customers. Some of the most spectacular failures that people commonly associate with this phase are pets.com, webvan.com, and a whole host of other companies that appended .com to their names which you probably have never heard of. By the year 2000 the market had crashed, resulting in a loss of 5 trillion in market cap by 2002. Certainly this is a cautionary tale for all of us crypto investors? Don’t over value speculative assets and companies, and don’t buy into an oversaturated market in the modern day equivalent of late 1999.

However, along with all the jokes about people who invested in drkoop.com, there is another lasting legacy that the dot-com bubble has left us with: The creation of the infrastructure that powers the modern-day internet and everything that runs on it. Let’s talk for a minute about some other companies that rose out of the dot com bubble. Amazon.com, founded in 1994 and IPO’d in 1997. Amazon not only takes in $600B+ a year, but also powers a huge chunk on the internet with its AWS service. Ebay, founded in 1995 and IPO’d in 1998, made peer to peer sales/auctions commonplace. Google, founded in 1998 and IPO’d in 2004, is the de facto search engine of the internet today.

Back to our question about how we should be thinking about the dot-com bubble in relation to today’s crypto market. One lesson that the dot com bubble teaches us is that early investments in emerging technologies are crucial to forming a foundation that will provide decades of growth in the future. Every major company during this time was forced to start forming an “online” strategy and I think it’s very easy to underestimate the impact this had on the growth of the internet in the long run. Without all the investments made in internet infrastructure during this time, we would not be as far as we are today. The most exciting part about today’s crypto landscape is that we are watching the foundations of crypto infrastructure being built in front of our very eyes. Some semblance of what is being built today will be with us for a very long time.

Secondly, there will be winners and losers in any emerging technology. While there will be monumental failures ala pets.com, there will also be opportunities to get in on the ground floor of the next amazon or google. And yes, people that invested in these companies before the bubble burst and held are very very happy with their investments today. This is where your ability to assess a technology and determine for yourself if you believe it has future potential is vitally important. It’s common to say “do your own research” as a disclaimer for any crypto advice, but you should be asking yourself if each of your investments has potential beyond today’s valuation or the possibility of a random pump tomorrow or next week. Can you picture your investment powering some segment of the crypto space for years and decades to come? If the answer is yes, you may have found something that not only has the ability to weather a bubble but can emerge as an even better investment on the other side as other solutions fall by the wayside. So if you’re saying that crypto is the next dot-com bubble, meaning the foundation of a revolutionary tech movement that will have some volatility but will enable exponential growth over the following decades…I say bring it on!