2022 Was Crypto’s Dot Com Bust: Let’s Recap Tech Stocks After 2000 (Opinion)
Last year saw the downfall of the Terra-Luna, BlockFi, Celsius, Voyager Digital, 3AC and Alameda-FTX ecosystem. But that’s not the end of cryptocurrency. Like the internet after the Dot Com collapse, crypto is just getting started.
Of course, it is true that several crypto companies have fallen in 2022. But it looks worse in the headlines than it actually is. Critics of cryptocurrency in news journalism and the mainstream financial industry treat the stories of failure as representative of the entire industry.
The cryptocurrency community likes to use the term “FUD” to describe the proliferation of negative crypto news. In some ways this is natural and understandable in terms of vigilance, transparency and threat detection.
Fud is an acronym to describe crypto news articles or social media posts that add to perceptions and feelings of fear, uncertainty, and doubt. While FUD can spark arguments on Twitter or YouTube and drive engagement, it rarely informs about recent threats and weaknesses.
Instead, it usually discusses it too much and biases the participants in those discussions to overvalue them in their view of the industry and the markets. Also, all of FUD is not telling anyone about the great products the crypto industry is building.
Crypto critics continue to inspire doubt
At this point, the inevitability of crypto is hard to doubt for anyone familiar with the facts about cryptocurrencies and the latest techniques and products in the global financial market.
Take for example, this recent story in The Politico on the attitude towards crypto in Davos. It says:
Scaramucci is one of a slew of crypto junkies — executives and staffers from high-profile exchanges, intermediaries and tech companies — who are here at this Swiss ski resort trying to convince investors and potential backers that despite the almost complete collapse of the industry this fall, all is well.
There’s just no meaning to those words, “almost complete collapse”, that’s right. The crypto industry did not come close to completely collapsing last fall. Another company in the cryptocurrency industry, a new start-up in an innovative tech space, has gone bankrupt.
The Internet Never Stopped Growing After the Dot Com Crash
More crypto and altcoin businesses will fail in the crypto industry in the future. This does not make blockchain any different from any other sector of the economy. Additionally, the price of bitcoin and altcoins were all in deep correction in 2022. But the context is that this was after an equally steep bull run through November 2021.
But the production of cryptonets throughout the crypto winter of 2022 did not come close to collapsing altogether. They did not fail. They haven’t even weakened. Bitcoin Hash Rate and Difficulty kept climbing through the crypto winter. Network miners continue to find a new block on average every ten minutes and fulfill transaction orders for addresses.
Activity on the Bitcoin network remained robust. New BTC addresses active daily were the image of healthy use of digital platforms globally. The most popular altcoin, Ethereum (ETH), has seen the same robust growth in staking and network usage.
It is therefore simply misleading to say that the cryptocurrency industry has almost completely collapsed in 2022. It may be that many people with only a superficial understanding of crypto think that this is what which actually happened.
But crypto didn’t nearly disappear in the last year, nor is it a “pet rock,” like JP Morgan’s Jamie Dimon recently mocked.
Crypto’s future fortunes today resemble those of the internet in 2000. Even after several dot com stocks crashed and burned in a widely discussed media spectacle. The parallels are almost disturbing.
In 1999, the internet had the same kind of criticism in the media as crypto does today. They said it was a passing fad. They complained that it was too clunky and difficult to use. The public, at first, viewed the Internet as a cool toy for computer nerds.
But they didn’t see its potential to connect the whole world. Nor do they see today the expected future value of organizing this global connection to be fairer and safer.
Most people didn’t invest in “tech stocks” even after everyone and every business started keeping the internet at their fingertips 24/7, about a decade after the dot com crash.
In 2000, pieces of fud were flying around the internet. They said it was a place of scams, wire fraud and overrated companies that really didn’t produce anything. Not that what they were talking about was entirely wrong.
They were reporting facts, but not really to effectively sort them out and place them in their larger context to better inform their audience.
Of failure to shape the world
The newspapers sparked a small panic in the public over the year 2000 bug, as if it was going to be the end of the internet.
Today, they use the Internet for their broadcast. But the same organizations used to mock the internet on giant, folded pieces of paper delivered to homes by truck.
Many investments made in a late 1990s economy full of capital and low interest financing at the height of dot com mania were inadvisable. They burned when the stock market corrected.
But it wasn’t really hard to notice some of the Internet companies that would win the next two decades. Some dot coms had customers and revenue. Others had a dot com website, with a few pictures and their email address, but no customers or sales.
Amazon, for example, was a high-profile internet success story when the internet was new. It has a sharp business model and a founder. This dot com has made more books available to its customers than any other bookstore in the world has ever had. Then they shipped your order right to your doorstep and took great care of their customers.
Just $1,000 of AMZN, bought at $18 a share when it went public in 1997, had a market value of over $2 million in 2021. That was just over two decades later.
Many cryptocurrencies have already moved like this in much less time than Amazon stocks.
A ton of developer interest in the 2020s is in crypto
In 1999, young developers all wanted to create dot com websites and video games. In the late 2000s, they all wanted to create mobile apps and video games.
In the late 2010s, they all wanted to create cryptocurrencies and DeFi apps (and video games).
Truly talented IT students, creative entrepreneurs and smart venture capitalists are thrilled about cryptocurrency today like those same types of businessmen were talking about the Internet twenty years ago.
The emergence of the digital network itself has created a global connection revolution. This was characterized by being able to make digital copies of so many things. Plus, digital computer copies were super instant, super fast to send around the world, and it was all super affordable.
There has been a flood of digital abundance.
Cryptocurrency is the next step in this connection revolution. Blockchain is an industry that sustains the global computer network by reliably producing digital scarcity and securing it for its owners.
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