Let’s Recap Tech Stocks After 2000 (Opinion)
In the last year, the Terra Luna ecosystem, BlockFi, Celsius, Voyager Digital, 3AC and Alameda-FTX have fallen. But it’s not the end of cryptocurrency. Like the internet after the dot-com bust, crypto is just getting started.
Sure, it’s true that several crypto companies have gone under in 2022. But it seems worse in the headlines than it really is. Cryptocurrency critics in news journalism and the traditional finance industry treat the failure stories as representative of the industry as a whole.
The cryptocurrency community likes to use the term “FUD” to describe the spread of negative crypto news. In a way, that’s natural and understandable in terms of vigilance, transparency, and threat detection.
Fud is an acronym used to describe crypto news articles or social media posts that contribute to perceptions and feelings of fear, uncertainty, and doubt. While the FUD can start discussions on Twitter or YouTube and drive engagement, it rarely provides updates on current threats and vulnerabilities.
Instead, they tend to be over-discussed and participants in those discussions are tricked into over-emphasizing them in their view of the industry and markets. Also, the whole FUD doesn’t tell anyone about the great products that the crypto industry is building.
Crypto critics continue to raise doubts
At this point, the inevitability of crypto is hard to doubt for anyone knowledgeable about cryptocurrency facts and the latest techniques and products of the global financial market.
Take, for example, this recent story in The Politico about attitudes toward crypto in Davos. It says:
Scaramucci is among a slew of crypto junkies — executives and employees from top-tier exchanges, intermediaries and tech companies — who are here in this Swiss ski resort to try to convince investors and potential backers that despite the near-total collapse of the industry in everything is fine this fall.”
There’s just no sense in those words “almost complete collapse,” that’s right. The crypto industry didn’t come close to collapsing completely last fall. Another company in the cryptocurrency industry, a new venture startup in an innovative technology space, went out of business.
The internet never stopped growing after the dot-com crash
Going forward, more crypto companies and altcoins will fail in the crypto industry. This does not differentiate blockchain from other sectors of the economy. Furthermore, in 2022, bitcoin price and altcoins were all in a deep correction. However, the context is that this came after an equally steep bull run through November 2021.
But the production of crypto networks during the 2022 crypto winter came nowhere near complete collapse. You haven’t failed. They didn’t even falter. Bitcoin hashrate and difficulty continued to rise during the crypto winter. The network’s miners continue to find a new block every ten minutes on average and execute transaction orders for addresses.
Activity on the bitcoin network remained robust. Daily new active BTC addresses were the picture of a healthy, globally scaled use of digital platforms. The most popular altcoin, Ethereum (ETH), has seen the same robust growth in staking and network usage.
So it is 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 this really happened.
But crypto hasn’t nearly disappeared over the past year, nor is it “pet rock,” as JP Morgan’s Jamie Dimon recently mocked.
Crypto’s future fortunes today look much like the internet did in 2000, even after several dot-com stocks crashed and burned to the ground in a much-discussed media spectacle. The parallels are almost uncanny.
In 1999, the internet had the same kind of media criticism that crypto has today. They said it was a passing fad. They complained that it was too clunky and difficult to use. At first, the public saw the Internet as a nice toy for computer nerds.
But they didn’t see its potential to connect the whole world. Nor do they see the expected future value today in making this global connection fairer and more secure.
Most people didn’t invest in “tech stocks,” even after within about a decade of the dot-com crash, everyone and every company began keeping the internet within reach 24/7.
In 2000, the Fud pieces flew across the internet. They said it was a place for scams, wire transfer scams, and over-the-top companies that don’t really produce anything. Not that what they were talking about was completely wrong.
They reported facts, but not really, in order to sort them efficiently and put them in their larger context to leave their audience better informed.
From failure to shaping the world
The newspapers created a bit of a public panic about the year 2000 bug, as if it meant the end of the internet.
Today they use the Internet for their dissemination. But those same organizations used to mock the internet on giant, folded pieces of paper being delivered to people’s homes by a truck.
Many investments made in a late 1990s economy boasting capital and easy financing at the height of dot-com mania were ill-advised. They burned when the stock market corrected.
But it wasn’t really hard to notice some of the internet companies that would gain in the next few decades. Some dot-coms had customers and revenue. Others had a dot-com website with some pictures and their email address, but no customers or sales.
Amazon, for example, was a widely publicized internet success story when the internet was new. It has a sharp business model and founder. This dot-com made more books available to its customers than any other bookstore in the world ever had. Then they sent your order straight to your home and took great care of their customers.
AMZN, valued at just $1,000 and bought for $18 a share in its 1997 IPO, had a market value of over $2 million as of 2021. That was just a little over two decades later.
Many cryptocurrencies have already scaled like Amazon stock in a much shorter period of time.
A lot of developer interest in the 2020s is in crypto
Young developers in 1999 all wanted to create dot-com websites and video games. In the late 2000s, they all wanted to develop mobile apps and video games.
In the late 2010s they wanted to develop all cryptocurrencies and DeFi apps (and video games).
Truly talented computer science students, creative entrepreneurs, and savvy venture capitalists are as excited about cryptocurrencies today as the same businessmen were about the internet twenty years ago.
The advent of the digital network itself led to a global connection revolution. This was characterized by the fact that you could digitally copy so much. On top of that, digital computer copies were super fast, super fast to ship all over the world, and it was all super affordable.
There was a flood of digital abundance.
Cryptocurrency is the next step in this connection revolution. Blockchain is an industry that supports the global computer network by reliably producing digital scarcity and securing it for its owners.
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