Cryptocurrency has been taking the world by storm. With many people now using Bitcoin and altcoins to make purchases, it’s no surprise why there are so many skeptics who view cryptocurrency as nothing more than a fad. However, with an increasing number of reputable retailers accepting cryptocurrencies for goods and services in recent months (e.g., Microsoft and PayPal), it’s hard to deny that this digital currency will be around for years to come.
Cryptocurrency is the most significant technological revolution since the dot-com boom. The difference between this and other booms is that it’s not a bubble but instead an invention. It has not been over-inflated by greed but instead created for a specific purpose: decentralizing monetary power and jurisdiction to make society fairer and more equal.
In this blog post, we’ll look at a short history of the dot-com boom of the 1990s and then get into some similarities and differences between that and the Cryptocurrency boom now taking the world by storm.
The Dotcom Boom: A Short History
In the 1990s, investors were confident that they could tap into these new markets of internet-based startups. They believed all it would take was a little time before their investments started to pay off handsomely as soon as one or two companies in this growing field emerged from obscurity.
The dot-com bubble drove up property prices for those living close by because people wanted to be near something which seemed like a sure thing. Profitable businesses within the area became scarce quickly thanks to how lucrative investing had become at such an early stage with negligible risks involved when compared with other financial sectors.
A significant number of investors ignored long-term metrics, such as the P/E ratio, when they rushed to buy on the internet flash. That meant that some investments turned out pretty badly for these investors.
Alternatively, others bought services to boost market share and brand recognition, even if it meant that these assets had to be given away or sold at a discount for them not to go under due to low-interest rates. That created an influx of money into dotcoms which helped fuel their growth. It added a significant amount of value, and many overnight wealth success stories began to appear for those who contributed, and smartly, for these new internet startups.
Cryptocurrency and Dotcom: Similarities
The first similarity between cryptocurrencies and the Dotcom boom is how much the general public is starting to take note of cryptocurrencies like bitcoin. Nowadays, it’s all too common to hear cryptocurrency talk around the office – people asking what it is or people recommending to others which cryptocurrencies to buy. That is quite similar to the dot-com era, where people would discuss what internet stocks to invest in or an exciting new internet business popping up.
Bitcoin is the most popular and well-known cryptocurrency, but there’s a whole world of currencies out there with lower profiles that offer immense potential for savvy investors who know where to look. There are now over 800 different cryptocurrencies in circulation, which means you have plenty of options when it comes time to diversify your portfolio – in the same way, you did during the dot-com boom when internet businesses were taking the world by storm!
With the cryptocurrency craze, it’s easy to see parallels in how cryptocurrencies are emerging, similar to the dot-com boom. For example, few details about their business model and no reliable information on whether they will be successful or not.
Just like during the tech boom years, there are a lot of new companies (or currencies, in this case) popping up at a breakneck speed that may soon disappear just as quickly if it turns out people aren’t interested in what they’re offering. But this hasn’t stopped people from investing in cryptocurrency in the same way it didn’t stop people investing in the tech boom many years ago.
Looking at the stock performance of cryptocurrencies, specifically bitcoin, with the performance of the dot-com stocks, you’ll see similarities too. Let’s go back to 2017 as an example.
The price of Bitcoin had risen dramatically. In 2015 it was trading at $228, but by September 1, 2017, it had reached a high point of $4,947.99, or an increase of 2268% over this period! The trend is comparable to that during the dot-com bubble with Amazon (AMZN) and Qualcomm. Amazon rose 2,265% before its peak and 2,667% for Qualcomm prior to its peaks. As you can see, this is very similar to how bitcoin value has been rising in recent years.
Cryptocurrency and Dot-Com: Differences
The dot-com era and today’s crypto market share some differences, though, and these differences can be seen in the way each product viewed the world.
Dotcom company founders focused on making money with their IPOs and tried to live extravagant lifestyles. Most cryptocurrencies strive to improve the product they offer. Because of the decentralized nature of cryptocurrencies, the focus is on improving the lives of the unbanked (or at least one of the core focuses), while the dot-com boom was focused on improving the lives of company founders and, perhaps, their most significant shareholders.
This difference is also illustrated by how these two markets have been affected in recent years. Many of the dotcoms died out during a crash because they overspent on marketing campaigns, while cryptocurrencies remain successful even when Bitcoin experiences price drops or corrections due to lackluster demand.
The cryptocurrency market is also different from the dot-com bubble because it’s driven by retail investors, not institutional ones. Institutional money is too focused on profits, leading to flight when there are worries in the markets. This was part of what happened during the dotcom boom and bust cycle years ago.
However, for cryptocurrencies, we see a strange phenomenon where people who invest seem to have an attachment to their coins rather than just selling them off like they would if they were stocks or something else with less sentimental value attached.
Cryptocurrencies are Here to Stay
Bitcoin has proven to be a strong and durable currency because people have put their faith in it. They believe that Bitcoin is here for the long haul, just as they’ve done with other currencies before it. It’s not uncommon for mainstream society to question new technologies––but no one ever questions whether cash or credit cards are going anywhere anytime soon!
Bitcoin is the new currency of the future. It has successfully merged two worlds, proving that there are no longer any barriers between “currency and real-world money.” People who couldn’t participate in transactions before now can. Bitcoin provides a cheaper means for cross-border payments, international transfers, and wealth preservation than ever before.
At Unbanked, we believe that Cryptocurrencies will have a lasting place in society. Financial access and control is a fundamental human right that enables people to live their lives as they choose. Blockchain technology can empower individuals by giving them the power of financial independence without unnecessary intermediaries between themselves and those who have resources. Visit us today to get started with crypto bank accounts and debit cards and start sending and receiving money today!