There several parallels that can be drawn between the situation of cryptocurrencies and last decade’s dot com bubble. As the internet became more popular it the 1990’s and early 2000’s many people quit their day jobs and began investing in companies related to the field of the internet. Even though they had no idea what those companies were doing.
However, most of those companies did not survive after the bubble busted. According to the Los Angeles Times, more than half of the Internet companies created since 1995 were gone by 2004 – and hundreds of thousands of skilled technology workers were out of the job. In addition, nearly $5 trillion were lost in the market to tech stocks.
David Gewirtz from CNN ex[plains why so many companies disappeared, “Today, there’s one Amazon, one company that sells virtually anything you want online. During the dot-com bubble, there were thousands of companies that wanted to be Amazon.”
Today we see over 1000 different kinds of cryptocurrencies and two main types of ICO’s: the security token and utility token. Although many cryptocurrencies are projected to crash in the next few years. Many experts suspect that the few who may survive will revolutionize the way economics works just as Google and Amazon changed the way society works.
Security tokens: is a transferable asset. Represents ownership such as a stock and may be looked upon as an investment.
Utility token: often called app coins or user tokens, provide users with future access to a product or service.
Similarly, to the dot com bubble, many investors do not know where they are putting their money. However, there are many differences between the two kinds of tokens.
As for the differences between the dot com bubble and cryptocurrency there are several. In order to create a cryptocurrency, you need to be a blockchain expert. To create a dot com company you didn’t need to Know much, all you needed wa create a website and have people invest in it because of the dot and the word “com” at the end of it. In addition, in the dot com bubble people did not have the resources to look up if an investment was good or not.
According to Obi Nwosu, the CEO of Coinfloor “If in 15 years only 1 in 10, or even 1 in 20, survive then we’re looking at dozens of potentially killer cryptos.”