Terabytes of articles have been written comparing the historical rise in the price of Bitcoin to the Dotcom bubble of the late 1990’s. The speculation in new technology companies, particularly by individuals, drove the US NASDAQ stock market to a record high of 5,132.52 on March 10, 2000. It then lost 78% of its value.
The point of these articles is usually that “history repeats itself”, and so anyone buying Bitcoin or cryptocurrencies in general now is more likely to end up losing their money than making a fortune. The suggestion is that the money to be made in cryptocurrencies has already been made by those smart enough to have bought early enough.
A Tale of Two Companies
This point-of-view fails to learn the real lesson of the dot com bubble. That lesson is best illustrated by Amazon.com and Pets.com. The first company is familiar to everyone, but the second died an ugly death when the Dotcom bubble collapsed. Both were in the retail sector and sought to replace brick-and-mortar stores with on-line shopping.
Pets.com failed in spite of having very popular ads that featured a clever sock-puppet spokesman. Amazon has succeeded to the point where they are now considered one of the 5 companies that “rule the world”. These outcomes demonstrate that not everything in a financial bubble becomes worthless when the bubble “pops”. This is the real lesson of the current interest in Bitcoin and cryptocurrencies.
Bitcoin vs. Everyone Else
Bitcoin may – or may not be – in the grip of a speculative frenzy that is heading for a painful fall off a very tall cliff. The point is that just as Amazon was able to capitalize on the emerging trend of buying items over the internet, new business ideas will capitalize on the emerging trend of buying goods and services with cryptocurrencies.
The speed at which this change will take may be astonishing. There is certainly ample evidence that the rate at which new technologies are replacing old ones is increasing rapidly. This means there may be limited time to apply the lessons of history to the current environment.
However, 8 trillion tokens is not an arbitrary amount, but represents 5% of the total of all currencies in the world. This is the minimum required for an authentic global cryptocurrency.
Blockchain is the technological innovation that drives firms in the area and may remake both industries and the broad economic landscape. Large corporations and industry giants are embracing blockchain as the wave of the future. Amazon did this for internet retailing in spite of the Dotcom bubble. Perhaps other use cryptocurrencies hold the same promise.
By The Dentacoin Foundation