Steemians...more and more, crypto-currencies and ICO are compared to such a well-known historical phenomenon as the dot-com bubble, which arose at the time of the boom in the Internet business in the late 1990s. As you know, after the dot-com crash, the word itself has been used against an immature or inefficient business model. Is this comparison relevant in the case of the ICO market?
Any big wave of revolutionary innovations is accompanied by financial agiotage. And here are some interesting examples:
- Tulip-mania. A short burst of rush demand for bulbs of tulips in the Netherlands in 1636 - 1637.
- Railway fever in the 1840's. The higher the price of railroad stocks, the more they were bought by speculators, down to the inevitable fall. About a third of approved roads have not been built.
- The era of the dodkoms. Shares of companies, whose business model was based on Internet sales, rose sharply in value.
Revolutionary technology
ICO: in 2009, the first application of decentralized blocking technology appeared in the form of a phenomenon such as bitcoin. With the development of bitcoin, people were able to transfer money to any person anywhere in the world almost for nothing.
Dotcom: in 1991 the world wide web became publicly available on the Internet and there was an opportunity to connect via a telephone line. This led to the growth of users in the network and the emergence of new business models.
Pioneers and success
ICO: In 2013, Vitalik Buterin described the work of Ethereum, a platform for creating decentralized online services based on the blockbuster. Already in 2014, a crowd-raising campaign was launched to raise funds for the development of a platform that collected 31,591 bitcoins or more than 18 million dollars at that time.
Dotcom: In 1994, Netscape was created, which developed the browser Netscape Navigator. But already in 1995 the company entered the IPO - it was an unusual IPO, since Netscape did not bring profit then. Initial valuation of the shares was $ 14 for a joke, then it was doubled. Already on the first trading day, the value of the stock doubled, and within five months Netscape shares soared to $ 160 per share - an absolutely unprecedented growth for the company that does not bring profit.
Growth of projects
ICO: In 2016 there were 23 projects on the ICO, in 2017 their number exceeded 130 in the first seven months. Many entrepreneurs began to launch their projects on the basis of the blockbuster. Companies began to reorient themselves to the business model using blockage.
Dotcom: in 1995, only 23 companies issued their shares. But already in 1999 more than 250 companies came to the IPO. Hundreds of entrepreneurs with laptops and hastily written business plans moved to the Silicon Valley to launch their projects.
Investment
ICO: the ability to purchase crypto currency anywhere in the world and invest in any project without state borders has led to a multiple increase in the number of investors in the ICO. In 2016, a total of more than 0.3 billion dollars, but in the first seven months of 2017, the total investment in ICO projects exceeded $ 1.5 billion.
Dotcom: Every day, companies appeared on the stock exchange, where investors bought shares of all companies, whose name ended with Dotcom. They began to buy people who had never participated in the auction. It was a gambling, dynamic time, when it was easy to lose common sense.
Fraud
ICO: As the number of ICO-projects grows, the number of companies and specialists that offer their services to promote, promote and conduct ICO is growing without any guarantees.
Dotcom: One of the problems that new companies faced was the high probability of hiring fraudsters and pseudo-specialists. Therefore, the founders of startups often hired their friends and acquaintances to work to reduce the risks of hiring fraudsters.
Day Traders
ICO: Normal people began to invest in ICO without proper project expertise, but with an understandable income model for them - enter the project at the pre-ICO stage, buy tokens and sell tokens at the ICO stage with a coefficient of x3.
Dotcom: "Day Traders" - people who went to the stock exchange to buy shares in the morning and sell them in the daytime. Purchased shares of all companies, whose name ended at dotcom. Often, "one-day traders" were people who had never traded on the stock exchange before.
So...the dotcom bubble burst in 2000 5 years after the company's first successful IPO placement, but professional teams and projects survived. Thanks to huge investments in the industry, in just 5 years the infrastructure and the foundation for future successful projects were built. Yes, many block projects will not survive, many investors will lose their money, but this is an inevitable stage of development, which we need to go through.