The crypto price crash may be good for the market, economist Tyler Cowen said, referring to the dotcom bubble burst. ‘Internet stocks plunged in the dot-com crash of 2000-2002, but that in turn cleaned out the bad companies and paved the way for the subsequent tech revolution.’ He added that it may be time for cryptos to prove their worth. ‘I am modestly optimistic, but it is time to put up or shut up. Let us hope that this ‘do or die’ moment will once again bring out the best in entrepreneurs.’
- Will the crypto market follow the same trend as the internet bubble?
Cryptocurrencies are far from raging these days. Many have lost 80 percent or more of their market value from their peak in January, and some have fallen off the map altogether, but perhaps this development is exactly what we need for crypto to take the next step.
In the context, rail stocks collapsed after a bubble in the 19th century, but the railroad continued to transform our world. Internet stocks plunged into the 2000-2002 dot-com crash, but in turn cleaned up the bad companies and paved the way for the subsequent technological revolution, including the rise of Amazon and Google.
Facebook: Welcome to Crypto?
This history is no guarantee that cryptography will take off, but it shows that a price collapse must not announce the end or relevance of a technology.
One problem crypto has had is that too many junky ideas were tossed around and then often funded by ICOs (initial coin offerings). That is hardly a surprise, given that the asset class went from basically zero to more than $800 billion value at its peak. People will try to get their share of that pie, and that will lead to thousands of white papers, startups, frauds and, yes, some valuable innovations.