FUD FUD everywhere! Everytime Bitcoin rallies, it brings a whole lot of FUDsters predicting all kinds of scary things. Truth is that we have absolutely no idea what is going to happen and predictions are well...predictions after all. They may or may not come true! We can only prepare for:
An upward swing which ensures profitability and longevity of our investments or
It all goes bust and we rely on our emergency funds that allows us to go on with our lives.
With any kind of investments, this is all that you can do...really!
In recent times, Bitcoin’s unprecedented rally has often been compared to the build-up that lead to the Dot-com crash in early 2000-2001. There were many companies whose stock prices shot up considerably. They got big really fast and then went bust owing to a number of reasons.
It took about 5 years or so for business that gained massive market share to lead up to the peak and crash. The rapid interest in internet companies ultimately led to an implosion and free fall in prices for over 2 years. It proved that IPOs and VC money couldn’t guarantee any couldn’t substitute for lack of solid business model and regular income flow in order to scale. At least that is my understanding of the era.
Chaos precedes all great changes. The dot-com bubble is what led to the modern internet as we know it. There were many companies that made it through these harsh times. Priceline, Amazon, Ebay, Microsoft, Apple, ARM, IBM, Coupons.com, SanDisk, and Oracle are some of the companies that have since become giants with market cap in the billions.
The entire dot-com market cap at the time of the crash was just upwards of $5 trillion. We’re just under $600 billion in crypto-market cap at press time. This isn’t a lot in comparison. It surely feels like it but fact is that $5-8 trillion doesn’t hold the same value today as it was 16-17 years ago. The IT space is far more valuable today than it was when it began.
There’s a lot of real development in the crypto-space from various companies and projects that are pioneering new opportunities to grow this domain and make it scale.
Therefore, I feel that we’re still too early to witness a massive crash in valuations of cryptocurrencies and comparing dot-com bubble to Bitcoin rally isn't fair. On the flipside however, many new entrants into the space are here purely for speculation, especially due to widespread FOMO in the market.
Whether these massive crypto valuations exist or don’t, I certainly feel that blockchain technology and blockchain based applications will thrive in the next few years. Some of our traditional software giants today are starting to adopt and experiment with blockchain technology.
The bottom line is that blockchain technology is still in it's early stages. Mass adoption is many years away and by the time we get to that point, there would've been a lot more development of these new and disruptive technologies.
For now, let's sit tight and enjoy the ride!
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