Why the Crypto Era is Just Like the Dotcom Era

We all know that history repeats itself. While the events may not mirror each other exactly, there tends to be enough parallels that (often painful) lessons can be learned from what came before. 

The technology space has had two such events, the dotcom era of the late 90s and the blockchain space of today. At the center of each of these are great technologies. The dotcom era spawned from the internet and the crypto era emerged out of blockchain technology. 

So, how is the crypto space similar to the dotcom era? And what lessons can we learn from the dotcom bubble?

The Crypto and Dotcom Bubbles

The internet was the great technological development of the early 90s. Computers were becoming increasingly common in U.S. households, and with the advent of web browsers, the internet became more accessible to the average consumer. This fueled the rise of many internet-based companies looking to capitalize on the growing use of the technology. 

At this point, everyone believed the internet to be the greatest technological invention yet. And, they were right. By 1995,  investors and venture capitalists had started pouring money into internet companies. Thus began a trend that would see the valuations and stock prices of these companies go to the moon. 

But there was a problem. Hype and speculation on the potential of the internet caused many investors to throw caution to the wind. They invested in any company with a ‘.com’ behind it, never caring about its business model. This caused most of the internet companies to be overvalued, creating a bubble. 

The crypto space was in a similar position towards the end of the last decade. As crypto and blockchain technology became popular, there was a lot of hype on its potential to shape the world. This saw the values of major cryptocurrencies, like Bitcoin (BTC), skyrocket. 

Not wanting to miss out on this great technological revolution, many people blindly poured their money into crypto projects. Of course, the record profits being made by early adopters had something to do with it too. This brought in a lot of fictitious value, creating what many experts considered to be a bubble. 

All bubbles eventually burst, though. For the dotcom bubble, it came in March 2000 when the capital began to dry up. This was a result of rising interest rates and investors realizing that most of these internet companies had over-promised on what they could deliver. They were never going to return a profit. 

In the crypto space, 2022 was the year. Dramatic collapses, hacks, and bankruptcies caused investors to pull out of crypto projects. Many retail investors also began to question the utility of many of these projects. Thus, prices fell, dropping cryptocurrencies into an industry-wide bear market. 

The Post-Bubble World

Contrary to what many people feared back then, the bursting of the dotcom bubble wasn’t the end of the internet. It might have caused the collapse of many internet companies and wiped trillions of dollars from the market, but it signalled a turning point that set up the Internet to become what it is today.  

Companies like Google, eBay, and Amazon rode out the ensuing bear market and are among the biggest in the world now. The industry as a whole also emerged bigger and better. And here, perhaps, is where the most valuable lessons for the crypto market can be found. 

Lessons from the dotcom bubble

The post-dotcom era was marked by increased awareness of what the internet could really do for the world. Investors and users were more educated and thus, wiser. 

At the same time, surviving internet companies focused more on the user experience (UX) as opposed to attracting as many investors as possible. Websites become easier to use and new products and services that actually catered to customer needs were developed. This increased customer satisfaction, promoting widespread adoption of the internet.

The Way Forward

Today, much of the same needs to happen in the crypto space. Most of crypto’s troubles come down to a poor user experience coupled with insufficient education and awareness. 

People find the UX in crypto to be overwhelming, which is made worse by the fact that they typically don’t know enough about the technology. This lack of knowledge also means people tend to make mistakes while investing, falling for FUD and hype, which contributes greatly to the creation of bubbles. 

The crypto market needs a major improvement in user experience. Wallets and dApps should become easier and more convenient to use and at the same time, focus on providing solutions to real problems. More effort also needs to go into user education. But just education for education’s sake isn’t enough. 

Since most people know almost nothing about crypto, education should be aimed at beginners. New educational material should be designed such that anyone can easily understand important crypto concepts no matter how technical they are. 

A crypto education platform like Dypto Crypto will prove invaluable going forward. It delivers crypto knowledge in an easy-to-understand format which, combined with a better UX, will make mass adoption more likely.  

Just like the dotcom era from a couple of decades ago, crypto has been through a cleansing fire. With hard-won lessons under our belts, the path forward seems clear. More user-friendly tools and better education will usher in the mainstream adoption of cryptocurrencies and blockchain technology.