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Ask HN: Is the current cryptocurrency scenario a bubble like the dotcom one?
Apologies if this has been beaten to death and sounds cliche, but I'm still not able to wrap my head around how the current hype about cryptocurrencies is not just plain speculation and hype.
I was too young when the dotcom bubble happened, but from what I read on Wikipedia, the following were the reasons for the dotcom bubble and its eventual crash:
- Investors were eager to invest in any company with a ".com" suffix. Isn't this very similar to people just looking to invest in new ICOs (I still have no idea what those are)?
- There was a real sense of fear of missing out - investors just couldn't afford to not invest in a company because the entire market was investing in dotcom companies. Isn't this akin to how people invest in coins just because others are buying in? In fact, isn't the entire Bitcoin climate running on this?
- The market was confident that the companies would turn future profits. Isn't this too similar to "I'll cash out later when the exchange rate rises further"?
- An unprecedented amount of personal stock market investment occurred during the boom. Again, there are so many people blindly (not all, but some) buying coins without fully understanding the risk, purely based on speculation.
- Companies went public through IPOs so frequently. Now currencies offer an ICO so often.
Just reading through https://en.wikipedia.org/wiki/Dot-com_bubble#Bubble_growth I find so much similarity between the two scenarios.
I have heard some arguments denying a bubble - it mostly comes down to the statement that most new and brilliant things appear to go through a bubble. But isn't there too much of a similarity?
Again, I know this is a very beaten-to-death topic, so apologies if you're tired of hearing this (and I searched before asking HN).
- nickjj 9y agoI think it's somewhat comparable to Tulip mania[0] which happened in the 1600s. If you want to read up on bubbles, you won't be disappointed with that story. The TL;DR is people were selling their homes to buy tulip bulbs because they were certain they were going to flip them for massive profit. [0]: https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania
- PaulHoule 9y agoThe main thing I see is complete ignorance about distributed systems, currency, business, etc. Funny enough, last year I went to a conference in NYC where people talked about using blockchains to do "back-office" functionality in financial services. For instance, if you own 45 shares in Caterpillar, somewhere they keep track of how many you own, where to send the dividends, what to do in case of splits, mergers, etc. Existing solutions are not so satisfactory, also it is a good fit for blockchains because it is a pure ledger without any need for money to be in two different places at once (as does any kind of debt instrument) Today the ICO is all the rage because it can easily keep track of the fact that you own 31 shares of this or that. It doesn't guarantee that those 31 shares are worth anything, but it does keep track of it. What amazes me is that there is so little interest in small permissioned blockchains. I mean, really, if I just want to lend books between me and 10 friends, why do I want to get thousands of computers on the Ethereum network working on it when we could just run our own small blockchain?