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We had the dot-com bubble, but it didn't stop the internet from changing everything in fundamental way. Google, Facebook and Amazon are in the top 10 most valua

by rythie 9y ago

We had the dot-com bubble, but it didn't stop the internet from changing everything in fundamental way. Google, Facebook and Amazon are in the top 10 most valuable companies in the world - all completely dependant on the internet for the business model. Granted webvan and pets.com didn't make it, but it didn't mean the internet had failed as an idea.

eloisant 9y ago
What it meant is that people were throwing money at really bad idea, because they didn't understand the web, they just FOMO.
JumpCrisscross 9y ago
> We had the dot-com bubble, but it didn't stop the internet from changing everything in fundamental way We also had the Japanese theme park bubble, which left behind a lot of scrap metal. Be wary of sampling bias.
rhino369 9y ago
But just because there was an internet bubble and there is a bitcoin bubble, doesn't mean the internet and bitcoin are similar. The internet had explosive growth. New uses and technology were coming out constantly. Bitcoin? It's not clear actual use of bitcoin as a currency is even growing. It's very possbile nobody uses bitcoin at all in 5 years. The internet on the other hand was an eventuality. We knew it wasn't a fad.
acdha 9y ago
That’s a common marketing claim but the comparison has problems: Bitcoin is turning 10 without a single application where it has a significant advantage over the status quo unless you count ransomware. In contrast, as soon as the internet became available to normal people they had immediate new or improved options for a bunch of different activities. Yes, speculators backed a lot of bad business ideas but that was because people were getting online in droves because there were so many uses. Those companies failing didn’t change that, especially since there were so many examples showing that concepts were solid: e.g. a dotcom losing money on each sale didn’t mean online stores were doomed since Sears had proven the model many decades earlier.
- alphydan 9y ago
  > Bitcoin is turning 10. It all depends on where you start counting. In 2008 it was just Satoshi and a few cypherpunks. I would argue it looked a lot like Arpanet [0]. So Fast forward 10 years from 1973 ... and was the internet really useful in 1983? On January 1st 1983, "every machine connected to ARPANET had to use TCP/IP. TCP/IP became the core Internet protocol and replaced NCP entirely." [1] ... hardly a huge commercial success at that point. [0] https://en.wikipedia.org/wiki/ARPANET https://en.wikipedia.org/wiki/ARPANET [1] https://www.davesite.com/webstation/net-history2.shtml https://www.davesite.com/webstation/net-history2.shtml
  - acdha 9y ago
    I don't think that comparison holds so tightly, but if it did it seems to make it worse: ARPANET had significant dependency delays in availability since computers cost a fortune, modems were slow, and you had to pay by the minute for phone calls. In contrast, despite Bitcoin being available to everyone on the first day most people have never had a reason to use it other than speculation. That said, there were still plenty of ARPANET users in the early days if you look at the subset of people for whom network access was an option. The benefits of email were obvious and group forums like Usenet (1980[1]) had similar quick adoption, at least in technical or academic fields where communicating with people outside of your location was important. Similarly, FTP (1980[2]) had clear value and the pricing made sense more often than it might have seemed since all of the other alternatives cost money, too. The other thing to remember is that this wasn't happening in a vacuum — while the internet was emerging, there was popular mainstream usage for companies like The Source, CompuServ, etc. starting in the late 1970s[3] and so again there was clearly a business opportunity if you could bring the access costs down. The number of people willing to pay by the minute to chat, shop, etc. suggested that an even large number of people would be interested as that per-minute rate dropped. It's that last part which makes me question the current valuations: even if you assume that all of the operational problems were solved with Bitcoin, it's hard to see what value it has to the ordinary person beyond possibly reclaiming the ~3% overhead of a credit card transaction — and that's assuming that VISA, et al. wouldn't just lower their rates to beat whatever the operational cost + fraud insurance costs ended up being for Bitcoin. 1. https://en.wikipedia.org/wiki/Usenet#History https://en.wikipedia.org/wiki/Usenet#History 2. https://tools.ietf.org/html/rfc765 https://tools.ietf.org/html/rfc765 3. There's a great series starting with https://www.filfre.net/2017/10/a-net-before-the-web-part-1-the-establishment-man-and-the-magnificent-rogue/ https://www.filfre.net/2017/10/a-net-before-the-web-part-1-t...

by rythie 9y ago

eloisant 9y ago

What it meant is that people were throwing money at really bad idea, because they didn't understand the web, they just FOMO.

JumpCrisscross 9y ago

> We had the dot-com bubble, but it didn't stop the internet from changing everything in fundamental way We also had the Japanese theme park bubble, which left behind a lot of scrap metal. Be wary of sampling bias.

rhino369 9y ago

But just because there was an internet bubble and there is a bitcoin bubble, doesn't mean the internet and bitcoin are similar. The internet had explosive growth. New uses and technology were coming out constantly. Bitcoin? It's not clear actual use of bitcoin as a currency is even growing. It's very possbile nobody uses bitcoin at all in 5 years. The internet on the other hand was an eventuality. We knew it wasn't a fad.

acdha 9y ago

That’s a common marketing claim but the comparison has problems: Bitcoin is turning 10 without a single application where it has a significant advantage over the status quo unless you count ransomware. In contrast, as soon as the internet became available to normal people they had immediate new or improved options for a bunch of different activities. Yes, speculators backed a lot of bad business ideas but that was because people were getting online in droves because there were so many uses. Those companies failing didn’t change that, especially since there were so many examples showing that concepts were solid: e.g. a dotcom losing money on each sale didn’t mean online stores were doomed since Sears had proven the model many decades earlier.

alphydan 9y ago
> Bitcoin is turning 10. It all depends on where you start counting. In 2008 it was just Satoshi and a few cypherpunks. I would argue it looked a lot like Arpanet [0]. So Fast forward 10 years from 1973 ... and was the internet really useful in 1983? On January 1st 1983, "every machine connected to ARPANET had to use TCP/IP. TCP/IP became the core Internet protocol and replaced NCP entirely." [1] ... hardly a huge commercial success at that point. [0] https://en.wikipedia.org/wiki/ARPANET https://en.wikipedia.org/wiki/ARPANET [1] https://www.davesite.com/webstation/net-history2.shtml https://www.davesite.com/webstation/net-history2.shtml
- acdha 9y ago
  I don't think that comparison holds so tightly, but if it did it seems to make it worse: ARPANET had significant dependency delays in availability since computers cost a fortune, modems were slow, and you had to pay by the minute for phone calls. In contrast, despite Bitcoin being available to everyone on the first day most people have never had a reason to use it other than speculation. That said, there were still plenty of ARPANET users in the early days if you look at the subset of people for whom network access was an option. The benefits of email were obvious and group forums like Usenet (1980[1]) had similar quick adoption, at least in technical or academic fields where communicating with people outside of your location was important. Similarly, FTP (1980[2]) had clear value and the pricing made sense more often than it might have seemed since all of the other alternatives cost money, too. The other thing to remember is that this wasn't happening in a vacuum — while the internet was emerging, there was popular mainstream usage for companies like The Source, CompuServ, etc. starting in the late 1970s[3] and so again there was clearly a business opportunity if you could bring the access costs down. The number of people willing to pay by the minute to chat, shop, etc. suggested that an even large number of people would be interested as that per-minute rate dropped. It's that last part which makes me question the current valuations: even if you assume that all of the operational problems were solved with Bitcoin, it's hard to see what value it has to the ordinary person beyond possibly reclaiming the ~3% overhead of a credit card transaction — and that's assuming that VISA, et al. wouldn't just lower their rates to beat whatever the operational cost + fraud insurance costs ended up being for Bitcoin. 1. https://en.wikipedia.org/wiki/Usenet#History https://en.wikipedia.org/wiki/Usenet#History 2. https://tools.ietf.org/html/rfc765 https://tools.ietf.org/html/rfc765 3. There's a great series starting with https://www.filfre.net/2017/10/a-net-before-the-web-part-1-the-establishment-man-and-the-magnificent-rogue/ https://www.filfre.net/2017/10/a-net-before-the-web-part-1-t...