The economic history of the world is a succession of bubbles and recoveries. With the mistakes of the past being repeated again and again. What though the sound tragic, it is also an opportunity for the market of cryptocurrencies. Therefore, learning from the mistakes of the past, we can build a better future.
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The bubble dot com
Who can deny that the Internet is a revolutionary invention? In just a couple of decades, the massification of the Internet has changed the way it works our world in all aspects. And the cyber revolution is still in progress, because there are still billions of people who have not accessed the internet. The inclusion of which will represent a radical transformation in the system. The growth of Internet users in recent times has been immense But this was not always so. On the contrary, when the Internet began to take its first steps at the beginning of the TWENTY-first century, this technology was much more chaotic, vulnerable, and above all, speculative. Then, in the early 2000’s, was brewing the first financial bubble of this millennium on the Internet. Hundreds of new Internet companies sprang up out of nothing. Without a proposal of real value behind web domains they owned, the majority of them are not generating true wealth. In spite of which, and due to the technological novelty that represented the Internet, investors rushed actions of these companies. When the market woke up and the bubble has burst, the major countries of the world entered into crisis. Of the night to the morning, the financial markets collapsed, and people lost faith in the Internet. At least the kind of faith that they had had until then. Therefore, the so-called bubble “dot com” was positive for the development of the Internet. And that is, when the same exploded and dozens of Internet companies went bankrupt. In the market were only the main companies of technology of the time, which if you generated a true value proposition. So we begin to see arise to the companies that shape the Internet today, such as Google.
The cryptocurrencies and the bubble
The parallelism between the cryptocurrencies and the bubble dot com is often used by analysts. Which predict that the proliferation of cryptocurrencies without any real value behind it will lead to death of the same in a short time. Leaving standing only the cryptocurrencies more strong. And let’s take an example from the world of the Internet. If we look at the advance of Google shares from year to year, we see that the price of the same is maintained in permanent growth. Coinciding in addition to this growth with the increase of people using the Internet. That is to say, a proportional relationship between the size of the Internet companies and the adoption of this technology. The stock price of Google has grown exponentially in the time And this is a trend that we also see in the crypto world. So, if we take for example one of the main cryptocurrencies, Ethereum. We will see that as adoption increases ETH so does the price of the criptoactivo in the market. As you can see in the following graphic where it overlaps the growth of the price of ETH with the increase of active addresses of the same coin. There is a relationship between the adoption of ETH and its price This information is important, because it shows us as the value of the cryptocurrencies grows in function of their utility. That is to say, when we try to calculate the price of a criptoactivo beyond the impulses speculative. The level of adoption of the same is a fundamental signal for knowing if your price is the natural product of supply and demand, or not. The following two tabs change content below. Student of International Studies, interested in issues of economy and international politics. Passionate about the progress of the Fourth Industrial Revolution in general and the cryptocurrencies in particular.