One of the more persistant narratives that is being used in describing the meteoric rise of Bitcoin (and most other blockchain projects and cryptocurrencies) is that of the bubble.

Of those, two historical bubbles are most commonly mentioned: the “Tulip Mania” of 1636-37 and the Dot Com Bubble of the end of last century.

Of these, the Tulip Mania could be classified as the “Bubble that never was”, a scary fairytale that is taught to many people, but which essentially never happened. I invite you to read “Famous First Bubbles: The Fundamentals of Early Manias” by Peter M. Garber for more information.

The Dot Com Bubble of course does fit the Bubble definition, but is it a good analogy for what is happening with Bitcoin?

I wouldn’t ask the question if I didn’t mean to disagree, and I believe there are some key differences between what happened in Dot Com and now.

Wrong assumptions

Articles like this one on Bloomberg are fairly typical of the comparison made between Dot Com and Bitcoin.

Logical as such articles may seem, they suffer from a false premise, which is that Bitcoin is like stocks.

From this bad premise, it’s easy to conclude it is a bubble.

But once it’s made clear that Bitcoin is not like stocks, the conclusion falls apart.

Analysts consistently make a fundamental mistake, which is to confuse the “currency” bitcoin with the protocol Bitcoin (capitals).

Bitcoin is a protocol. A protocol that underpins a lot of working and upcoming projects. It is also immature, like the ‘net wat in the ’90s.

We all know how silly predictions about the ‘net not being viable in the ’90 turned out to be, since these predictions were made as if perceived problems were not being worked upon. Scaling, user-friendliness, business uses, they all came, albeit later than many people preferred.

The same holds true for Bitcoin. Yes, the network has significant drawbacks at the moment. However, what is extremely powerful about it is that the people working on it are engineers that hold to security standards that will benefit us all down the line. Delivering shoddy, but useful work now is a short term work ethic that will bite us in the arse when it really matters.

Where adherents of the bubble theory go wrong is assuming that most, if not all people putting money into cryptocurrencies solely for monetary gain.

2017 is not 1999

To my mind, the biggest difference between the dotcom bubble and the current situation is the existence of a matured internet.

This is something that makes a huge difference, because what I mostly see is new users making a development to a state of rather impressive knowledge in a very short time.

I am moderator of two large Dutch Facebook groups (~ 5000 members), a member of numerous dedicated chat groups since 2013 (~19000 members) plus an active member of several cryptocurrency related forums.

In my role as moderator, I am rather well informed of how users enter and then evolve in their journey, and I am one of the people who gets a lot of questions from new users.

Yes, I do see a LOT of people enter the cryptocurrency space as what could be termed loosely investors. These people tend to start out with basic questions like “What coin should I invest in?” or variations on that theme.

But these people do not exist in a vacuum! They are introduced to the high energy communities and rather quickly disabused of such notions as “just fling money at it, because Lambos!”. Instead, more often than not, one or more experienced members will answer them with some very basic, but sound tips on how to stay safe when trading and also (this is the internet, after all) to call out any stupidity they may see.

Some people disregard this and some leave, but those who stay often become quick learning members. This day and age, there are ways to assimilate and absord more knowledge that the dotcommers ever could, and that changes the situation completely.

I often see people evolve from standard traders to more informed members of the community, taking up tasks, asking questions, furthering knowledge and helping out others. It’s really a joy to see that happen.

Looking in from the outside

And this is where most, if not all Doomsday dotcom writers go wrong: they never even try to blend into the crowd and they do not really know what is going on. They seem to want to spot an analogy that fits and then never waver.

I’d like to invite each and every one of them to just join in for once, and experience our communities at ground level.

No, there are no sects. Mostly, these communities are dedicated, hard-working, meritocratic groups that want something to change.

What that change is, may differ per person, but for most that I meet, the money is a welcome, but not essential side-effect.

Bas Wisselink
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Bas Wisselink

Freelance trainer and speaker at Blockchain Workspace
Bas Wisselink is a freelance writer, public speaker and trainer. He is a founder of Blockchain Workspace. His expertise is in education, training and presentation skills.
Bas Wisselink
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