Life as we once knew it drastically changed in the mid-90s. The Internet's popularity was on the rise, and many savvy businesses and companies saw the potential of a hyper-connected, digital world. This lead to the dot-com bubble--a sharp rise, and fall, in stock prices that was fueled by investments in Internet-based companies.
While we've moved far past the early stages of Internet start-ups and e-commerce companies, digital is continuing to change our everyday lives--from how we work, live, and play to the future of money itself. Interest in cryptocurrency, similar to the frenzy we saw in the early days of the dot-com bubble, is reaching a crescendo--yet many experts are already predicting its demise.
Warren Buffet has gone on the record saying that crypto will come to a bad ending. Jamie Dimon, J.P. Morgan's CEO, called Bitcoin a fraud before later admitting that he regretted making that statement.
Meanwhile, other big-name investors and companies are going out of their way to invest in crypto--from Richard Branson to Microsoft .
But are the naysayers right? Are we headed toward a catastrophic implosion of dot-com level proportions?
Yes, the crypto market is volatile. There are too many unknowns to be certain, but if we look at the histories of companies like Amazon, eBay, Priceline, and Shutterfly, then maybe we can gain some clarity.
These e-commerce companies were born during the dot-com era, and they weathered the storm and emerged as some of the most successful and stable companies in history. The dot-com crash didn't destroy the concept of e-commerce or the fact that consumers want to buy airline tickets, antiques, or pet food online--there was simply a gold rush in the early development stages. Once the dust settled, however, the strong survived.
Don't call it a comeback
In the end, the dot-com bubble was a movement. Smart investors saw the future of digital-based commerce and, as they invested, the movement snowballed into madness. Many of the companies that popped up during that time were run by people who were in over their heads, or they didn't have the technology to keep up with the demand. When the crash happened, it thinned the herd.
Mona El Isa, the chief executive and co-founder of Melonport, summed this notion up at a recent TechCrunch conference when she said, "The dot-com bubble was messy, but if we look at some of the largest companies that exist today they are a result of the dot-com bubble and they are part of our everyday lives."
Which leads us back to what we're seeing with cryptocurrency today. Even if this bubble bursts, the concept of digital currency will not go away. It may wipe out 90% of today's existing startup currencies, but the strong will survive. Companies, like Kodak, who try to create a currency without providing real customer value may see efforts go to waste. And this will pave the way for the Amazon of cryptocurrency to make its mark on the world.
To further the power of this movement, it's important to remember that cryptocurrency isn't a company. It doesn't have shareholders. It isn't VC-backed. Which means this movement extends beyond any other economic bubble we've seen--it's happening in an arena that's removed from the stock markets. So, when, and if, the bubble bursts, it won't go quietly into that good night. The parameters may change drastically from what we are seeing today, but digital currency--in one form or another--is the future.
How to invest in a movement
So, if cryptocurrency is the future--how do you invest? From a business standpoint, it's important to look at crypto through a risk-management lens. Business leaders and board members should be learning everything they can about this new trend so they can determine how, where, and why it might affect or fit into the business. Is there a way to offer customers value through cryptocurrency? Is the time right to execute? Is there a long-term strategy in place that will take advantage of the crypto movement when the stormy waters calm down?
These are the types of questions you need to consider. Do what's best for your business and what's best for your customer. As with any digital movement, you need to be aware of the trends and aware of how it could change your business. This is the only way to defend your company from possible disruption.
For anyone who is considering investing in cryptocurrency, it's important to remember that this is a long-term movement. Our world is becoming increasingly smaller and more reliant on digital means--currency transformation is inevitable.
It's the smart investors who understand that this isn't a fragile economic trend. Digital currency will continue to adapt and change over the next few years--and the companies and entrepreneurs who pay close attention now will have the best chance at deftly navigating the troubled waters.