If the cryptocurrency market is a bubble right now then it is a very small one!
Some people compare the current boom of cryptocurrencies with the Dotcom bubble of the late '90s. I certainly see similarities, but that doesn't mean the cryptocurrency market is in a bubble right now. Not yet in my opinion. Let me explain why...
Dotcom bubble vs ICOs
The dotcom bubble started growing in the late '90s, as computing and the internet expanded all over the world. Companies just had to add '.com' to their name and investers were willing to pay huge amounts of money for their stocks without even looking at the profits and revenue of the company.
Companies were going to the stock market with IPOs and received big prices, with stocks sometimes doubling on the first day. The value of the NASDAQ grew from around 1,000 points in 1995 to a high of more than 5,000 points in March 2000. What a time, it was insane!
I think the same can be said about the current Inintial Coin Offerings (ICOs). Many new digital coins are coming to the crypto markets while the company behind the coins only have made a promise to deliver an interesting blockchain project. At the launch of the ICO their is no working product yet, only a promise to deliver something later. No money is being earned yet. Only time will tell which of these digital coins will have a long life like Amazon.com and which of them will end up as Pets.com (who went bankrupt shortly after the Dotcom bubble bursted).
The Cryptocurreny markets VS the Dotcom bubble
On March 10, 2000, the combined market capitalization of all companies on the NASDAQ was at $6.71 trillion; the crash began March 11.
I've made the next image to compare $6.71 trillion with the total market capitalization of all 867 cryptocurrencies...
And don't forget $6.71 trillion is only for the companies traded on the NASDAQ in the US. There are many other stock markets worldwide which are not included.
Comparing the biggest companies of today
| Company | Market Cap |
|---|---|
| Apple | $815 billion |
| $649 billion | |
| Microsoft | $561 billion |
| $493 billion | |
| Amazon.com | $474 billion |
| All cryptocurrencies combined | only $162 billion |
As you see... If the cryptocurrency market is currently a bubble then it is a very small one.
it is not too late to invest in any currency ;)
Every bubble pops. @penguinpablo
The volatility of crypto far exceeds that of the dot coms, we have already crashed and risen many times. Have we already forgotten that in July the total market cap hit $60 billion? That was from a previous ATH of almost $120 billion. If a 50% drop in the entire market isn't a "healthy correction" or "market crash" then I don't know what is. Let's compare that to 2008, Dow Jones was 14,000 ATH and then crashed to 6,500 in 2009. Pretty comparable numbers. Even the Great Depression was a 55% stock market crash.
The bubbles will burst and they will refill, but to think the entire market is some massive bubble that will burn more than 50% is next to impossible unless a quantum computer hacked every blockchain. And if there was a malicious quantum computer out there I would be far more worried about our military and government computers than cryptocurrencies.
It will be governments with the quantum computers doing the hacking! I suspect though that the quantum dream is further away than we think.
i thought bitcoin was already quantum resistant
https://news.bitcoin.com/antonopoulos-bitcoins-protection-against-quantum-computing/
While crypto's obviously have a very high volatility, I think it's useful to compare their market cap to the fiat money supply. US "M2" money supply (roughly speaking, money in circulation as well as in liquid bank accounts) is currently $13,600B, or roughly 85X more than all crypto's. That's just USD; the Euro M2 is ~$13,300B USD. So just those two currencies are 166x larger. There's a pretty decent amount of room to grow from that standpoint.
@penguinpablo, That's a very good comparison. Both the worlds look exactly the same at the moment. As more and more people get familiar with the magic of crypto currecnies, I'm sure this small looking bubble is going to become sizable and it won't take it a lot of time. Keep updating and serving the world the way you're doing. Great job.
I have similar thoughts on this issue. I posted a post discussing the bubble of bitcoin (sorry it is in Chinese), I think if it is a bubble then it will not break in the near future.
Great post, thank you for sharing @penguinpablo. This is especially insightful for me, as I was only 5 years old at the time of the dot come bubble. I sure am hoping you are right about this one. Steemit to the moon!
Liked and resteemed.
I think crypto currency bubble won't inflate large enough before regulators step in to shape it up.
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We are scraping the surface. We scare established businesses because the power is to the people. This is the heart and beauty of crypto. Decentralised and blockchain techonology is here to hopefully stay.
good article really myself i taught its big bubble today when i see 163billion not knowing that was small fraction compared to those company you mention above.
Lets work together to make it bigger!