A comparison – dot com (.com) bubble Vs The Bitcoin bubble
We know what could happen to a “Bubble”, if it goes on expanding there is going to be point at which it would not be able to hold all its sides together and then “Boom” it is going to burst. The same thing could happen to our lives, our families and to our businesses as well, if we go on, with no parameters and limits set to ensure that we could manage the continuous expansion.
Around the years 1997 to 2001, when the Internet was slowly integrating or we could also call it infiltrating itself into our daily lives, everyone embraced it with open arms because the opportunities were immense. Some companies were overwhelmed by the possibilities and also the opportunities the Internet offered and brought it into their businesses failing to see some of the inherent dangers that it brought along.
The years between 2000 and 2002 the Internet bubble or more popularly the dot com (.com) bubble burst and many companies worldwide collapsed as they were so dependent on it and just could not handle the vastness of the problem. What happened was over speculation on the possibilities the Internet offered and the asset values of companies were over estimated and were valued at very much higher prices than what it was in real terms and then could not be sustained and at some point had to give way.
That is what exactly happened to companies like Pets.com and Webvan, which collapsed and had to close up their businesses.
Webvan is considered as the largest Internet or dot com (.com) flops in the history of modern business, which was a company delivering grocery items to customers within a 30 minute window in ten (10) United States markets.
They were planning to extend their operations to twenty six (26) more markets when they collapsed, and was subsequently absorbed into Amazon.com.
Webvan were in business for three (03) years and during that short time did grow in leaps and bounds but it was based on virtual asset bases which did not exist in reality hence the ignominious collapse.
The newest entrant into the world of business and one which is a deviation from the norm is the new kid on the block the “Bitcoin” cryptocurrency that everyone is talking about with its asset value leaping by an incredible 20% plus in just a few days.
Is Bitcoin going down the same path as what happened to the Internet or dot com (.com) bubble and would its value crash, are all questions being asked at every street corner, bar and even on the trading floors where this new “money” which we know very little about is trading.
Virtual money would be a very great idea and Bitcoin has been gaining in popularity and it is also gaining in value as we have seen but the big question on every one’s lips is whether it could sustain this phenomenal growth.
There is also another very pertinent question, which would be asked all over the world, which is, would the governments in the world relinquish their control over the real paper money that we are using now.
The United States Dollar which is the popularly traded currency everywhere in the world brings the government of the USA revenue and prestige and would they be willing to trade in Bitcoins rather than their own currency the “Greenbacks”.
There is much doubt on that because it is a farfetched idea and one we could imagine the government of the USA would not relinquish in the furthest of futures as we could see it.
If there is no governmental blessing for the Bitcoins and in that context whether it could sustain itself is the biggest concern among all those who would generally try their hands in new forms of investment.
The growth of the Bitcoins since its introduction has been quite promising and desirable but whether it could be the currency of the future would be anybody’s guess.
The Bitcoin bubble is also expanding at somewhat on the same lines as the dot com (.com) bubble when it started hence the worry among most of the experts who have done comprehensive research on the two.
The main concern is that there is a tendency of over indulgence in the Bitcoins initiative and most who have invested into it would not know what it really is and it is their gut feeling that they relying on when they put in their investments.
Whether they are on the right or the wrong path nobody could tell now but “only time will tell” and for that we would need to wait and see.
Bitcoins could be the answer to the real money that we are using in transactions today but whether that would be so, is something nobody could tell.