Internet Bubble 2000 versus Crypto Bubble 2018  – What’s next?

Most readers will remember the Crypto bubble of 2018, but only some readers remember the Internet Dot-com bubble of 2000. In this article, we ask if we can leverage our knowledge of the Internet 2000 bubble in forecasting future Crypto trends? What are their commonalities? And what will happen next?

The NASDAQ Composite Bubble

NASDAQ composite is a stock market index of securities listed on the NASDAQ stock market. It is heavily tilted toward information technology companies. NASDAQ composite was launched in 1971 with a starting value of 100 and it peaked at 5132 in March 2000. After that, it fell to 1108 in October 2002, a — 78% decline. This was the dot-com bubble.

NASDAQ has recovered from these lows and the current price is around 7400 (in Feb 2019).

The Crypto Bubble

Here, we use Bitcoin as a proxy for the crypto markets. It reached a top price of 19500 in Dec 2017, and the current low, 3250, in Dec 2018. This represents an 84% decline.

Many believed, like in the NASDAQ 2000, that “this time it is different” or that it’s “the new economy”. It wasn’t so.

Analysis of the NASDAQ bubble

The dot-com bubble was driven by the belief in new technology — the Internet. The NASDAQ Composite was full of stocks that lacked real business potential.

The initial focus was on broadband cable companies, which were seen as a new infrastructure that would eventually generate huge revenues. However, this resulted in the oversupply of broadband infrastructure, internet connectivity prices collapsed, and with them the stocks of the respective broadband companies as well. The positive outcome was that Internet broadband became a commodity and became available for most of the population.

The real business models of the Internet were not present before the dot-com bubble. These new, so-called Web 2.0 business models — Amazon, eBay, Facebook, Google, etc. emerged after the dot-com bubble.

All of them started to generate revenues/benefits compared to brick-and-mortar models, which translated into huge Discounted Cash Flow valuations thanks to the network effects (value of the network increases in quadrat to the growth of the nodes in the network):

  • Search (Google)
  • Advertisement Model (Google)
  • Social Networks (Facebook, LinkedIn)
  • Marketplaces (eBay, Amazon)
  • Online Merchants
  • Pay per use Web Services Models
  • Client Data / Client Behavior-based business models

The internet was and is a major disruption enabler. However, interestingly — the initial business models on the Internet tried to mirror the brick-and-mortar world into the Internet. It took 5+ years before the new disruptive revenue-generating business models emerged.

Analysis of the Crypto bubble

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The crypto-bubble was driven by the belief in new technology — in this case, the Blockchain. was full of projects without real business potential (remember that it was believed that you didn’t need cash flow/benefit based valuations then).

The initial focus was on the “smart contract platform” systems, which were the key enabler of blockchain disruption. However, being the key enabler doesn’t mean revenue generation. It can mean becoming a commodity as it happened with broadband during the NASDAQ bubble.

We forecast that smart contract platforms will consolidate, there will be some global/central platforms and other rather region-specific platforms. (Having a smart contract platform could be compared to the importance of having/controlling maritime sea routes two centuries ago).

However, it is not the most technologically advanced platform that will win the race, it will be the platform with the most users by now. Winning the race doesn’t mean becoming a cash flow generator, it will rather mean becoming a commodity or standard in the industry.

So, who will be the new eBay’s, Amazon’s, Google’s for the Blockchain economy? The answer to this is in the new disruptive business models — it’s about cash flow/benefit generating disruptive business models.

So, what are the real disruptive revenue-generating business models on the Blockchain? There are the following:

  • Base money — Bitcoin, which disintermediated the central bank’s privilege to create base money.
  • Privacy money — Monero, which disintermediated the government agency’s control over your privacy.
  • Stablecoins money — DAI, TrueUSD, etc — it disintermediates the SWIFT network for the fiat money transfers and bank accounts for keeping your fiat money.
  • Credit money —, it disintermediates the commercial bank’s privilege to create credit money.
  • My data is mine models — it disintermediates Google & Co’s advantage of monetizing your data.
  • Supply chain models — it allows real tracking of who produced what, where, when, and from which materials.
  • Decentralized energy — disintermediating centralized energy production to the decentral prosumers model.
  • Distributed storage/hosting — disintermediating the huge data centers of today.
  • Digital rights — disintermediating centralized media rights companies.
  • Tokenization — tokenization of the real world and financial assets, disintermediating the safekeeping accounts of commercial banks.
  • Asset Management — disintermediating the mutual funds’ industry through tokenized investment schemas.

These business models — money, credit, data, supply chain, energy, rights, and assets are by their nature decentralized. Adding a transaction fee per value-added business transactions will allow easy monetization and enables discounted cash flow based valuations. Adding a network effect will multiply these valuations.

Most of these business models relate to the financial system, see more in the article “Blockchain-based financial system – Are we ready?


The NASDAQ 2000 bubble and the Crypto 2018 bubble were similar events. The next similarity will be what will happen afterward.

In both bubbles, the platforms (broadband or smart contract platforms) had the highest valuations. In the case of NASDAQ, broadband became the commodity. We expect the same from the smart contract platforms.

In the case of NASDAQ, the real value-adding disruptive business models emerged. Real value-adding transactions drove the discounted cash flow based valuation of these companies.

We forecast that the same thing will happen in the crypto sector — new disruptive cash-flow generating business models will emerge. The companies behind these models will become the new Facebooks, Googles, and Amazons.

How to find these companies — it’s pretty easy:

  1. Look in the ecosystems which are from the logical point of view decentralized by design, but centralized in the current implementation.
  2. Look at the companies in these ecosystems, which will generate real benefits to real business problems.
  3. Some of these companies will become the new Facebook, Google, and Amazon.

We have heard many people saying “this time will be different”. We don’t think so, we think “this time will be the same”. History will repeat itself. Major disruptions are driven by real value-adding business models. It’s all the same. It’s the economy.

Additional information

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