Irrational Exuberance and Lessons from the Dot-com Bubble
If you are unaware of the term Irrational Exuberance, it represents the massive amount of investing into products that had no fundamentals to back them up. It was used by then Fed Chairman Alan Greenspan to describe the dot-com bubble and the multitudes of investment that was going into worthless products. The stories of the time of people sinking a billion dollars into companies that hadn’t proved they could do anything or even have a viable business model is becoming very relevant to the crypto scene today.
Whether it is because of greed or because people are fearing they missed out on coins like ethereum/bitcoin, they are throwing tens and thousands of dollars at ICOs that have proven nothing. Half of them don’t even have a proof of concept let alone a working client. It is like going into a venture capitalists office and pitching a time machine, getting funding yet not knowing how to build it. And yet people are lining up to throw their money at anything that is the current trend.
This precisely is what happened during the dot-com bubble and we know how that ended, with the loss of probably 90% of the companies that were fundraising at the time. Very few succeeded and people lost entire fortunes during that time. One big thing that happened was the ability to access trading online for the regular consumer and also be able to track your stock value the same way. Much like in crypto, people were looking at their portfolios double overnight and kept sinking more money into it because they believed it was a sure thing. Ultimately we know what happened there.
Sure there are a few success stories, but the vast majority lost their ass and I believe that is going to happen with many of the coins we see doing ICOs today. I see things on forum posts like “ 100% returns aren’t good enough for me I want to make 20x my money” and this reeks of greed. Rational people know that a 20x return is too good to be true or has a very small probability of happening. Going into every investment with that ideology will leave you broke and holding the bag because the majority of new coins being issued today are for the sole purpose of pumping and dumping them.
Look at the coins that held the top 10 spot 2 years ago and see how they coincide to today. Yes two years might be a lifetime in crypto but many of the coins that promised the world were unable to deliver and eventually sold out. Don’t be someone who loses their money investing in foolish ideas and products that you have no idea if they are going to work. Invest smart and do your due diligence. If someone is trying to sell you something too good to be true, it probably is.
During the peak of the dot-com bubble, I had $1.4M in non-vested stock options. I never had the chance to cash out $1.
Playing with the shitcoins is fun, but only with money you can afford to lose.
I was fortunate enough to have cashed out on my Google call options. No one can truly time a market. However, always take some off of the table. The market can truly punish even the smartest investors.
Interesting how things like locked steem power or POS ETH will effect price swings. When there is a lot of illiquid value tied up in crypto - interesting times.
Very interesting but I remember the dot com bubble more because of the investments I thought were good and turned out to be just that. I missed out because I had more faith in other areas that while profitable didn't do as well as I could have... story of many I guess.
Can you give bad coin examples that people are investing in that shouldn't? thx
Timely. Woke up to see most of the coins in a retracement. Slightly unsettling, no doubt, though of course a natural course of events.
Overall, I think a bubble bust will be beneficial, as it'll squeeze the shit coins out of the space and separate the substance from the hype...
Too true. But it's hard to see that you're in a price bubble from the inside. Sure it's easy with hindsight to see all the warnings, but everything looks rosy from the inside.
It's just common sense. You don't invest in the currency. You invest in the people behind the currency.
Lets Try this from my actual account!
Indeed the important thing is the development community. The bigger it is, the more chances something has to make a real splash and have staying power. Its one of the things that I think most people don't even pay attention to, and its one of the reasons why I am so excited about Steem.
Very true, our reality is very distorted when we are in a bubble. We tend to expect too much and become quite vulnerable.
Exelente post, excellent platform steemit I am really excited and I have dedicated much of my time in trying to grow in this community, a vote may not cost you anything but for me it means a lot, you follow me I tell you.
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