SYS-CON MEDIA Authors: Yeshim Deniz, Elizabeth White, Zakia Bouachraoui, Liz McMillan, Janakiram MSV

Blog Feed Post

Blockchain/Crypto Bubble: Dot-Com Bubble All Over Again?

I called the massive Bitcoin bubble less than two months before it popped – or perhaps my articles helped it pop, who’s to say? In any case, I’m calling another bubble – and given I now have a 100% track record on these things, perhaps people should listen.

Today, the entire blockchain/cryptocurrency hairball is itself in a massive bubble. Rather than speculation in cryptos driving the market over the cliff, however, it’s speculative interest in initial coin offerings (ICOs).

This is no mere currency play. Deep pockets with more money than sense are betting on an entire market full of startups, largely because of FOMO – ‘fear of missing out.’

All this hullabaloo is giving me a serious case of déjà vu. I’ve lived through such a bubble before – the dot-com bubble of the turn of the century.

Unlike most of the blockchain/crypto players out there who were children at the time, I saw the craziness of the dot-com runup and bust from the inside. Similarities to the current bubble abound.

Lest we make the mistakes of the past, however, it’s also important to point out the differences. In truth, the two bubbles only have superficial similarities. We can only gain wisdom by understanding both how they are alike – and how they are different.

Scammers’ Paradise?

How they’re similar: All the money pouring in is bringing out the scammers in droves.

How they’re different: The World Wide Web really began to take off in 1994, but it wasn’t until 1998 or so that the VCs caught on and money started pouring in. By then many companies had web sites, JavaScript was working in the Netscape browser, and an entire market of consulting firms had established themselves.

In contrast, the money has poured into the blockchain/crypto world much sooner. The speculative interest in Bitcoin led to an explosion of speculative interest in other cryptos, and in turn, in ICOs – long before the businesses getting the funding had any real customer base.

As a result, it’s hard for any investor to differentiate the honest ICOs (assuming there are any) from the scam ones, since neither is likely to have a running business with paying customers. In addition, scammers are taking advantage of the mad rush to this market, preying upon the confusion and ignorance, as well as the lack of adequate regulation and enforcement.

Speculative Bubble?

How they’re similar: There is a massive speculative investment bubble that is bound to collapse.

How they’re different: The fact that the dot-com boom had a longer runway impacts the nature of its bubble. During the dot-com run-up, most of the speculative interest was in public companies on NASDAQ. While many were not profitable, at least they were in business, and had their act together well enough to navigate the complexities of an IPO.

In addition, the public status of many dot-com players forced them to open their books, so that everybody could see when a company was unlikely to ever turn a profit.

With blockchain/crypto, the speculative interest is primarily in ICOs for companies not yet in operation, or just launching their operations. All these investors have to go on are each company’s white papers, which they typically write in order to avoid regulatory attention, rather than to conform to it as in the dot-com days.

The risks, therefore, are far greater this time around. The rewards? Not so much.

Change the World?

How they’re similar: Talk of a ‘New Economy.’ Widespread belief that business will be forever transformed.

How they’re different: The dot-com ‘New Economy’ centered on web-based business models disrupting ‘bricks and mortar’ precursors. Yes, the Internet changed the world – but it turned out the Web was really little more than a new marketing channel.

Just how much blockchain/crypto will actually change the world remains to be seen, but it’s shaping up to be nothing more than a better way to conduct multi-party transactions.

Furthermore, much of the ‘New Economy’ buzz around blockchain/crypto is mostly around crypto’s use as money. The dot-com era had no equivalent, unless you count money alternatives like Beenz and Flooz. Don’t remember Beenz or Flooz? Maybe there’s a reason.

Will there be Survivors?

How they’re similar: All the hype and speculation obscure some real businesses that will survive the crash and disrupt the world. Perhaps that disruption will be so great as to swamp the silliness that came before.

How they’re different: True, dot-coms like Amazon and Google survived and ended up disrupting the world. But other than those two exceptional cases, disruptive dot-com survivors are few and far between. Yahoo! survived the crash but is no more. eBay caused its fair share of disruption in its day, but nobody cares about it or companies of its ilk anymore. It’s hard to even think of many others.

It’s too early to be sure about blockchain/crypto, of course, but the most disruptive ideas are plans for fully distributed platforms of various sorts. Just one problem: because they are fully distributed, founding such a platform isn’t a good way to make money.

It’s no wonder so many blockchain platform businesses are ‘dot orgs.’ They have no clear business model. Amazon and Google may have been among the only broadly disruptive dot-coms to survive, but so far there’s no new blockchain/crypto Amazon or Google in the offing.

What about Technology Standards?

How they’re similar: A handful of open standards-based technologies are at the heart of the movement.

How they’re different: HTTP and HTML in particular have proven to be remarkably versatile, even as they matured. We can even consider XML to be a dot-com era standard. XML had a good run, and while JSON has largely supplanted it, JSON itself is simply JavaScript, another dot-com success story.

The dot-com era’s B2B standards like ebXML, however, didn’t fare as well. The complexities of business interactions largely proved too complex for the standards of the day.

Unlike core Internet standards, core blockchain technologies have a far narrower applicability. Because of its multiparty transaction sweet spot, blockchain’s promise lies in B2B transactions.

However, just as with the dot-com days, nascent blockchain standards aren’t likely to address general B2B scenarios.

In fact, it’s not clear if a core set of generalized blockchain standards is going to coalesce, as many of the standards efforts underway are industry-specific.

Finally, what about the security standards that underlie blockchain? Such standards predate the blockchain/crypto movement, and in fact, some of them date to the dot-com era.

What About the Community?

How they’re similar: A vast community of techies, entrepreneurs, investors, consultants, and others are changing their career paths to join the new community.

On the one hand, this exodus is depriving enterprises of desperately needed expertise. On the other hand, when the bubble bursts, these people will return to more traditional employment, the better for their experience.

How they’re different: The people at the heart of the dot-com movement were a mix of university intellectuals and US Department of Defense and other government techies. In fact, it wasn’t until the US National Science Foundation ended its sponsorship of the Internet in May 1995 that it was technically legal to build a for-profit business (aka a ‘dot-com’) on it.

The initial instigators of the blockchain/crypto movement – early Bitcoin insiders – couldn’t have been more different. This crew was a core group of radical libertarian anarchist misogynists, intent on bringing down the global financial system.

Even though the blockchain/crypto community has expanded well beyond this rotten core, its radical principles still pervade the movement. The belief that decentralized transaction processing holds the moral high ground over its centralized alternative impacts blockchain businesses broadly, even those business that have nothing to do with crypto.

The problem with radical libertarian ideals, of course, is that they are really only good at one thing: giving criminals cover. Organized crime in particular has ridden the coattails of this trend, and now threatens the entire permissionless side of the blockchain/crypto movement. Nothing even remotely like this craziness took place during the dot-com days.

The Intellyx Take

The biggest difference between the dot-com and blockchain/crypto bubbles, of course, is that we know how the former ends, while the latter is a book that is still being written. There is always the possibility that cooler heads will prevail where they didn’t before, thus proving skeptics like myself wrong.

All indications, however, point to the opposite happening. The blockchain/crypto bubble is more inflated, more scam-ridden, more devoid of business value than the dot-com craziness ever was. And it will pop much more loudly as a result.

Copyright © Intellyx LLC. Intellyx publishes the Agile Digital Transformation Roadmap poster, advises companies on their digital transformation initiatives, and helps vendors communicate their agility stories. As of the time of writing, none of the organizations mentioned in this article are Intellyx customers. Image credit: Beenz and Flooz.

Read the original blog entry...

More Stories By Jason Bloomberg

Jason Bloomberg is a leading IT industry analyst, Forbes contributor, keynote speaker, and globally recognized expert on multiple disruptive trends in enterprise technology and digital transformation. He is ranked #5 on Onalytica’s list of top Digital Transformation influencers for 2018 and #15 on Jax’s list of top DevOps influencers for 2017, the only person to appear on both lists.

As founder and president of Agile Digital Transformation analyst firm Intellyx, he advises, writes, and speaks on a diverse set of topics, including digital transformation, artificial intelligence, cloud computing, devops, big data/analytics, cybersecurity, blockchain/bitcoin/cryptocurrency, no-code/low-code platforms and tools, organizational transformation, internet of things, enterprise architecture, SD-WAN/SDX, mainframes, hybrid IT, and legacy transformation, among other topics.

Mr. Bloomberg’s articles in Forbes are often viewed by more than 100,000 readers. During his career, he has published over 1,200 articles (over 200 for Forbes alone), spoken at over 400 conferences and webinars, and he has been quoted in the press and blogosphere over 2,000 times.

Mr. Bloomberg is the author or coauthor of four books: The Agile Architecture Revolution (Wiley, 2013), Service Orient or Be Doomed! How Service Orientation Will Change Your Business (Wiley, 2006), XML and Web Services Unleashed (SAMS Publishing, 2002), and Web Page Scripting Techniques (Hayden Books, 1996). His next book, Agile Digital Transformation, is due within the next year.

At SOA-focused industry analyst firm ZapThink from 2001 to 2013, Mr. Bloomberg created and delivered the Licensed ZapThink Architect (LZA) Service-Oriented Architecture (SOA) course and associated credential, certifying over 1,700 professionals worldwide. He is one of the original Managing Partners of ZapThink LLC, which was acquired by Dovel Technologies in 2011.

Prior to ZapThink, Mr. Bloomberg built a diverse background in eBusiness technology management and industry analysis, including serving as a senior analyst in IDC’s eBusiness Advisory group, as well as holding eBusiness management positions at USWeb/CKS (later marchFIRST) and WaveBend Solutions (now Hitachi Consulting), and several software and web development positions.

Latest Stories
After years of investments and acquisitions, CloudBlue was created with the goal of building the world's only hyperscale digital platform with an increasingly infinite ecosystem and proven go-to-market services. The result? An unmatched platform that helps customers streamline cloud operations, save time and money, and revolutionize their businesses overnight. Today, the platform operates in more than 45 countries and powers more than 200 of the world's largest cloud marketplaces, managing mo...
Containerized software is riding a wave of growth, according to latest RightScale survey. At Sematext we see this growth trend via our Docker monitoring adoption and via Sematext Docker Agent popularity on Docker Hub, where it crossed 1M+ pulls line. This rapid rise of containers now makes Docker the top DevOps tool among those included in RightScale survey. Overall Docker adoption surged to 35 percent, while Kubernetes adoption doubled, going from 7% in 2016 to 14% percent.
Blockchain has shifted from hype to reality across many industries including Financial Services, Supply Chain, Retail, Healthcare and Government. While traditional tech and crypto organizations are generally male dominated, women have embraced blockchain technology from its inception. This is no more evident than at companies where women occupy many of the blockchain roles and leadership positions. Join this panel to hear three women in blockchain share their experience and their POV on the futu...
Technology has changed tremendously in the last 20 years. From onion architectures to APIs to microservices to cloud and containers, the technology artifacts shipped by teams has changed. And that's not all - roles have changed too. Functional silos have been replaced by cross-functional teams, the skill sets people need to have has been redefined and the tools and approaches for how software is developed and delivered has transformed. When we move from highly defined rigid roles and systems to ...
The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development cycles that produce software that is obsolete at launch. DevOps may be disruptive, but it is essential. DevOpsSUMMIT at CloudEXPO expands the DevOps community, enable a wide sharing of knowledge, and educate delegates and technology providers alike.
The platform combines the strengths of Singtel's extensive, intelligent network capabilities with Microsoft's cloud expertise to create a unique solution that sets new standards for IoT applications," said Mr Diomedes Kastanis, Head of IoT at Singtel. "Our solution provides speed, transparency and flexibility, paving the way for a more pervasive use of IoT to accelerate enterprises' digitalisation efforts. AI-powered intelligent connectivity over Microsoft Azure will be the fastest connected pat...
At CloudEXPO Silicon Valley, June 24-26, 2019, Digital Transformation (DX) is a major focus with expanded DevOpsSUMMIT and FinTechEXPO programs within the DXWorldEXPO agenda. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of business. Only 12% still survive. Similar percentages are found throug...
Atmosera delivers modern cloud services that maximize the advantages of cloud-based infrastructures. Offering private, hybrid, and public cloud solutions, Atmosera works closely with customers to engineer, deploy, and operate cloud architectures with advanced services that deliver strategic business outcomes. Atmosera's expertise simplifies the process of cloud transformation and our 20+ years of experience managing complex IT environments provides our customers with the confidence and trust tha...
Financial enterprises in New York City, London, Singapore, and other world financial capitals are embracing a new generation of smart, automated FinTech that eliminates many cumbersome, slow, and expensive intermediate processes from their businesses. Accordingly, attendees at the upcoming 23rd CloudEXPO, June 24-26, 2019 at Santa Clara Convention Center in Santa Clara, CA will find fresh new content in full new FinTech & Enterprise Blockchain track.
At CloudEXPO Silicon Valley, June 24-26, 2019, Digital Transformation (DX) is a major focus with expanded DevOpsSUMMIT and FinTechEXPO programs within the DXWorldEXPO agenda. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of business. Only 12% still survive. Similar percentages are found throug...
At CloudEXPO Silicon Valley, June 24-26, 2019, Digital Transformation (DX) is a major focus with expanded DevOpsSUMMIT and FinTechEXPO programs within the DXWorldEXPO agenda. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of business. Only 12% still survive. Similar percentages are found throug...
As you know, enterprise IT conversation over the past year have often centered upon the open-source Kubernetes container orchestration system. In fact, Kubernetes has emerged as the key technology -- and even primary platform -- of cloud migrations for a wide variety of organizations. Kubernetes is critical to forward-looking enterprises that continue to push their IT infrastructures toward maximum functionality, scalability, and flexibility. As they do so, IT professionals are also embr...
In today's always-on world, customer expectations have changed. Competitive differentiation is delivered through rapid software innovations, the ability to respond to issues quickly and by releasing high-quality code with minimal interruptions. DevOps isn't some far off goal; it's methodologies and practices are a response to this demand. The demand to go faster. The demand for more uptime. The demand to innovate. In this keynote, we will cover the Nutanix Developer Stack. Built from the foundat...
CloudEXPO has been the M&A capital for Cloud companies for more than a decade with memorable acquisition news stories which came out of CloudEXPO expo floor. DevOpsSUMMIT New York faculty member Greg Bledsoe shared his views on IBM's Red Hat acquisition live from NASDAQ floor. Acquisition news was announced during CloudEXPO New York which took place November 12-13, 2019 in New York City.
AI and machine learning disruption for Enterprises started happening in the areas such as IT operations management (ITOPs) and Cloud management and SaaS apps. In 2019 CIOs will see disruptive solutions for Cloud & Devops, AI/ML driven IT Ops and Cloud Ops. Customers want AI-driven multi-cloud operations for monitoring, detection, prevention of disruptions. Disruptions cause revenue loss, unhappy users, impacts brand reputation etc.