That's the question that seems to be on everyone's mind these days. Some are predicting the GREAT CRASH!!, while others put all their faith in the tech and the future.
We're also kind of living - and that's for sure! - in our own bubble here on Steemit. We are surrounded by believers! Preaching to the choir is easy...
I'm reading an amazing book ( spoiler alert!! it will be featured in my book gift-guide soon) called "Life in Code". It's a series on essay on technology, software development by a woman who's been into this word from almost the start. What's really interesting to me is that they are published as they were written back then, there is no hindsight advantage. This makes for a more authentic reading experience. It's almost like a journal or a blog.
Anyway, it has a chapter on the .com bubble which seem to me very relevant to the current crypto world.
It's all about the stories we tell ourselves, stories that we heard and bought from the modern storytellers: the start-up founders, the tech giants.
Stock markets float in clouds of stories. Numbers and mathematical analysis may be the infrastructure, but narratives surround the market with words, tales, explanations, myths. The stories shape our thoughts and feelings about the great, mass, global economic behavior of billions of people who buy and sell stocks, bonds, funds, hedges, commodities, puts (a bet that a security will go down) and calls (a bet it will go up), and the complex financial instruments that recede from public view
A lot of the realities of the market are exactly this: stories. Now this might sounds weird if you never heard this idea but almost all economic beliefs are based on the stories. Please watch this video before you continue reading this blog as I think it's a great intro and explanation on what I mean by all this.
Here are the relevant quotes from the book. The whole chapter is fascinating but I've selected only the heavy hitters. If you want to read the rest, please buy the book.
The first one that caught my eye was the story about "dips". We all know it: buy the dip, sell high.
An almost irresistible narrative is the story of buying technology stocks on price dips, as I said earlier. It is so compelling a belief system that it takes great discipline to escape it. Technology stocks will keep rising, goes the story; price drops are opportunities to get into the game. If everyone is making this bet, so should I. Greed is the emotional undercurrent of this narrative: Do not hesitate. Yet more riches await you—buy.
Now, looking at ICOs especially we notice that this is the narrative that's been going around too:
During the internet boom, a special, untried, counterintuitive story was accepted not only by the general public but also by venture capitalists, stock-fund managers, trustees of inheritances, hedge-fund investors, financial consultants, overseers of pension funds, and market insiders of all stripes. This dream of the future said: Technology is different. The internet and the web are transforming society. A new economic order is dawning, a new reality of existence. The singularity of human/digital convergence approaches. In the new capitalism of technology, profits do not matter.
Still, at one point profits must come or the faith will no longer sustain the prices.
In the meantime, a web company needs revenue, money to pay salaries and operating expenses. For the startup, the first revenue source is a round of financing from the venture capitalists; a year later, there may be a second round; yet a third after more time has gone by. But, eventually, the company will have to go out into the world and stand on its own.
I spoke with the founder of a startup. I asked him if he had a path to profitability; he did not. I asked if he had a revenue plan; he did. His answer was “Go IPO!” That is, have an initial public offering and reap the millions from the sale of the stock. Another way to look at this transaction is: Get the general public to finance a company with no known path to making money.
What started all this was different 20 years ago but you can see the parallels...
What brought the web to the millions, and the millions to the web, was a single class of programs: the browser. The period of the rising “enthusiastic” market closely follows the years during which the web browser was being created and widely deployed.
There were financial factors that drove the start of the web mania, in 1998, as discussed below, but it can be no accident that the market madness was fueled in part by a true technological advance, the graphical browser, which now was in the hands of the millions.
What else is now in the hands of millions that makes us crazy?
And the crash of 2000 came. But even as the market fell precipitously, the story of buying on dips somehow endured: perhaps this was just a bigger dip. Both serious investors and the general public rushed in once more to buy technology stocks. The Nasdaq index bounced up about 30 percent, fell again briefly, then bounced back up once more.
Here's a great metaphor that I did not hear before:
This was what Basile calls the falling knife: even if you think the market will turn up again—if more of the riches you dream of still lie ahead—you can’t step in and buy. “The selling pressure is too fierce,” said Basile; “the downdraft will skewer your greedy hand.” The parabolic curve had broken. “When the curve breaks, you’re dead,” said Basile
Many lost a lot.
Now you might say: OMG this is a bubble this is exactly what's happening now: SELLLLLL.
Not so fast!
First even if history repeats itselfs - which I am not sure it's happening and it's generally ANOTHER STORY! that we buy into - the crazyness is nowhere near what it was. We're at about 10% of what it was so we still have a few good years ahead ( teoretically! ).
Secondly, even in the dot-com boom and crash a lot of people made a lot of money even by hodling. But they held onto good stock and bet on good companies: no one is stopping YOU now to buy on the good icos now. If you want to get into all the shitcoin icos, then maybe don't cry after...
Thirdly, I leave you with this tweet:
