You’ve seen this movie before. Or at least you know the plot: a new technology begins to attract attention, confusing skeptics but exciting its adherents, who promise it will change everything. A flurry of hype and speculation is lifting it into the public eye, culminating in Super Bowl commercials that make the new technology seem utterly mainstream and appealing – if still confusing to most normal people. Then the crash.
Then yes. It was the first web bubble, in the 1990s, which burst in March 2000.
It also sounds like what is happening with crypto and/or “Web3” – the recent rebranding of crypto – right now. Over the past year, your friends who know nothing about technology have learned about NFTs, even if they couldn’t explain them. The 122 million people who watched the Bengals-Rams Super Bowl in February also watched advertisements for once-obscure crypto companies, like FTX, endorsed by a celebrity with no obvious connection to the product. Slogan: “Don’t miss the crypto. »
And now the crash: Something like $1.5 trillion in value has disappeared since last fall as cryptocurrencies plunged: Bitcoin is down 56% from its November peak; Ethereum is down about 63%. Don’t even ask about Dogecoin. Even venture capitalists Andreessen Horowitz, perhaps the most prominent crypto advocates in tech, admit that we may be entering a “crypt winter.”
The big question for anyone who has invested in crypto so far – institutional investors, founders and employees of startups, and average people who have bought a bitcoin or a digital cartoon monkey – is whether things are different this time. We don’t have an answer yet.
There are many arguments on both sides. It should be noted here that crypto bulls strive to distinguish between blockchain, the technology based on a global network of computers that talk to each other and record transactions, and cryptocurrencies, the assets often generated by this technology. In theory, interest in blockchain should not be tied to the price of cryptocurrency; in fact, that is quite the case.
If you think crypto is plunging along with the rest of the stock market and the tech market in particular, you can point to data points like NFT price drops. Or investment “lows” – private companies that are forced to raise money in deals that value their business for less than it was worth just months ago. It can happen to BlockFi, a crypto trading platform. Less than a year ago, the company thought it was worth $5 billion; now investors would tell the company it’s worth $1 billion.
Or the fact that other crypto companies — including Coinbase, one of the crypto companies that splashed millions on a Super Bowl ad a few months ago — are carrying out hiring freezes or even job cuts. dismissals.
Meanwhile, some workers who were eager to quit their Big Tech jobs for Web3 startups a few months ago might have second thoughts. A private non-crypto company executive tells me that it has been much easier to recruit the likes of Google and Facebook than earlier this year when they were all heading into crypto.
There is also a general change in mood: a year ago, it was hard to find many techies willing to spend time publicly criticizing crypto and Web3. Now there are more and more of them, Box CEO Aaron Levie to software engineer Molly White, who runs a site dedicated to cataloging crypto and Web3 struggles and missteps (I chatted with her recently on the Recode media podcast.) See also: Joy in headlines like “Someone Stole Seth Green’s Bored Monkey, Who Was Supposed to Star on His New Show.”
But if you think crypto is going nowhere, you have your own data points: While Andreessen Horowitz talks about dark times in the near future, he also just raised a $4.5 billion fund explicitly intended to crypto investments. That money has to be spent somewhere, and there are still plenty of crypto investments: Katie Haun, a former federal prosecutor who became a crypto investor and raised $1.5 billion earlier this year, just announced a new deal this week.
And yes, some people may be tired of cartoon monkeys. But that doesn’t mean they’ve had enough of NFTs. Something called Goblintown is the new hotness, people who spend time in this space tell me, while I knowingly nod even though I have no idea what they’re talking about.
Meanwhile, Gary Vaynerchuk, the marketing/self-improvement guru who loves nothing more than the Next Big Thing, recently hosted a four-day VeeCon event on the Minnesota Vikings stadium floor in Minneapolis. The only way to get in was to buy a Vaynerchuk NFT, and he tells me nearly 7,000 VeeFriends owners showed up.
And many people I talk to in Web3 and crypto insist that things aren’t as dire as they look – and they’re used to crypto prices swinging wildly. It would be weird if they told me otherwise because they are convinced. But that doesn’t mean they don’t believe it.
“This has been a cycle that has been widely discussed as a crypto crash. But when you’re there, it doesn’t feel like it,” says Jarrod Dicker, an entrepreneur and tech executive who is now a crypto investor at Chernin Group, a media and technology investment firm. . “I think a lot of these companies that are building or starting to build, they’ve raised their capital, they’ve got their three to five year plan, and they’re going there. »
For now, at least, crypto remains something that many ordinary people care about, for better or for worse. Brandwatch, a company that analyzes social media sentiment, says social mentions of “crypto,” “NFT,” and “Web3” have remained mostly positive over the past 12 months. According to Data.ai, the download rankings of crypto trading apps have also remained fairly stable.
But if we draw parallels between now and the Web 1.0 bubble, it’s important to note that it didn’t completely deflate overnight in March 2000 – it took a few years for all the dot bombs to more stupid disappear.
I was around at the time, and I remember you could measure the decline by how the successive waves of layoffs were handled: people who got laid off by their dot-com early on got nice severance pay (I remember several people telling me that they were going to spend their funemployment payments on the cooking school). But the successive dismissals became less and less generous, and when the companies closed their doors for good, the employees had nothing left because there was nothing to give them.
So, as much as I hate this hedge, I’m going to hedge: we won’t know how severe and significant the crypto meltdown is for some time. In the meantime, one of the things you hear from Web3 devotees is that it wouldn’t be terrible for lame crypto companies to walk away and leave the good ones untouched. In this scenario, their company is Amazon, which survived the dot-com breakout and became… Amazon; other people’s lame ventures are theGlobe.com, a dot-com flagship that now exists only as a Wikipedia entry.
“Every cycle, when there’s a huge bust, I think people who build quietly are quite ecstatic because a lot of the noise is washed away,” says Tina He, the Web3 entrepreneur I spoke to over earlier this year when I was trying to get my head around the hype.
He’s still building something called Station, which she hopes will be a LinkedIn for crypto workers, and says she has a “super skinny” team of six workers and “lots of leads.” On the other hand, she says, the fact that other Web3 teams might be struggling will impact her project, which assumes there will be a lot of Web3 projects and employees to follow and connect. each other. So it can’t last forever without new money.
“We’re actually quite optimistic and idealistic about our progress,” he tells me before acknowledging that she may need to lift a “bridge turn” to transition her to a more lenient funding climate. “Even without that, we could make it through the winter – if the winter lasts less than two years. »
Rani Molla contributed to this story.
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Crypto crashes again. Will it come back? – News 24 | News in France and abroad
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