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Is Crypto Repeating the Internet’s Growing Pains?

Last Updated February 4, 2024 10:55 AM
Teuta Franjkovic
Last Updated February 4, 2024 10:55 AM

Key Takeaways

  • A new report has compared cryptocurrency to the internet, offering little practical value but paving the way for revolutionary applications.
  • Both technologies faced early skepticism and challenges, like the dot-com bubble.
  • Will crypto follow the internet’s path to ubiquity, or remain limited? The report leaves this question open.

A new report highlights the connection between cryptocurrency and the internet and how this is ingrained in the digital fabric of our world.

The recent report  by Architect Partners delves deep into this nexus, drawing parallels between the internet’s expansive 28-year evolution  and the nascent 8-year journey of cryptocurrency. Authors Eric Risley and Arjun Mehra probe the developmental trajectories of these technological phenomena.

Exploring Crypto’s Growth Through the Internet’s Evolution

The report underscores  that, in isolation, these networks hold minimal intrinsic value . “These networks alone offer little practical value,” Risley and Mehra observe. They compare them to a blank canvas, which, though initially empty, sets the stage for the creation of innumerable software applications.

Risley and Mehra advocate  for an understanding of cryptocurrency’s potential trajectory by examining the internet’s historical path, noting the shared “familial DNA” between the two. This comparison comes at a crucial juncture, as the cryptocurrency realm seeks to cement its position in the financial landscape, amid growing interest from traditional finance (TradFi) institutions.

This theme is further explored in the new publication  by billionaire venture capitalist Chris Dixon, titled “Read Write Own: Constructing the Next Era of the Internet.”

The Late ’90s: From Doubtful Beginnings to Modern Foundations

Initially, the internet’s prospects were not particularly bright, but it eventually became the cornerstone for many essential applications integral to our daily lives.

The report  illuminates the early stages of the internet, tracing its roots back to the 1960s. Despite its early inception, a robust method for inter-computer communication remained elusive. It was not until March 1992 that the introduction of the internet protocol suite TCP/IP  addressed this crucial need, marking a significant milestone in the internet’s development.

Technology Vs. crypto
Credit: Architect Partners

The internet began with rudimentary web pages, paving the way for the rise of foundational platforms like AOL, Yahoo, and Netscape in the mid-1990s, collectively known as Web1.

Yet, this was merely the beginning of the story. The late ’90s witnessed an unprecedented surge in investment into the Internet sector, propelling technological innovation, the widespread adoption of personal computers, and the creation of innovative software tools.

Highlighting key milestones, the authors of the report note , “Some of today’s most notable leaders were founded during this era, including Amazon, Google, Salesforce, Equinix, Expedia, and Netflix.” As the decade came to a close, the internet had become an integral part of daily life for over 400 million people worldwide.

Is Crypto Destined for Internet-Like Ubiquity?

The period between 1995 and 2000 was characterized by significant investments in internet companies, driving the tech sector’s valuation to a staggering $5.6 trillion by 1999. However, this bubble burst in 2000, seemingly validating the doubts of skeptics.

By the turn of the millennium, the risk capital had dried up, and the skeptics’ warnings appeared to materialize. A drastic 74% of the perceived value evaporated by 2002.

Despite these setbacks, the spirit of innovation did not falter. Companies like Facebook, YouTube, Skype, Workday, and DocuSign thrived by harnessing the potential of the internet. By 2006, the pervasive influence of the internet was undeniable, underpinning virtually all valuable modern innovations.

Reflecting on this trajectory, the authors remark , “What felt like breakneck innovation actually took 34 years – almost half a lifetime.”

The report culminates with a probing inquiry: Will cryptocurrency emulate the internet’s journey to become a universally accepted technology, or will it remain on the fringes?

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