THE FOLLOWING IS AN EXACT COPY OF THE DOT COM BUBBLE WIKIPEDIA PAGE THAT TOOK PLACE BETWEEN 1997-2001. THE ONLY WORDS THAT HAVE BEEN CHANGED FROM THE WIKIPEDIA PAGE HAVE BEEN BOLDED AND HAVE BEEN CHANGED TO REPRESENT THE RESEMBLANCE BETWEEN THE DOT COM BUBBLE AND CURRENT ICO BUBBLE.

ICO Bubble

The ICO bubble was a historic economic bubble and period of excessive speculation that occurred roughly from 2017 to 2018, a period of extreme growth in the usage and adaptation of cryptocurrencies by businesses and consumers. During this period, many blockchain-based companies were founded, many of which failed. During 2017-2018, the bubble collapsed. Some companies, such as Ripple and QTUM, failed completely and shut down. Others, such as Stratis, whose stock declined by 86%, and Golem, lost a large portion of their market capitalization but survived, and some companies, such as Storj and Augur, later recovered and surpassed their ICO-bubble stock price peaks.[2]

As a result of the rapidly-increasing usage of crypto-currencies, many investors were eager to invest, at any valuation, in any company that had one of the crypto prefixes, leading to a stock market bubble.[5] During the bubble, the valuations of companies increased extremely rapidly.[6] Venture capitalists, eager to profit on this investment demand, moved to raise and invest capital faster and with less caution than usual. A combination of rapidly increasing stock prices, market confidence that the companies would turn future profits, speculation in stocks by individuals, and widely available venture capital created an environment in which many investors were willing to overlook traditional metrics, such as the price–earnings ratio, in favor of basing confidence on technological advancements.

An unprecedented amount of personal investing occurred during the boom, and the press reported the phenomenon of people quitting their jobs to engage in full-time day trading.[9] The value of Ethereum, which facilitates many token-based companies, rose from $0.87 in 2016 to $1000 in the year 2017.[5] In 2017, shares of Stratis rose in value by 137386.71% and 12 other large-cap tokens each rose over 1,000%.[10]

At the height of the boom, it was possible for a promising token based company to become a public company via an ICO and raise a substantial amount of money even though it had never made a profit—or, in some cases, realized any material revenue whatsoever. American news media, including respected business publications such as Forbes and the Wall Street Journal, took advantage of the public's desire to invest in the stock market; an article in the Wall Street Journal suggested that investors "re-think" the "quaint idea" of profits and CNBC reported on the stock market with the same level of suspense as many networks provided to the broadcasting of sports events.[6][11] Author Andrew Smith argued that the financial industry's handling of ICOs tended to benefit the banks and initial investors rather than the companies.[12] This is because company staff were typically barred from selling their shares during a lock-up period of 12 to 18 months, although many were able to lock in profits by buying options or entering into forward sale agreements. However, the investment bankers and other initial investors were typically entitled to sell their shares on the first
day of trading and lock in huge profits literally overnight. Smith argues that the high profitability of the ICOs to Wall Street was a significant factor in the course of events of the bubble. He wrote: "But did the kids [the often young ICO entrepreneurs] dupe the establishment by drawing them into fake companies, or did the establishment dupe the kids by introducing them to Mammon and charging a commission on it?"

However, executives and employees who received employee stock options became instant paper millionaires when their company made its ICO. Several company executives, such as Shawn Wilkinson, made vast fortunes when their companies were bought out at an early stage in the ICO stock market bubble; the most successful sold for cash or entered into hedging transactions on shares they received.

"Get big fast"

Most ICO companies operated at a net loss to harness network effects to build market share or mind share as fast as possible, using the mottos "get big fast" and "get large or get lost". These companies offered their services or products for free or at a discount with the expectation that they could build enough brand awareness to charge profitable rates for their services in the future.[13][14][15]
Advertising
Token-based companies sought to expand public awareness and their customer bases via massive advertising campaigns. Many ICOs named themselves with onomatopoeic nonsense words that they hoped would be memorable and not easily confused with a competitor.

Aftermath

On October 9, 2017, Ethereum peaked at $1000, but fell 78% in the following 30 months.[24] After venture capital was no longer available, the operational mentality of executives and investors completely changed. A money-losing company's lifespan was measured by its burn rate, the rate at which a non-profitable company lacking a viable business model spent its existing capital. Many ICOs ran out of capital and were acquired or went through liquidation; the .eth domain names were purchased by old-economy competitors, speculators or cybersquatters. Several companies and their executives were accused or convicted of fraud for misusing shareholders' money.

Job market and office equipment glut

Nevertheless, laid-off technology experts, such as computer programmers, found a glutted job market. University degree programs for computer-related careers saw a noticeable drop in new students.[29][30] Anecdotes of unemployed programmers going back to school to become accountants or lawyers were common. Failed startups liquidated all of their equipment.