Crypto crashes again. Will it come back?

You’ve seen this movie before. Or at least you know the plot: A new technology is starting to gather attention, confusing doubters, but exciting followers, promising that it will change everything. A wave of hype and speculation lifts it into the public eye, culminating in Super Bowl ads that make the new technology seem completely mainstream and tempting – albeit confusing to most regulars. So the crash.

So yes. It was the first internet bubble, back in the 1990s, that appeared in March 2000.

It also seems like what’s happening with crypto and / or “Web3” – the recent reorganization of crypto – right now. Over the past year, your friends who know nothing about technology became aware of NFTs, even though they could not explain them. The 122 million people who watched the Bengals-Rams Super Bowl in February also saw ads for previously obscure crypto companies, such as FTX, backed by a celebrity with no obvious connection to the product. Tags: “Do not miss the crypto.”

And now cracked: Something like $ 1.5 trillion in value has disappeared since last fall as cryptocurrencies plummeted: Bitcoin is down 56 percent from its peak in November; ethereum is down around 63 percent. Don’t even ask about Dogecoin. Even the venture capitalists of Andreessen Horowitz, perhaps the most prominent crypto-advocates in technology, admit that we can enter a “crypto winter.”

Rani Molla

The big question for anyone who has invested in crypto so far – institutional investors, start-up entrepreneurs and employees, and average people who bought a bitcoin or a digital cartoon monkey – is whether things are different this time around. We do not have an answer yet.

There are many arguments on both sides. Here we should note that cryptocurrencies are able to distinguish between blockchain, the technology based on a worldwide network of computers that talk to each other and record transactions, and cryptocurrencies, the assets that are often generated by that technology. In theory, the interest in blockchain should not be tied to the price of cryptocurrency; in reality it is very much.

If you think cryptocurrencies are collapsing with the rest of the stock market and technology market specifically, you can point to data points as falling prices for NFTs. Or “downward” investments – private companies that are forced to raise money in agreements that value their company at less than they were worth just months ago. It can happen with BlockFi, a crypto trading platform. Less than a year ago, the company thought it was worth $ 5 billion; now investors say the company is worth $ 1 billion.

Or the fact that other crypto companies – including Coinbase, one of the crypto companies that sprayed millions on a Super Bowl ad a few months ago – are making layoffs or even layoffs.

Meanwhile, some workers who were eager to leave their Big Tech jobs for Web3 startup a few months ago may think twice. A leader in a privately owned, non-crypto company tells me that it has been much easier to recruit people from the likes of Google and Facebook than it was earlier this year when they were all on their way to crypto.

There is also a general change of mood: a year ago it was difficult to find many technological people who were willing to spend time on public criticism of crypto and Web3. Now there are a growing number of them, from Boxing boss Aaron Levie to software engineer Molly White, who runs a website dedicated to cataloging the difficulties and missteps of crypto and Web3 (I chatted with her recently on Encrypt media podcast.) See also: The joy of headlines like “Someone stole Seth Green’s boring monkey, which was meant to star in his new show.”

But if you think crypto is not going anywhere, you have your own data points: While Andreessen Horowitz is talking dark times in the near future, it has also just raised a $ 4.5 billion fund that is explicitly earmarked for crypto investments. That money must be used somewhere, and there are still a lot of crypto investments going on: Katie Haun, a former federal prosecutor who became a crypto investor and raised a $ 1.5 billion fund earlier this year, just announced a new deal this week.

And yes, some people may be tired of cartoon monkeys. But that does not mean they are tired of NFTs. Something called Goblintown is the new hott, says people who spend time in this room, while I nod consciously even though I have no idea what they are talking about.

Meanwhile, Gary Vaynerchuk, the marketer / self-improvement guru who loves nothing more than Next Big Thing, recently hosted a four-day VeeCon event on the floor of the Minnesota Vikings Stadium in Minneapolis. The only way to get in was to buy a Vaynerchuk NFT, and he tells me that almost 7,000 VeeFriends owners showed up.

And many people I talk to in Web3 and crypto insist that things are not nearly as cruel as they sound – and that they are used to cryptocurrencies fluctuating wildly. It would be weird if they told me something else because they bought it. But that does not mean they do not believe it.

“This has been a cycle that has been widely discussed as a cryptocurrency. But when you are in it, it does not feel that way,” said Jarrod Dicker, a technology founder and leader who is now a crypto investor in Chernin Group, an investment firm specializing in media and technology. “I think a lot of these companies are building or starting to build, they’ve raised their capital, they have their three- to five-year plan, and they go for it.”

For now, at least crypto is something many ordinary people are interested in, for better or worse. Brandwatch, a company that does sentiment analyzes of social media, says social reviews of “crypto”, “NFT” and “Web3” have remained largely positive over the past 12 months. Download rankings for crypto trading apps have also remained fairly level, according to Data.ai.

Rani Molla

But if we draw parallels between now and the web 1.0 bubble, it is important to note that it did not empty completely overnight in March 2000 – it took a couple of years before all the dumbest dot bombs disappeared.

I was around then, and I remember you could measure the decline in the way subsequent waves of layoffs were handled: People who were fired by dot-com early got nice severance packages (I remember several who told me they should use “funemployment” their payments at cooking school). But subsequent rounds of layoffs became less and less generous, and when the companies closed their doors for good, the employees got nothing because there was nothing to give them.

So even though I hate this hedge, I’m going to make sure: We’ll not know how bad, and how meaningful, the cryptocurrency collapse is for a while. Meanwhile, one of the things you hear from Web3 believers is that it would not be terrible for lame crypto companies to go away and leave the good ones intact. In this scenario, their company is Amazon, which survived the dot-com bust and became … Amazon; others’ lame companies are theGlobe.com, a dot-com flagship that now exists solely as a Wikipedia entry.

“Every cycle, when there’s a big bust, I think people who build calmly are pretty ecstatic because a lot of the noise is washed away,” says Tina He, the Web3 founder I spoke to earlier this year when I was trying to get my head around it. 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 lean” team of six workers and “plenty of runway.” On the other hand, she says, the fact that other Web3 teams are struggling will affect her project, which assumes that there will be many Web3 projects and employees to track and connect with each other. So she can not last forever without new money.

“We are actually quite optimistic and idealistic about our progress,” he tells me before acknowledging that she may have to take a “bridge round” to get her through to a more forgiving finance climate. “Even without it, we can last through the winter – if the winter lasts less than two years.”

Rani Molla contributed to this story.