Benedict Evans, a general partner at Andreessen Horowitz (A16Z), one of the most successful venture capital firms in the world, has said that crypto is quite similar to the internet in 1993.
As with any other emerging technology or market, the cryptocurrency space has seen a large number of failed projects and scams over the past several years.
However, according to Evans, if investors focus on the failed projects and fraudulent operations in the exponentially growing cryptocurrency sector, it would be like dismissing the internet in 1999 based on the lack of progress of Usenet, Cuecat, and Boo.com.
“Crypto today has a lot in common with both the internet in 1993 and the internet in 1999. Huge potential with few of the use cases invented yet, combined with froth, scams and delusion. This makes it easier to dismiss. But dismissing crypto as a useless scam is much like looking at Usenet, Cuecat and Boo.com and dismissing the internet. It mistakes applications for the enabling layer.”
Emerging Technology is Disguised as Inferior Technology
Previously, Ben Horowitz, a legendary venture capital investor and the co-founder of A16Z, emphasized that one deceptive aspect about emerging technologies like crypto and mobile phones is that in the beginning, emerging technologies seem significantly inferior to existing technologies.
Hence, due to the discrepancy in efficiency and practicality between emerging technologies and existing solutions, it is easier to dismiss newly created technologies on the premise that they are dominated scams.
In a new market, investors often try to rush in to invest in every new project to catch the bubble. Several cryptocurrency projects reached multi-billion dollar valuations in late 2017 as the valuation of the cryptocurrency market reached $800 billion.
But, Evans explained that as the market matures, more mainstream use cases will emerge, and technologies employed by projects in the sector will drastically improve.
“Looking at crypto and only seeing the scams is like looking at the internet in 1999 and only seeing the bubble. Looking at crypto and seeing no use cases is like looking at the internet in 1993, when the web was 3% of traffic,” said Evans.