Circle CEO Jeremy Allaire Compares The ICO Bubble To The Early Internet Bubble

Unlike many of the younger folks who were involved in the 2017 bubble around initial coin offerings (ICOs), Circle CEO Jeremy Allaire was there for the rise and subsequent crash of early internet stocks. During a recent appearance on Off the Chain, Allaire was asked by host and Morgan Creek Digital co-founder Anthony Pompliano about how these two tech bubbles were similar to each other.

Catalysts for Increased Growth

In his initial response to Pompliano’s question, Allaire said his experience with the early internet mirrors his experience in the world of crypto assets.

Particularly, Allaire pointed to various catalyst moments for the early internet, such as the availability of dial-up internet and Windows 95, and how he felt he was seeing similar moments for the crypto asset market in 2016 and 2017.

“That was a set of catalyst moments where it was useful, and that got a lot of people excited,” said Allaire in terms of some of the early internet’s base infrastructure. “But it was still really immature infrastructure. You really couldn’t do that much, but it was inspiring and there were tons of companies getting started. And that, to me, really felt like where we were in crypto in 2016 [and] 2017.”

Investors Get Hype

According to Allaire, the hype around these sorts of transformative technologies is what can lead investors to overinvest in a particular sector over the short term.

“People can paint the possibility of the technology and they can see the transformative impact — it’s in some ways patently obvious what those can be — and people want to participate in it,” explained Allaire. “They see values rising quickly, tons of companies jump in with a business plan and say [they’re] going to revolutionize this or that, and investors are gullible because values have been rising so quickly. But the reality kind of comes crashing down, literally.”

In Allaire’s view, it was at least partially the lack of the basic infrastructure needed to take user adoption to the next level that led to the crashes of the early internet and ICO bubbles.

“The technology wasn’t at a place where it could scale and deliver a great customer experience,” said Allaire.