Hype cycles repeat themselves with a new flavor of technology, and the money quickly follows. Gig economy, daily deals, wearables, meal kits, social commerce, native ads, gamification, augmented reality, metaverse, internet of things, creator economy. Maybe a winner emerges; maybe it was all a big joke. Few get hurt, except perhaps the employees — and those battle scars fade in time, too.
When the crypto industry collapsed last year, setting off a wave of lawsuits and criminal indictments that culminated in FTX’s bankruptcy in November, it should have been a humbling comeuppance for those who had promoted it. The tech industry had poured billions into the promise of a new decentralized internet that could solve society’s ills, and anyone expressing skepticism was labeled a hater. That promise turned out to be a casino that was easily exploited by criminals and hucksters, some of whom fled overseas when it all came crashing down.
Between November 2021 and November 2022, the cryptocurrency market lost roughly $2 trillion in value, or two-thirds of its total. Since then, 95 percent of nonfungible tokens, or NFTs, have become worthless, according to an analysis by the crypto gambling company DappGambl. Shares of Coinbase, the only crypto exchange to list its shares on a U.S. stock exchange, have plunged 74 percent since it went public in 2021. Investors who parked money with Gemini, Genesis and Digital Currency Group, three well-known crypto firms, lost $1 billion, according to a fraud lawsuit by the New York attorney general.
Yet few in the tech industry have admitted that crypto failed to deliver on its hype. The crash is just part of a normal “crypto winter” cycle, the thinking goes, not a symptom of a larger problem.
Some crypto companies have since tried rebranding with less stigmatized terms like “decentralization” or “on chain.” Autograph, an NFT start-up co-founded by the retired football star Tom Brady, quietly removed some of the crypto language from its marketing. Paradigm Capital, a crypto investment firm that poured $278 million into FTX, erased mentions of the word “crypto” from its website this year, describing itself as a “research-driven technology investment firm.” After criticism from crypto die-hards, the firm reinstated the language.
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