© Artur Widak - NurPhoto - Getty Images At the height of crypto hype, proponents claimed it would solve every problem under the sun.In November 2001, The New York Times wrote: "The semicolon is gone, and so is the dream." Three years later, Mark Zuckerberg launched Facebook from his Harvard office.
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The rise, fall, and eventual recovery of the Internet is an important lesson for today's cryptocurrency skeptics: technological innovations often follow a predictable pattern, and the heyday of cryptocurrency is likely to come.
Public reaction to new technologies often anticipates the "hype cycle" that the consulting firm Gartner identified decades ago. It starts with a lot of inflated expectations: the prediction that new technologies will change everything. But when new technologies are inevitably misused by bad actors or marginalized groups, public opinion quickly plunges into an "abyss of disillusionment."
Ultimately, innovators and decision makers work together to encourage rational use of technology and limit redundancies and abuse, and achieve a "performance plateau."
Working in Lime, I saw how politicians struggled with this cycle when electric scooters started appearing in cities a few years ago. After the initial hype surrounding their introduction, I saw many local legislators rush to ban them after the first accident or after the first scooter was dumped in the local river. It's a tempting answer, but an unwise one given the cycle of technological innovation. What politicians have not realized is that the introduction of new technologies is never linear and that a small number of bad actors is inevitable and manageable.
Likewise, the early days of Internet politics were plagued with bad ideas that were precursors to better ones. Kozmo.com flopped, but it led to more sustainable models like Doordash and Grubhub. Napster and Kazaa violated copyright laws, but they proved that consumers wanted a better way to consume music, and iTunes and Spotify were born.
Cryptocurrencies are no different. Despite the necessary adjustments, policymakers must be careful not to overreact to the recent downturn or risk missing out on the next Doordash, iTunes, or Spotify.
A year ago, crypto advertising dominated the Super Bowl and Web3 was the buzzword of the day. Proponents of decentralized banking argue that the burgeoning industry will solve every problem under the sun, from reducing global wealth disparities to unifying the Internet of Things. Optimism about the growth of the digital asset industry has also fueled a rare bipartisanship in Congress.
It was the culmination of inflated expectations. And that's okay: Techno-optimists should be excited about the potential of what's next.
But it is now clear that the industry has fallen on hard times. The price of Bitcoin has plummeted, the industry has suffered massive layoffs, and the arrest of FTX founder Sam Bankman-Fried has drawn global attention.
However, that doesn't mean we should throw in the towel.
The crypto industry can also bounce back and become better than before. Like the rise of Facebook after the dot-com bubble burst, the killer app Web3 may not have been invented yet. Mastodon, which started in 2016 as a decentralized alternative to Twitter, has been gaining momentum of late.
In the case of scooters, cities that have bottomed out in frustration and finally learned to regulate their use have built scooter parking lots to free up sidewalks and have found a balance where electric scooters are now essential transportation for residents. . . and negative effects are mitigated.
Similarly, we shouldn't be doing a post-mortem analysis of the cryptocurrency industry just yet. We should focus on developing the necessary regulations and avoid excessive political directives. Some politicians are already preparing to crack down on the cryptocurrency industry and need to be careful not to let cryptocurrencies mature through excessive regulation.
So let's punish bad actors hard. Let's introduce new account promotion rules. And let's remain optimistic about the new services that technology will eventually bring.
Adam Kavacevich is the founder and CEO of the Chamber of Progress.
Opinions expressed in Fortune.com comments are those of the authors alone and do not necessarily reflect the views or beliefs of Fortune .
This story originally appeared on Fortune.com
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