07 Feb 2018

Amazon and Bitcoin have a similar destiny?

Seattle's company has gained 272 times its 2001 price

Nothing is more passionate about discussions on financial bubbles, true or presumed than they are. At the beginning of the new millennium, the Internet was the mother of all the bubbles, destined to burst, producing the most horrible explosions. Too bad that today the surviving champions of that technological season score one record after another and are among the most valuable companies in the world stock exchanges. Like Amazon, for example, that last week scored its primacy price at $ 1,498 per share. The story of the Seattle giant’s company is also very interesting to navigate in the most popular bubble of the moment: crypto currencies. At its debut in June 1997, an Amazon action was worth $ 1.40 to go up to the historical maximum, pre-burst of the so-called Internet bubble at the beginning of 2000, of $ 113 in December 1999. From this price the retracement was violent: $ 5.51 the minimum marked by the title in October 2001 with a loss of 95.13% from the highs. Since then, the Amazon run has not known more pauses and the price of the action has grown by about 272 times to reach over $ 1400 today. Ten thousand dollars, invested at Amazon’s minimum price, today would be worth almost three million: 2,722,323 dollars.
What does the business case of the Jeff Bezos company teach? Surely it is too trivial to talk about the bubble when there is a technological discontinuity that introduces new business models: immediately understand how this technology can develop is an exercise that is anything but easy. But it also teaches that it is difficult to quantify values ​​or prices when a phenomenon is very dynamic, such as a disruptive technological innovation, and has dropped in the global market.
This explains why it is very difficult to pronounce on the future of the blockchain at the base of Bitcoin and the many crypto currencies. The backend systems, for example, of the banks have already been scrapped by the blockchain even if it is not easy to guess the timing of their total technological replacement. What is certain is that in a few years some of the companies that are emerging in the cryptocurrency ecosystem will be the world’s leading giants of blockchain technology and will be worth many tens or hundreds of billions of dollars. One must only have the patience to wait and not to be misdirected by short-term speculation. This is why it is not surprising that Bitcoin can fly very high, reaching price values ​​that were unthinkable only a few years ago.

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