Jim Breyer, one of the most successful investors in the world and owner of Breyer Capital, recently reinvigorated investor confidence in the crypto industry. He firmly believes that even though the market is heading for what he describes as a “nuclear winter,” digital currencies will eventually undergo a rebound.
Breyer’s comments came in an interview at the 2018 Global Tech Forum held in Guangzhou, China. One of the subjects covered during his contribution to the event was the current state of blockchain technologies, in which the billionaire investor remains undoubtedly bullish.
Breyer Has Advised Not To Bet Against The Smartest Brains on the Planet
Speaking on-stage, Breyer claimed that intellectuals continue to flock into this space en-masse, with PhDs, computer scientists, and students at universities such as Harvard, Stanford, and Tsinghua University in Beijing, as well as entrepreneurs and technologists, continuing to invest time and capital in this nascent industry. He stated:
“So many of the very best computer scientists and deep learning Ph.D. students and post-docs are working on blockchain because they have so much fundamental interest in what blockchain can mean”
It must be said that he makes a great point here. If so many of world’s most intelligent individuals, as well as groups, strongly believe in the success of blockchain technologies, it would be foolish for investors to turn their backs on investment in cryptocurrencies.
Market Cycles Have Been A Feature Of Every Successful Industry
Speaking from experience, Breyer compared current investments in blockchain technologies to the post-Dotcom era. Over a five-year period that began in 1995, the value of tech companies grew exorbitantly, with many of these startups becoming hugely overvalued due to investors’ lack of industry knowledge. By the turn of the new millennium, what we now know as the Dotcom Crisis ensued, wiping close to $5 trillion dollars off the market.
Between 2000 and 2005, the Dotcom fallout had left many investment firms sour and wary of internet companies. On the contrary, Breyer saw this as the right moment to invest in a bear market, in which others lacked confidence.
Looking back at that period he was absolutely correct to be bullish. PCs with dial-up modems were already becoming a permanent household fixture in many developed nations, and broadband connections were introducing speeds of up to 512 kilobits per second. The face of the World Wide Web was about to change with mass adoption clearly in full swing.
Obviously, Breyer was well informed and could see what was coming. At that time, he was working for Accel Partners, in which the venture capitalist firm choose to invest in Facebook when shares in Mark Zuckerberg’s social networking phenomena were worth only cents to today’s dollar.
It turned out to be one of the most lucrative investment decisions of his career. Investors like Breyer who put their faith in internet-based businesses, such as Facebook, Google, Amazon, eBay, and Shutterfly, have since reaped the rewards from the time that the market was bear.
He now feels the same fortune awaits crypto investors, but first blockchain startups need to see out the current market cycle, which he says are about to go through a ‘nuclear winter’.
Crypto Expected To Experienced A Similar Cycle To AI
Another industry Breyer compared the crypto market cycle to is that of Artificial Intelligence (AI). He describes AI’s periodic slumps as “AI winters,” which occur after initial excitement in new developments ease off, resulting in a reduction in share values.
The companies that survive these winters then gain renewed interest from investors stimulating further rises in share values before they die down again. This cycle has been continuing in the AI industry for several years, and it is highly likely the crypto market will experience the same trend.
His analysis makes perfect sense because when it comes to emerging technologies, it is extremely common to see hype steering market prices up. It is likely overvaluation of a misunderstood marketplace, much like Dotcom, has led to the rise and current fall in virtual currency valuations over 2017 and 2018.
In addition to this, there is still a lot to be learned about blockchain technologies, and those at the center of this learning curve betting their future on it are from the world’s most renowned universities.
Obviously, Breyer is not saying that going forward from this point means future investment will be easy or clear-cut. We are likely to see several cycles as we have seen within the AI industry. He is merely pointing out past trends in other industries that cryptocurrency valuations are likely to follow.
Blockchain startups are now approaching a ‘Nuclear Winter’, but as the market cycle turns and new developments emerge things will start to heat up again. It is at this time we are likely to see the survivors such as the Dotcom’s “Googles and Facebooks” of blockchain tech emerge on the other side.