From Crypto to AI: A Guide to Identifying Tech Bubbles

Life is full of hype, trends, ups and downs, and overexaggerated stuff. Our human need to somehow always find better efficient ways to do things that are already pretty fine always puts us in the chase for the next breakthrough, whether it’s because we’ve gotten comfortable, smart or we’ve innovated so much that it’s time to refactor our old innovations. It doesn’t matter.

But this constant search for better ways to solve non-trivial things is what led us to the crypto bubble and the surge of random solutions to already solved problems (like, why would I register a contract on the blockchain when we already have an established, legal, efficient system just for that?),

a bubble that ended up causing more harm than good for your everyday people who fell for some of the scams that came associated with this bubble.

And here we are in another bubble, just a bit more useful than NFTs. The hype is unreal, and the tone is even more negative. Everyone is scared AI will replace us, will kill jobs, and make the rich richer (obviously it will, everything does) and the poor poorer …

This article won’t be about why AI won’t replace us — if you need to know here’s the short answer: No, Not yet at least, and not in the near future.

There are a lot of videos you can find online and articles, videos debunking random AI tools that are suddenly popping up for every single random use case, how it is too early to ship AI to prod or start building your company’s vision based on it …

But instead, this article is more about the patterns that all bubbles usually have and how to spot them, stay calm, and more.

First, let’s break down the anatomy of a typical hype bubble. You start with innovation — something genuinely groundbreaking, like AI or blockchain. Early adopters and tech enthusiasts jump on the bandwagon, fueling preliminary success stories and speculative dreams.

Then comes the media attention. Suddenly, every news outlet and social media platform is buzzing about how this new technology will change the world. Case in point: Remember when blockchain was touted as the solution to virtually every problem in the world? Now, AI is getting the same treatment, with claims it can solve everything from climate change to curing cancer.

But with increased visibility comes the frenzy of investors and entrepreneurs looking to cash in on the hype. Products that barely use AI are labeled as “AI-powered” to attract funding and customers, much like the early days of the internet when adding “.com” to your company name was enough to secure a hefty investment.

Consider the recent surge of AI in healthcare diagnostics. While legitimate, groundbreaking tools are being developed, dozens of startups have slapped AI on their marketing materials without substantial evidence of efficacy.

This kind of behavior muddies the water, making it hard for both consumers and serious developers to discern what’s truly innovative and what’s just fluff.

One typical characteristic of hype bubbles is the rapid proliferation of startups and specialized conferences that tout revolutionary technologies.

During the dot-com boom, numerous tech conferences featured startups promising to revolutionize commerce — many failed to deliver beyond their initial presentations.

Similarly, real estate seminars proliferated in the housing bubble, promising foolproof investment strategies that led many to financial ruin when the market collapsed.

More recently, AI and crypto conferences have echoed this pattern, often emphasizing speculative potential over practical results.

Marketing plays a crucial role in every bubble, often exaggerating the potential of new technologies. During the dot-com bubble, countless companies added “e-” or “.com” to their names and saw their stock prices soar despite lacking viable business models.

In the crypto bubble, terms like “blockchain” were thrown around similarly, inflating company valuations without substantial underlying innovation.

The AI bubble has not been immune to this, with products loosely labeled as “AI-powered” for marginal enhancements.

Venture capital can often accelerate and exacerbate the conditions of a bubble.

During the dot-com era, investors poured money into any startup with a web presence, similar to how real estate investments surged during the housing bubble with little regard for long-term sustainability.

The AI and crypto industries have seen a similar trend, with investors sometimes backing projects more out of fear of missing out than sound financial rationale.

As we navigate this latest wave of technological enthusiasm, remember: that history doesn’t repeat itself, but it often rhymes.

By understanding the patterns of past bubbles, we can better manage our expectations and contributions to the current AI craze.

This won’t prevent the bubble from bursting, but it will help us extract its genuine value, ensuring we’re not just left with broken dreams and useless digital tokens.