The Expanding Internet Markets of the Past

In the late 1990s and early 2000s, the Internet market experienced explosive growth, a phenomenon that is not mirrored by blockchain technology today. This disparity is evident when we assess market sizes, the number of consumers, and revenue generated within each sector. When people find a technology beneficial and affordable, they are likely to invest in it. Major technologies that gain widespread acceptance typically see a significant surge in market size.

As previously discussed by my co-author Jeffrey Funk and me, e-commerce, Internet hardware, software, and mobile services generated revenues of $446 billion, $315 billion, $282 billion, and $230 billion respectively by 2000 (adjusted to 2020 dollars). For instance, the global networking equipment market was valued at approximately $72 billion in 2000 (in 2022 dollars). Although the dotcom crash of 2000–2002 devastated many Internet startups, as Bustillos points out, the underlying technology was part of a broader revolution. Consumers were eager to purchase Internet technologies, software, and services to connect to digital networks. Within a few short years (Netscape Navigator launched in 1994), Internet technologies boasted market sizes exceeding $200 billion, with some approaching half a trillion dollars.

Contrastingly, while many individuals have embraced the hype surrounding blockchain, actual consumer investment remains low.

Market Reality: Blockchain Today

Despite blockchain's existence for several years, the current landscape is starkly different. Bustillos’ New York Times article lacks substantial market data, aside from mentioning that nearly $1 trillion has been invested in cryptocurrencies. However, if we exclude cryptocurrencies and speculative assets like NFTs to focus solely on blockchain technology, we observe a vastly different scenario compared to the early Internet. Various market analyses indicate that the global market size for blockchain in 2021 ranged from $4.5 to $6 billion, with one report estimating it at $4.93 billion. When compared to the early Internet figures outlined earlier, blockchain's market presence appears minimal.

While Bustillos may believe that blockchain could eventually become significant, many applications have yet to demonstrate their utility, leading to a lack of widespread adoption. The skepticism surrounding blockchain is often summarized as it being a solution in search of problems—an endeavor that has seen limited success thus far. Bustillos envisions businesses adopting blockchain as they did Internet technologies, but the reality is that such adoption has not materialized.

Bustillos argues that the $4.5-$6 billion figure is too narrow, suggesting that it only reflects a fraction of commercial blockchain activities distinct from speculative ventures. However, when pressed for specific figures on this broader commercial activity, she did not provide substantial evidence.

Lack of Evidence for Comparisons

This lack of concrete data might suggest that Bustillos' comparison between today's blockchain and the Internet of the past is more based on a feeling than on solid evidence. I find it disappointing that the New York Times published her op-ed without demanding more substantiation, which is not surprising given the publication's history of promoting technological hype, including narratives about robots, AI, and social media's influence over users. In an upcoming essay, Jeffrey Funk and I argue that if journalists and editors improved their approach to basic economic inquiries, including market size analysis, we would see a significant reduction in hype within the media.

As the current technology bubble deflates, advocates for emerging technologies will persist in claiming that their innovations are “revolutionary,” provided they receive the necessary time and resources. It’s crucial to approach these assertions with skepticism. While blockchain may one day prove significant, there is currently no compelling reason to believe it will, and it could very well remain the minor market player it is today—barely worthy of attention.

Section 2.1: Market Size and Potential

Exploring the current market size and potential growth avenues for blockchain technology.