From the internet to crypto: second generations tend to improve

Before Facebook there was something called MySpace. Created in August 2003, it’s been identified by many as the start of the social media era. Offering profiles that could be personalized and a way to share photos and music, the platform took off internationally, becoming the most visited website in 2006.But MySpace’s reign was short. In 2006, Facebook, a page for socializing created by students at the University of Harvard, opened up to the public at large. By Abril 2008, it was the largest social network in the United States. MySpace tried everything to reinvent itself but ended up being sold off for $35 million in 2011. Meanwhile, Facebook has become the world’s biggest social network with 2.96 billion user accounts and an estimated value of $270 billion dollars.

Another famous case of a second generation wiping out the competition is Google. It quickly displaced Wandex and Aliweb, which few people remember today, and also other search engines such as AltaVista, which was one of the first to move to search using words.

What happened to them? They failed to evolve and were beaten by Google’s speed, the accuracy of its results and its integration with other services, among other advantages. Not even Yahoo, which bought Altavista in 2003 to integrate it into its own search engine, could beat Google.

Could Bitcoin reinvent itself?

Facebook and Google are evidence that between the first and the second generation, all good ideas get better, but they need significant changes. A similar situation can be seen today in cryptocurrencies. Bitcoin, the first generation of cryptocurrency, has faced considerable volatility for years. It was worth just a few cents when it was created in 2008, and it went on to hit a peak in October 2021, reaching 66,000 dollars. In February 2023, a Bitcoin was worth 23,000 dollars.

Facebook triumphed because it managed to conquer a business model that MySpace couldn’t sustain. In the world of Crypto, will Bitcoin be able to reinvent itself? For now it remains based on its original model, while trends are leaning towards investment in crypto assets that are more stable, transparent and which have an economic backing behind them.

The question is whether this path will lead the cryptocurrencies to enter everyday use. Changpeng Zhao, the founder of Binance, summed up his forecast in an interview with El País: “I think that by the time teenagers who are 15 today have turned 35, cryptocurrencies will be everywhere. People will be using them to buy a coffee or at the supermarket. But this is something that will happen in the medium term,” he noted. The market is still evolving, and the new cryptocurrencies have all the elements in place to displace the first generation. It may only be a question of time.