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When the Internet bubble burst in the early 2000s, it didn’t just wipe out capital. It wiped out ideas that never should have existed in the first place. Companies with no real users, no viable business models, and no sustainable economics disappeared. Pets.com didn’t survive. Webvan didn’t limp along for another decade pretending to matter. The market was ruthless, and in retrospect, that ruthlessness was healthy. It forced the Internet industry to self-clean.
Crypto has not had that moment.
Despite multiple crashes, bear markets, and liquidity wipeouts, the blockchain industry remains cluttered with zombie chains and garbage tokens that should have died long ago. They have no meaningful users, no defensible value proposition, and no credible path to long-term relevance. Yet they persist—still listed, still traded, still talked about—as if survival itself were proof of legitimacy.
This is not resilience. It is stagnation.
In traditional markets, failure is instructional. When a company goes under because its product doesn’t work or its business model is flawed, capital and attention are reallocated toward better ideas. Innovation accelerates. The ecosystem improves. In crypto, that reallocation rarely happens. Projects don’t fail because they are bad. They fail only when founders are criminals, and although there have been spectacular failures (SBF/FTX, Terra/Luna, Three Arrows Capital, Mt Gox), they are few and far between.
That distinction matters.
Crypto crashes almost never kill projects because of weak product-market fit, poor economics, or lack of demand. They kill projects when fraud is exposed, when insiders steal, when regulators intervene, or when outright crime becomes impossible to ignore. If a project is merely useless—but not illegal—it can linger indefinitely. Token issuance, exchange listings, and artificial activity provide just enough oxygen to keep it alive.
The result is a market filled with the undead.
Zombie chains continue to claim “ecosystems” that consist mostly of incentives chasing incentives. Garbage tokens maintain market caps that signal importance without delivering substance. Metrics are gamed, narratives recycled, and roadmaps endlessly deferred. Survival becomes decoupled from value creation.
And this has real consequences.
Every zombie project absorbs attention that could have gone to something genuinely useful. Every worthless token competes for mindshare with teams building real infrastructure, real applications, and real economic utility. Capital that should be disciplined remains trapped in sunk-cost denial. Builders are forced to differentiate not just against competitors, but against noise.
This is what “sucking the oxygen out of the room” actually looks like.
Worse, it distorts public perception. To outsiders—investors, policymakers, enterprises—crypto appears bloated, unserious, and incapable of self-regulation. The presence of so much low-quality detritus makes it harder to identify what actually works. The industry’s signal-to-noise ratio collapses.
The dot-com era eventually produced giants like Google, Amazon, and Salesforce—but only after the dead weight was cleared. Crypto wants to be the next foundational layer of the Internet, yet it resists the very process that enabled the Internet to mature.
This is a structural failure, not a cyclical one.
Until crypto develops mechanisms—market-driven or otherwise—that allow bad ideas to actually die, progress will remain slower than it should be. Crashes that merely reset prices without eliminating irrelevance are not cleansing events. These are pauses.
Real maturity requires something harder: the ability to say that some things do not work, do not matter, and should not continue to exist.
Until then, crypto will keep mistaking endurance for success—and mistaking fraud exposure for evolution.
William Mougayar's Blog
2 comments
Crypto shows a market still cluttered with zombie chains and useless tokens that misallocate capital and attention. The post draws a contrast with the dot-com era, where cleansing paved the rise of Google and Amazon, and argues for mechanisms that let bad ideas die for real progress. @wmougayar
Crypto’s Missing Dot-Com Moment The dot-com crash was brutal—but it was also clarifying. https://wamougayar.xyz/cryptos-missing-dot-com-moment