The cryptocurrency market is in the midst of a broad sell-off, with bitcoin and ether — the top two tokens by market cap — falling below $26,000 and $2,000, respectively, early Thursday morning.
Billionaire Mark Cuban sees the slide, which is happening at the same time as stock markets are being pummeled by inflation fears, as echoing the early 2000s dotcom bubble.
In the late 1990s, speculative investing led internet-based companies' valuations to soar wildly, which sent the Nasdaq Composite stock market index up 400% in a five-year span before a steep crash in 2001 and 2002.
Now, "crypto is going through the lull that the internet went through," Cuban tweeted on Monday.
The Dallas Mavericks owner and investor on ABC's "Shark Tank" said that "after the initial surge of exciting apps" and NFTs, or nonfungible tokens, crypto is entering an "imitation phase" where too many companies are failing to bring new utility to the market.
But the blockchains that do emerge from the lull will be the ones that use "smart contracts to improve business productivity and profitability," Cuban predicts, rather than the ones that aren't doing anything original. Smart contracts are digital agreements that are coded and stored on the blockchain which power decentralized finance, or DeFi, applications and NFTs and are necessary in forming decentralized autonomous organizations, or DAOs.
"The chains that copy what everyone else has, will fail," Cuban tweeted. "We don't need NFTs or DeFi on every chain."
As for if more lulls are down the road for crypto, Cuban isn't sure. "I have no idea," he told CNBC Make It.
It's not the first time Cuban has compared crypto to the development of the web. Early last year, he said the development of blockchain technology reminded him of "the early days of the internet" and that current blockchain companies are similar to internet pioneers like Broadcast.com — the company whose sale to Yahoo in 1999 made him a billionaire.
"[It took time] before bandwidth became available and cheap enough so that streaming and cord-cutting could really happen," he said in 2021. "That was 20 years into the internet, give or take, and we're only 10, 12 years into crypto."
Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."