The Dot Com Boom started with a new industry, the Internet. Now some of you might think the Internet was a thing that had been there forever because most of us kids have been using it for our whole entire life! Well, the thing is that it hasn’t really been there forever. It was available to the general public in the 1980’s and was mainly used by researchers and students when in 1990’s it became widely used by businesses and the broader population. And by 1995, roughly 12% of all the world’s population had used the internet. But before the public even knew of the internet, or could even use it, the US military developed a small series of networks that allowed computers to communicate with each other in the 1960’s. It was called the Arpanet, but because it was top secret the credit for inventing the internet goes to Tim Berners-Lee who developed the world wide web.
When the internet was built, the American economy was doing very well, and more money was being left instead of being removed by taxes, so the economy boomed and the internet created lots of new investment opportunities. Because in 1997, the congress passed a taxpayer relief act, and the tax rate on capital gains was brought down. So many businesses saw the internet as a way to expand and reach a new market and they talked of making great gains. Exactly how they were to make so much money seem’s hard to calculate. But no one bothered to think about it, so then a bubble started to form. More and more people were investing and buying up dot com websites even though they had yet to prove they were worth anything, and so by 1998-2000, roughly 100 billion dollars was invested into startups.
The market had to make a correction though, and so even though some of these dot com websites were legit, there were not enough to keep the bubble going, and when in 2003 new tax law was passed to raise taxes, a huge selloff occurred. Most dot com businesses completely collapsed while some others were brought really close to bankruptcy until some companies began proving that they were worth investing in. Today companies like Google and Amazon that weathered the dot-com bubble are flying higher than ever and now web based companies control a large portion of the market today. This is mainly because they actually made money, unlike the other companies.