You may have heard of it before: the notorious bursting of the Dot-com bubble. But by the time the bubble had burst, many were just beginning to feel its presence. So what was the Dot-com Bubble? The Dot-com bubble refers to a boom in internet-related stock and investments. This bubble was created in part by dot-com companies that began by selling items and services online, such as Amazon.com, eBay, and others. Now that you know what created the bubble, it is important to look at what happened. What made it burst?

The Blowing of the Bubble

The bubble grew as a result of a huge balloon in stocks and share prices. Stocks are bought with the expectation of a rise in value, hopefully significant value. So where did the dot-com companies go wrong? The theory behind the dot-com companies was that they needed to grow quickly and build their customer base as quickly as possible. And the consumer base was there. More and more people bought stock in internet and technological companies, focusing on the dot-coms.

The Bubble Bursting

In the process, the companies began spending on highly stylized office buildings, seeking to draw new and young employees. When the spending began to grossly overrun the income, many of the dot-com companies had to declare bankruptcy. Worldcom, for example fudged on its accounting with the purpose of inflating their profits. When their fraudulent accounting was exposed, the company had to file bankruptcy, and as a result, the value of their stocks crashed.

What Happened Next

The bursting of the Dot-com bubble had strong implications on the world of technology. Many of the companies involved in the Dot-com phenomena had to file bankruptcy, including NorthPoint Communications, Global Crossing, JDS Uniphase, Covad Communications and XO Communications. So what happened to the domain names used by the Dot-com companies? They were picked up by competitors who were domain name squatters. Top investment firms, such as Merrill Lynch and Citigroup, were fined for not being up front with investors on the risks involved with investing in the dot-com companies.