2017 has been a big year for cryptocurrency, with Bitcoin, growing over 1400%. Year-to-date, Bitcoin was selling at $963.66 a coin and at press time, it is trading at $14,627. Many other alternative coins have seen astronomical gains this year as well, some passing Bitcoin’s growth percentage. In early December, the market cap for all digital currencies passed the U.S’s largest bank, JPMorgan (NYSE:JPM).
Initial Coin Offerings (ICOs) this year also skyrocketed and raised hundreds of millions of dollars. For any crypto noob reading this, ICOs are a different form of fundraising for a startup company that offers its own cryptocurrency that is created to investors, instead of the typical shares given in exchange for funding. It’s just a different method of fundraising but this past year many individuals have taken advantage of that fact that it’s completely unregulated.
Many skeptics and big-time financial investors have slammed this investing strategy, due to it not having any regulation nor a solid business to back up the offering. “Pump and dump” and “Ponzi scheme” are among the top names that have most described ICOs this year and we’ve seen hundreds of thousands of dollars this year disappear from these ventures.
Regulators and authorities have already begun to crack down on ICOs, some even going as far as banning them from their country. The SEC just recently announced that it will begin cracking down on fraudulent ICOs. Hefty fines, litigation and jail time are in store for those that have committed fraud within the offerings. With that being said, many startups chose the ICO route because of its unregulated nature and when big-time agencies begin to step in, I believe the “fad” will become less appealing.
Further, there are currently 1079 coins out there that hold store value and with more coins added weekly, it continues to grow. It’s become much harder to compete in the space than ever before as the utility of tokens is diminishing. With all that said, the ICO fad will continue to diminish as regulations pour in within the next coming year and startups will revert back to the traditional methods of fundraising.
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