Cryptocurrency ventures have been erupting all over the globe since the last 18 months, but it has been found that over 800 of them have become lifeless, totalling to a comparison between the present digital coin market and the dot-com bubble during the year 2000.
The process of creating new digital tokens is through an initial coin offering (ICO) where a start-up can issue a fresh coin which investors can purchase. The investor does not receive an equity stake in the corporation like in a business IPO, but the cryptocurrency tokens that they own after the sale can be utilized on the company’s product. The public generally buys an ICO for the reason that the new cryptos are cheap and has potential to offer big profits in the future.
There has been a dramatic increase in the number of ICOs in the last four years. Corporations as a whole raised $3.8 billion via ICOs in the year 2017 alone. In 2018 so far, this figure has already shot up to $11.9 billion, according to CoinSchedule, a website that follows the coin bazaar.
On the other hand, hundreds of these projects have already become dead at the moment because they were scams, jokes or their products never turned up. Dead Coins is a website that catalogues all the cryptocurrencies that have fallen into the category of the deceased. Until now, it has recognized over 800 digital coins that are now deemed as dead. These cryptos are of no value and/or operate at less than 1 cent ($0.01).
Bitcoin has also faced a harsh year till now, even though it is the biggest cryptocurrency by market capitalization or worth. The value of Bitcoin has plunged by approximately 70% since its record peak near $20,000 last year. The gigantic fall in Bitcoin’s worth has drawn comparisons with NASDAQ’s razor-sharp plunge in 2000 and the crash of numerous cryptos has been likened to the various companies that went down after the dotcom boom.
Because of multiple frauds in the space, ICOs have become extremely dicey investments.A few months ago, CNBC reported another massive scam of an ICO called Giza. The bogus initiative ended up slipping away with $2 million of investors’ money.
Cryptocurrencies have been facing a lot of stress but there’s still hope that regulators might look more sympathetically towards them and that could improve involvement in the marketplace. Arthur Hayes, CEO of cryptocurrency exchange BitMEX, told CNBC’s “Fast Money” that Bitcoin packs the potential of climbing to $50,000 till the new year.