Crypto bulls predict ‘shake out’ of ICO market

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Lamborghini Huracan Performante car is seen during the 87th International Motor Show at Palexpo in Geneva, Switzerland, March 6, 2017.
Lamborghini
Huracan Performante car is seen during the 87th International
Motor Show at Palexpo in Geneva, Switzerland, March 6,
2017.


REUTERS/Arnd
Wiegmann




  • Startups raised over $5 billion issuing their own
    digital currencies last year and there are now over 1,400 in
    circulation.
  • “In 2018 what’s going to happen is some consolidation
    of the market,” cofounder of cryptocurrency IOTA tells
    BI.
  • “I think there will be a shake-out of these ICOs,”
    private equity veteran and cryptocurrency enthusiast Doug
    Barrowman says.

LONDON — Cryptocurrency market participants are predicting a fall
in the number of digital currencies in circulation this year as
the projects behind them fail to gain traction or consolidate.

2017 saw a boom in so-called “initial coin offerings” (ICOs),
where startups issue their own digital currencies — structured
like bitcoin — in exchange for real money to build their
businesses.
Startups raised over $5 billion through ICOs last year
and
there are now over 1,400 cryptocurrencies in circulation. These
coins can be traded on online exchanges, unlike equity in early
stage, private businesses.

Regulators around the world have
warned that these investments are highly speculative
and

investors risk losing all their money.
China and South
Korea have banned ICOs
, while
executives from the World Bank
and
the ECB have compared the crypto market to Ponzi schemes.

Surprisingly, even cryptocurrency market participants are
skeptical of many of recent ICOs.

“The market environment that we’re in right now is just everyone
wants to get a Lamborghini,” Dominik Schiener told Business
Insider. “They’re primarily focused on making money real quick.”


Dominik Schiener, Co Founder of IOTA
Dominik Schiener,
cofounder of IOTA.

IOTA
Foundation


Schiener is the cofounder of IOTA, a cryptocurrency aimed at
being the currency of the internet of things. IOTA created a
cryptocurrency back in 2015 — practically ancient history in the
cryptocurrency world. MIOTA, the currency, is now the 11th
biggest cryptocurrency by value.

“In my opinion, in 2018 what’s going to happen is some
consolidation of the market,” he said. “Projects that don’t
really add any concrete value or have a unique selling point will
definitely fall out.”

Bitconnect, the company behind a controversial cryptocurrency
lending and exchange platform, closed
its doors last month after an ICO in 2016.
It could be
perhaps the first example of what is to come for the market.

Doug Barrowman, a private equity veteran who got involved in the
cryptocurrency world two years ago, told BI: “I think there will
be a shake-out of these ICOs, of the 1,400 or so that have been
done.”

He believes the market has been over inflated by unskeptical
investors simply hoping to make short-term gains speculating on
coins, rather than backing long-term projects.

“No one is actually looking and saying, is the ICO any good?
Speculators are just trading altcoins,” Barrowman,
who is conducting his own ICO
, said.

“A lot of global crypto investors, they don’t even care what the
ICO is. The white paper comes out, it’s been thought about for
five minutes, and then everyone plays the same game — they pump
it high, they dump it, they buy back when its dumped, then they
pump it again on some more news.”

Business Insider highlighted the
prevalence of “pump and dump” scams in cryptocurrency secondary
markets
last year.

Scheiner said: “Market manipulation has really hurt IOTA since
the beginning. All you have to do is spread a lie and have your
Twitter and Reddit trolls and bots go lie. Then it quickly
changes the public perception and then the market just crashes.
Then you issue a correction and say hey that’s not true. That’s
how those people make money.”


Doug 2   photo credit
Doug
Barrowman.

Dan
Kennedy


Dom Williams, the lead developer of the DFINITY, told BI: “The
Ethereum ICO was very successful but it brought in a lot of bad
actors. I think most of them have got zero chance of delivering
what they’ve been promising.”

Williams has been working on the DFINITY network, a crypto-based
cloud 3.0, since 2014, when Ethereum held its ICO. DFINITY
recently
raised $61 million from venture capitalists
and Williams told
BI they didn’t do an ICO because they worried about “being guilty
by association.”

US regulators have
moved to shut down $600 million ICO scam last month
and
another scam
replaced its website with just the word “penis” after trying to
raise money through an ICO.
Thankfully, it only raised $11.

Charlie Lee, the founder of litecoin, told Business Insider
recently:
“I think there’s a bit too much scam in the space, in terms of
people getting in just to get rich quick.”

Schiener said: “I’ve only participated in two ICOs in my life —
Ethereum and IOTA.”

His relative conservatism matches that of the founder of Chinese
bitcoin exchange BTCC,
who told Business Insider last month he “wouldn’t touch”
ICOs.

“I don’t know if we’re going to be 250 successful ICOs out of
1,400 or what,” Barrowman said. “There’s going to be a shake-out,
there’s no doubt about it.

“Ultimately after the euphoria of this ICO boom, people are going
to say, what does that ICO actually bring to the world?”

Schiener’s prediction is even more drastic: “I personally think
only some 5 to 8 projects will be able to establish themselves
and continue to raise. Most of the projects serve no concrete
purpose in my opinion.”

Source

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