The author of the popular analytical articles of the British newspaper the Daily Telegraph James Titcomb (James Titcomb) in a recent issue of the rooms tried to speculate about the new phenomenon of bitcoins and everything related to it is not very clear high tech product.
Model Initial Coin Offering (ICO) from the beginning of 2017 helped start-UPS raise capital of 1 billion dollars is Not the situation begins to resemble the “dot com bubble” of the 2000s, says James Titcomb.
The index of technology companies in the S&P 500, after the collapse the collapsed post-dotcom-bubble in the early 2000s, to everyone’s surprise, last week exceeded its historical maximum of March, 2000, 17 years after the crisis, the “dot-com” investors regain confidence in the prospects of the Internet technologies.
But, as the author of the article, unwittingly emerges analogy with the first crisis of the Internet companies, and here is where the situation begins to resemble a “bubble”, inflated around a single technology — the blockchain (also known as a distributed registry of TRR). Proponents of the blockchain consider it almost the most important invention since the launch of the Internet, with the greatest distribution he received as the Foundation of the cryptocurrency “bitcoin”. At the same time, the potential of the TRR cryptocurrency is not limited, because the technology actually provides revolutionary capabilities for storing and transmitting information.
If you give a brief definition of the blockchain, it is simply a high-tech online-the registry — specific event log, such as messages, transactions, etc., However, unlike conventional data in a physical location or particular server, the information in the blockchain is stored and updated by the network users. This allows for online operations ranging from financial transactions and real estate transactions, and to registration of votes in the public vote, completely independently from the Central government. The experts interviewed think that the key point, which provides, among other things, the growing popularity of this product of technologies of the XXI century is that the blockchain allows us minimize the costs. And that is very important today, can be reduced to almost zero, or at least seriously minimize the risk of fraudulent transactions because each movement in the database can be controlled and checked at any time by network users.
Supporters of the blockchain argue that technology will rid the world of transaction costs and fraud, a world where you can safely vote online, enter into and immediately sign contracts, etc. And although the General public has not yet realized the benefits of TRR, this technology, according to the experts, capable to provide almost limitless access to information and services.
It is worth remembering that the blockchain was designed as part of “bitcoin” in 2008. However, as noticed by experts, the signs associated with this new product, the financial “bubble” have begun to appear only recently, with the proliferation of startups attracting investments using cryptocurrency (Initial Coin Offering ICO).
The traditional way of raising money for young companies reaching out to venture capitalists or launch the so-called “crowd-vendingovyh” websites. At the same time in exchange for the issued capital shares purchased by interested market participants in anticipation of future increase in its value. Overall, though, this risky scheme worked for a long time and was quite effective.
Now, according to James Titcomb, clearly delineated the trend, when the blockchain startups refuse venture capital in favor of the new scheme — offers investment in the form of cryptocurrency ICO, (not to be confused with the primary public offering of shares — IPO, which has nothing to do).
In fact, ICO is a rather complex transaction where startups instead of the stock exchange of virtual currency for manufactured special cryptographic units — tokens, the value of which varies in individual companies. And unlike traditional stock tokens do not involve any of the investor’s participation in the activities of the company, including by a vote, but only promise the access to services that a startup will have in the future. That is, it is something like pre-sale casino chips, which thus attracts capital to open a business.
Process ICO is a virtual transaction does not involve investment dollars, euros or pounds — the capital involved in the form of a type of cryptocurrency bitcoin. That is, according to British experts, in fact, we are talking about the exchange of money of one surrogate to another, and looks extremely risky scheme. But it is because the volume of such transactions has reached enormous dimensions, at least on formal grounds. According to research firm Autonomous Research, from the beginning of 2017 with the ICO in the world has attracted capital in the amount of 1.3 billion dollars. It is worth remembering that in 2014 this figure was only 14 million dollars, in 2016 only 222 million dollars. Experts draw attention to the fact that half of this amount, 1.3 billion dollars were attracted for the last 30 days! Against this background, the funding blockchain startups using ICO today exceeded investment in traditional venture capital funds.
It is noteworthy that in parallel off of the quotes used in the ICO virtual currencies: bitcoin has grown from $ 800 in early 2017 to $ 2,200 in June, the second most popular cryptocurrency in the world — “live” up from 8 to 400 dollars in less than six months. This rally turned into millionaires of those who invested in cryptocurrency from the beginning, and at the same time launched a speculative cycle that fuel prices and the public’s interest. Supporters of the blockchain argue that investors are only now beginning to realize its potential, while to outside observers the situation begins to resemble the classic “bubble” too dangerous to participate in it. “Speculation and the volatility associated with the “cryptoamnesia” extremely high, therefore, many market participants began to notice the growth of fraudulent activities and signs of a “bubble”, — the report says Autonomous Research.
British experts notice that ICO is largely not subject to traditional norms of financial market regulation, in connection with such transactions, in contrast to other forms of raising capital that do not involve the legal protection of investors. Transaction ICO are in minutes and at times the participants did not really understand what they are getting in exchange for cryptocurrency. Many of those who invested are speculators, Amateurs, Amateurs, hoping to hit the jackpot in the fast-growing stock market. So, the startup block.one who carried out last week, one of the largest to date ICO is based in the Cayman Islands and promises the creation of software, conducting millions of transactions per second with zero cost.
The funniest moment Initial Coin Offering is that the participants agree that “do not have any actual or alleged rights to the project”, that is, in fact, buy the air. With all of this block.one has attracted 185 million dollars, and, for example, another ICO, online exchange Coindash turned out to be a failure, because 7.3 million dollars raised for the development of the company were stolen by hackers breaking into its web site.
The founder of the “air” Charles calls Hoskinson ICO “time bomb”, warning that attracting the capital of many tech companies do not offer in return any value. Even many supporters of cryptocurrency today recognize that the sector is overheated and draw Parallels with the “dot com bubble” of the late 1990s — early 2000s, “the bulk of the transactions is speculative,” says Miguel Diaz, Executive Director of the blockchain startup Ripple.
Unfortunately, all of the above has little effect on the enthusiasm of market participants. By 2010, 86% of tech companies placed their securities on the stock exchange in the period post-dotcom-bubble, went bankrupt, while giants such as Amazon and Netflix began to dominate in their sectors.
The authors of the article Daily Telegraph declares: “This is revolutionary technology and we are only at the beginning of a long journey”.
