Blurred future for cryptocurrency?
Our expert's opinion
"During the past few months, we occasionally wrote about cryptocurrencies and the difficult situation they are in. We believed in the concept but had our concerns about the future of digital money. Nowadays, these doubts are becoming real, over 800 different brands created in the past 18 months are dead. Bitcoin's fall of 70% and governments restricting its daily use, does not help. The question marks we have are avoiding the transition of cryptocurrency to become an effective medium of exchange. Is it going for zero or will some brands take over the whole market?"
- Yoram Ceelen, Business Development Consultant
Is the cryptocurrency bubble about to burst? Over 800 brands of digital coins are now dead, as Bitcoin falls 70% from its record high
- New cyrptocurrencies are created through a process called initial coin offering
- The process raised £2.9 billion in 2017 and is already up to £9 billion in 2018
- The website Dead Coins tracks hundreds of new and emerging cryptocurrencies
- It lists 832 coins as 'Deceased', 'Hack', 'Scam' or 'Parody' making them worthless
- Some experts have compared it to the dotcom bubble at the turn of the 2000s
More than 800 different brands of cryptocurrency created over the past 18 months are now dead, in what some are seeing as signs of the bubble starting to burst. Even Bitcoin – the standard bearer for digital money – has seen a 70 per cent fall from its record high of almost £15,000 ($20,000) in December 2017.
Economists and other experts have long warned about the temporary fortunes of the sector, which some have compared to the dotcom bubble at the turn of the 2000s.
New cyrptocurrencies are created with a process known as token offerings, also known as an initial coin offering (ICO). This sees startup companies issue a new digital coin. The process exploded in 2017, raising £2.9 billion ($3.8 billion). This number has risen to £9 billion ($11.9 billion) so far in 2018, according to sites that track the cyrptocurrency market.
However, hundreds of these products are now worthless, according to a report in CNBC, either because the ICOs were scams, hoaxes or the digital currency itself has failed to attract investors.
The website Dead Coins tracks hundreds of emerging cryptocurrencies and categorises them as either 'Deceased', 'Hack', 'Scam' or 'Parody'. At the time of writing, it lists 832 coins under these various categories, with more added all the time.
Warren Buffett, one of the most influential and successful businessmen of his generation, has continuously talked about an imminent cryptocurrency bubble burst.
Back in May, Buffett revealed to CNBS that bitcoin was 'probably rat poison squared.' The main issue Buffett has with Bitcoin is the fact that it has no intrinsic value. 'If you buy something like bitcoin or some cryptocurrency, you don't have anything that is producing anything,' Buffett said in an interview with Yahoo Finance. 'You're just hoping the next guy pays more. And you only feel you'll find the next guy to pay more if he thinks he's going to find someone that's going to pay more. 'You aren't investing when you do that, you're speculating.'
The fortunes of Bitcoin seem to reflect a growing realisation on the part of investors, after the blockchain-based technology suffered a number of falls in valuation.
In late June, the price of Bitcoin fell below the £4,600 ($6,000) mark – the first time since early November last year.
Investors, many who may have invested in or around the peak of more than £14,000 ($19,000) in mid-December 2017, were facing huge losses on their cryptocurrency gamble.
However, not everyone is convinced this is the end for cryptocurrency. Speaking to CNBC's Fast Money, Arthur Hayes, CEO of cryptocurrency exchange BitMEX, claimed that Bitcoin could climb to £38,000 ($50,000) by the end of the year.
Source: Daily Mail
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