The cryptocurrency segment is boiling in 2017 in which it seems that bitcoin seems to lose ground against Ethereum. The new platform that gives name to the virtual currency ether charges more and more interest, but it does it for another phenomenon called ICO.
The Initial Coin Offering (ICO) has become one of the most interesting ways to attract million-dollar investment rounds for all types of projects. The last one, created by the mobile messaging application Status, has managed to raise 270 million dollars in less than three hours.
Ethereum promises, but nobody knows how much:
This application of messaging and web browsing is in the alpha phase, which is surprising given that project financing rounds like this usually rely on more mature products or services or offer more guarantees in markets as competitive as mobile messaging.
Those responsible for Status created this ICO with a valuation based on ether: 1 ETH would be equivalent to 10,000 SNT (Status Network Token), another virtual cryptocurrency specifically created to, among other things, be able to buy stickers in the application or access a “community filtering and content discovery “.
The truth is that ether (ETH) has become the digital currency in fashion, and in fact recently The New York Times claimed that bitcoin should “move aside” to make way for ETH. Although both have grown exceptionally since the beginning of the year, the valuation of ether has grown by 4,500% since it began 2017. Amazing.
A phenomenon with too many unknowns
That of associating a different cryptocurrency for each ICO is one of the reasons why we are suddenly seeing things get complicated. The same thing happened with the Basic Attention Token (BAT) of the Brave project, which managed to raise a round of investment of 36 million dollars without having yet shown too many things in a sector as mature as that of Internet browsers.
The new ICO of Status has also raised doubts, and in the Reddit debate, for example, some believe that those 270 million dollars collected are just a clear sign of the greed of those responsible for the project. “Nobody needs those damn 250 million dollars to develop a project like Status.” In Status, the idea is to offer a kind of WeChat for the western market: a messaging service that actually allows many more things to be done.
The idea of financing these projects is interesting: access to these investment rounds is open to the general public (or that is the theory, in Brave there was controversy about it), and it is a way for people who believe in these projects to be able to bet on them and do it so that this investment can have a real economic return. It’s like a speculative patronage, so to speak.
Speculation or real opportunity for entrepreneurs and investors
In fact, speculation is another word that seems inevitably associated with all this fever that has been generated around the ICOs and Ethereum (as it previously did to bitcoin). For many, the ecosystem of Ethereum and the Smart Contracts that allows creating create a revolution in which many transactions (if not all) could be completed without any intermediary.
Of course, it is still too early to know whether or not we are facing that bubble of cryptocurrencies that some people talk about. Speculation exists, but also the possibility of a real revolution of the pillars that govern current (economic and non-economic) transactions.
There can be many great winners here, but be careful, because there can also be many big losers, and the current situation makes it impossible to know what to expect. Here we would almost pay attention to that of “Be afraid when others are greedy, and be greedy when others are afraid” that billionaire Warren Buffett pronounced, that of investing and speculating knows a little.