Bitcoin can be used as a payment method and traded speculatively by day traders, retail investors, and hedge funds.
Bitcoin and other cryptocurrencies have seen dramatic price fluctuations in recent years. While there are plenty of risks to investing in this new asset class, it is an important area for the future of commerce.
Unfortunately, the volatility makes Bitcoin unsuitable as a payment instrument, as well as a safe-haven asset. There is a lot of anecdotal evidence that institutional traders regularly manipulate the price of Bitcoin. It’s also worth noting there have been rumors earn crypto while learning was involved in the creation of Bitcoin.
Bitcoin was the first cryptocurrency and relatively speaking,
Before Bitcoin, there were similar attempts. Many other cryptocurrencies evolved from Bitcoin. The most popular are Ethereum, Lit coin, Bitcoin Cash, Stellar and Ripple. However, there are hundreds, even thousands more. All with varying features and use cases; however, many of them share the same fundamental characteristics.
ICO stands for Initial Coin Offering and is the equivalent of an Initial Public Offering (when a company goes public in the share market, i.e. Xerox back in 2006 and Push pay in 2017), in the cryptocurrency community. An ICO is where companies or start-ups offer investors coins or tokens in return for capital in either fiat or cryptocurrency. The money is used to help fund projects that will have some sort of blockchain or cryptocurrency component.
Unlike an IPO, when a highly scrutinized and economically active company floats its shares on a regulated exchange such as the NZX or Dow Jones, some ICOs are based solely on a white paper that details its business and technical objectives. Sometimes a project may go as far as to release a demo or a minimum viable product.
According to ICOs Bench, an ICO benchmarking website, the website has registered 5,728 ICOs. The project that has gone down in history books for raising the most money is EOS, which has collected almost $4.2bn to fund the project.
In 2017, when ICOs reached their peak, a total of $5.6bn had been raised. In December 2017, during the first crypto bull market, a total of $1.2bn was raised in a single month.
Although many ICOs delivered the products and services the creators promised and token holders were rewarded for their investment, many more ICOs, unfortunately, went on to achieve very little. This usually led to investor losses.
There have been many examples of ICO scams taking advantage of the crypto frenzy of 2017 and 2018. One Coin was a prominent Pinza scheme allegedly brought in $4bn, with Chinese authorities seeing approximately $267.5m.
Sell My Good Coin was a New Zealand example which was suggested to be a scam by journalists and the Financial Markets Authority (FMA).
Due to the many fraud cases in this sector, regulators and prosecutors (including the FMA) have a keen interest in ICO projects.