Digital currency tokens (cryptocurrency) market has undergone a severe erosion in its valuation in the last eight months as the Initial Coin Offering (ICO) market recorded a high failure rate of 46 per cent, with about 800 ICO projects turning out to be deceased or scams.
During the time of the crypto-mania in 2017, several new digital currency tokens were introduced to the crypto market by the popular means of ICOs. However, the latest report released by CNBC shows that more than 800 such digital currency tokens are now dead, comparing this scenario of the ICO market directly with the dotcom bubble of the 90s.
ICO is a method used by many businesses and startups to raise funds by selling their digital tokens to the investors. Investors buy these digital tokens at an early stage to reap maximum profits considering the future growth and potential. Although the ICO-market witnessed a slowdown raised $3.8 billion in total by the end of 2017, 2018, it has proved to be very fruitful with over $13.5 billion being raised just during the first five months of this year, according to the latest report by pricewaterhouseCoopers.
However, according to the list provided by Dead Coins, a website that keeps a track of all the failed cryptocurrency and ICO projects, more than 800 such projects are dead now. These digital tokens have turned to be absolutely worthless or now trade below 1 cent in price. Dead Coins categorizes all these digital tokens as ‘Deceased’, ‘Hack’, ‘Scam’ or ‘Parody’.
Since the beginning of this year, there have been multiple reports from different financial agencies about scams being unearthed in the ICO market. All these multiple scams have drawn the attention of regulatory bodies from around the globe that has resulted in heavy scrutiny of ICO projects. Analysts believe this to be healthy in a way and, in the long run, it will help to weed out bad players from the cryptocurrency market.
Two months back in May 2017, the U.S securities watchdog – Securities and Exchange Commission (SEC) released a fake ICO website and tokens called HoweyCoins while demonstrating and educating investors of how not to fall prey to the malicious ICO schemes.
Meanwhile, the world’s largest cryptocurrency Bitcoin has dropped by 70 per cent since hitting its all-time high of $20,000 during mid-December 2017. In the last two days, Bitcoin has shown minor signs of recovery and is currently trading for a price of $6,581, according to the data on CoinMarketCap.
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