Yesterday I wrote that there were 1319 cryptocurrencies listed with a market capitalization of $245 billion. Today, 24 hours later, there are 1320 with a market cap of $255 billion. It’s a fast moving world out there, and anyone who makes the right investment now could end up very rich in a few years. On the other hand, it’s quite likely that you could lose your investment completely.
What you get when you invest in a cryptocurrency depends on what the issuing company is offering. In the simplest case you are just purchasing cryptocoins, which is another name for a digital asset that can’t be copied and whose ownership is verifiable via an entry in a blockchain. In other cases what you are purchasing amounts to shares in a startup company, in the expectation that those shares will increase in value as the company grows. In the latter case, regulators have warned that any initial coin offering (ICO) found to be doing this will be considered to be selling securities, with all the attendant rules and disclosure requirements. Some cryptocurrency companies could find themselves in trouble as a result.
Still other cryptocurrencies are sold as an adjunct to a product or service being sold by the company. One example of this is Filecoin, whose primary purpose is to provide low cost storage for digital documents by allowing storage owners to rent out unused storage capacity on their hard drives. Anyone who signs up gets Filecoins in payment, which can then be exchanged for real or crypto-currencies.
Scott Adams, the creator of Dilbert, is a co-founder of a blockchain called WhenHub. Having looked at various websites having to do with WhenHub I’m still not quite sure what product or service it’s offering. It offers something called timeline marketing which “is a form of content marketing that uses time to organize and present interactive content to audiences”, and if you know what that means, please let me know. However, it does offer tokens for sale with which you can buy contracts with WhenHub to do something or other, so I guess these count as a cryptocurrency.
Of course there is always the possibility of fraud when purchasing any blockchain-enabled product. According to Chainalysis, the Bitcoin anti money-laundering software provider, nearly ten percent of the $1.6 billion raised by ICO’s this year ended up in the hands of cybercriminals. This may not be as bad as you think. Considering the extent to which the cybercrime world has latched on to anything remotely capable of making money in the cyber-world, the fact that cybercrime has been limited to a mere ten percent may be a sign that the good guys are winning. We can but hope.