Ethereum Co-Founder Claims Cryptocurrency ICOs Are Ticking Time Bombs
Getting rich has never been easy, and depending on how you go about it, there can be certain risks involved. That was certainly true of the gold rush that sent miners packing for California, and it is true today as digital miners go in search of fortune by digging up cryptocurrencies. Even the co-founder of Ethereum, one of the hottest digital currencies in existence right now, warns that things are coming to a head.
"People say ICOs are great for Ethereum because, look at the price, but it's a ticking time bomb," Charles Hoskinson, one of the people responsible for developing Ethereum, told Bloomberg. "There's an over-tokenization of things as companies are issuing tokens when the same tasks can be achieved with existing blockchains. People are blinded by fast and easy money."
Indeed that is a big draw of cryptocurrency mining. People who sat on the sidelines while Bitcoin exploded in value over the past several years see newer digital currencies such as Ethereum making a run. In fact, Ethereum made headlines for hitting an all-time high of $300 last month, then not long after it ballooned to $400—at the beginning of the year it was trading at around $8. But like all cryptocurrencies, Ethereum is volatile and it is currently trading above $224.
Cryptocurrencies have also attracted startups that attempt to raise money through ICOs (initial coin offering), which is unregulated. In doing so, they typically sidestep safeguards that are otherwise required in traditional securities sales, such as vetting investors for accreditation and verifying the source of funds.
Hoskinson is not alone in his concern. Brad Garlinghouse, CEO of Ripple, a money-transfer company based on blockchain technology, ways that teams listing companies offshore and selling their coins to investors outside the U.S. are wrong in thinking that investor protection laws do not exist overseas. He also believes the U.S. Securities and Exchange Commission (SEC) will eventually view cryptocurrencies as securities and start regulating them.
"ICOs operating in the wild west of finance isn't sustainable," Garlinghouse added. "If it talks like a duck and walks like a duck, the SEC will say it's a duck."
And then of course there is the hacking scene. Hackers have made off with tens of millions of dollars worth of Ethereum in two separate heists this week, and that sort of thing is not as uncommon as one might thing. Combined with the volatility and potentially looming regulation, it is easy to see why some insiders might be sour on cryptocurrencies.
"People say ICOs are great for Ethereum because, look at the price, but it's a ticking time bomb," Charles Hoskinson, one of the people responsible for developing Ethereum, told Bloomberg. "There's an over-tokenization of things as companies are issuing tokens when the same tasks can be achieved with existing blockchains. People are blinded by fast and easy money."
Indeed that is a big draw of cryptocurrency mining. People who sat on the sidelines while Bitcoin exploded in value over the past several years see newer digital currencies such as Ethereum making a run. In fact, Ethereum made headlines for hitting an all-time high of $300 last month, then not long after it ballooned to $400—at the beginning of the year it was trading at around $8. But like all cryptocurrencies, Ethereum is volatile and it is currently trading above $224.
Cryptocurrencies have also attracted startups that attempt to raise money through ICOs (initial coin offering), which is unregulated. In doing so, they typically sidestep safeguards that are otherwise required in traditional securities sales, such as vetting investors for accreditation and verifying the source of funds.
Hoskinson is not alone in his concern. Brad Garlinghouse, CEO of Ripple, a money-transfer company based on blockchain technology, ways that teams listing companies offshore and selling their coins to investors outside the U.S. are wrong in thinking that investor protection laws do not exist overseas. He also believes the U.S. Securities and Exchange Commission (SEC) will eventually view cryptocurrencies as securities and start regulating them.
"ICOs operating in the wild west of finance isn't sustainable," Garlinghouse added. "If it talks like a duck and walks like a duck, the SEC will say it's a duck."
And then of course there is the hacking scene. Hackers have made off with tens of millions of dollars worth of Ethereum in two separate heists this week, and that sort of thing is not as uncommon as one might thing. Combined with the volatility and potentially looming regulation, it is easy to see why some insiders might be sour on cryptocurrencies.
