For several years, the cost of Bitcoin has been growing in accordance with Moore's law: its price roughly doubles every eight months. Under the conditions of a guaranteed shortage of supply, growth may continue for some time. Against this background, another interesting phenomenon appeared - the initial placement of cryptocurrencies or tokens (ICO, initial offering), which became a real mania on the financial markets, writes
The Wall Street Journal (translation of the Vedomosti newspaper). It can be compared with the dot-com boom, when Internet company stocks also grew by leaps and bounds. Many got rich on this, but most just lost their money when the bubble burst.
Now the statistics is really amazing: according to CoinDesk, about $ 1.5 billion were attracted through ICO this year, and according to Smith & Crown, when the cost of tokens increased, they showed an average increase of 28 times
. For example, Voise music platform tokens went up 453 times from June to August 2017, and Etheroll coins rose from $ 0.06 to $ 165, and then fell to $ 4.15.
ICO is something between an initial public offering (IPO) and crowdfunding. The golden cryptolife has spread to Russia: spontaneous meetings of investors and startups are taking place all over the country, who dream of getting on the ICO quickly and collecting a lot of money for their project. Something similar was on the WebMoney exchange, where companies offered "virtual shares" of their start-ups and even paid dividends on them. The cost of some "shares" soared several times, but often the investment stories ended very sadly.
Among ICO, the share of unsuccessful startups is about 40%. According to Smith & Crown statistics, more than 100 placements were made in 2017, while in 10% of cases the cost of tokens decreased, and for 30% there was no trade in tokens. One of the unsuccessful placements is the Estonian cryptocurrency Internet bank Polybius, which attracted $ 32 million, but its coins fell by 24%. However, for the entrepreneurs themselves, this is not a very critical factor, because they have already raised the money - it's done. Price fluctuations in the short term, they are not too worried.
In addition, most ICOs remain successful, and the cost of tokens increases many times due to the large amount of money in the market. Many people joined the “golden cryptoluch”, and thanks to this almost any tokens practically guaranteed growth after being placed. This is a unique situation when large masses of the population are “stupefied” with the possibility of rapid enrichment. And when such mania encompasses large masses, then the ideas really come to life. Ideas become material, in full accordance with the theses of the classics. Naturally, businessmen cannot miss such a unique opportunity - and they strive to attract investments more quickly, until the general “insanity” is over.
The Wall Street Journal writes that investment in ICO attracts the attention of both professional investors and ordinary citizens. The newspaper cites the example of Chicago-based entrepreneur Mike Bardy, who began investing in cryptocurrency in the summer of 2016, and has now turned his $ 80,000 into several million dollars.
In fact, there are dozens of such stories. On US federal TV channels, there have been repeated reports about a “digital miracle” called Bitcoin, thanks to which ordinary American hard workers have several times increased their savings. For example, recently on the channel NBC talked
about a 39-year-old worker from a metallurgical plant, who invested $ 1600 in Bitcoins, and now they cost $ 20,000. Now he talks about the unique investment in cryptocurrency by other workers in the plant. He says: "This is how to buy Apple shares at 10 cents." In the same report, the school bus driver was shown, who also got rich by investing a couple of thousand dollars in cryptocurrency, and now his entire family, including his grandmother, is also investing in Bitcoin.
In a report, CNBC
talked about the increased popularity of retirement accounts linked to bitcoins (for example, Bitcoin IRA offers such): their incomes have already exceeded a million dollars a day. With all this money, bitcoins are purchased to save for retirement.
In Russia, mania has not yet reached such proportions as in the United States. At least, workers from factories and retirees do not want to buy bitcoins immediately for their entire salary and retirement. That's when we see this - probably, we can say that the price of Bitcoin has reached its peak and the bubble has inflated to its maximum size.
Sensible people may assume that growth will not last forever, and the “bubble” may burst just as it did in 1999 with shares of Internet companies, many of which turned into rubbish. By the way, the Central Bank of the Russian Federation warns about this, as it yesterday published a statement on cryptocurrencies
on the official website.
The bank warns of the danger of investing in cryptocurrencies and reminds that “most operations with cryptocurrencies are carried out outside the legal regulation of both the Russian Federation and most other states”.
Most importantly, the Bank of Russia officially announced that it is not going to allow legal trading in cryptocurrencies and derivative instruments (tokens) in Russia.
On the use of private "virtual currency" (cryptocurrency)
On the use of private "virtual currency" (cryptocurrency)
The Bank of Russia confirms the position expressed in January 2014 regarding various private “virtual currencies” (cryptocurrency).
The Bank of Russia notes that recently the number of requests from participants in the financial market and the media has increased dramatically over cryptocurrencies, which have become widespread in the world.
Together with interested federal government bodies, the Bank of Russia monitors the cryptocurrency market and develops approaches to defining and regulating cryptocurrencies in the Russian Federation.
Most operations with cryptocurrencies are performed outside the legal regulation of both the Russian Federation and most other states. Cryptocurrencies are not guaranteed and are not provided by the Bank of Russia.
Cryptocurrencies are issued by an unlimited number of anonymous subjects. Due to the anonymous nature of the activity of issuing cryptocurrency citizens and legal entities may be involved in illegal activities, including the legalization (laundering) of criminally obtained income and the financing of terrorism.
Operations with cryptocurrencies carry high risks both when conducting exchange operations, including due to sharp fluctuations in the exchange rate, and in the case of raising funds through ICO (Initial Coin Offering is a form of attracting citizens' investments in the form of issuing and selling investors new cryptocurrencies / tokens). There are also technological risks in the release and circulation of cryptocurrencies and the risks of fixing rights to “virtual currencies”. This can lead to financial losses for citizens and to the impossibility of protecting the rights of consumers of financial services in the event of their violation.
Considering the high risks of cryptocurrency circulation and use, the Bank of Russia considers it premature to allow cryptocurrencies, as well as any financial instruments nominated or associated with cryptocurrencies, to circulate and use in organized trading and clearing infrastructure in the Russian Federation to handle cryptocurrency transactions and derivative financial instruments on them.
In this regard, the Bank of Russia draws the attention of citizens and all participants in the financial market to increased risks when using and investing in cryptocurrency.
Earlier, the head of the State Duma Committee on Financial Market and the Association "Russia", Anatoly Aksakov, said that the State Duma could adopt a law on the regulation of cryptocurrency in the fall. In the near future this topic will be discussed by a special working group of the State Duma.