Ethereum continues to gain
After a week hovering around 250$ Ethereum shot up and smashed through the 300$ limit and continued to skyrocket all the way up to 350$. This week has been filled with announcements of new ICOs based on the Ethereum blockchain, most notably Bancor.
Speculations in the end of May predicted that Ethereum would overtake Bitcoin as the largest cryptocurrency at the end of 2018, but at this rate we might see it happen much sooner. It’s easy to ask oneself how long this bull run will continue and what is causing it. In this article, I will cover the main reasons as to why I believe Ethereum is set to overtake Bitcoin very soon.
The mainstream media coverage and Putins expressed interest in the Ethereum technology has raised awareness among investors and money has been flowing into the currency. A mainstream acceptance is crucial as it legitimizes the technology and the currency. People often defer from investing in cryptocurrencies because of potential regulation in the future. However, as of the last few months, Russia has legalized the use of cryptocurrencies and seem to have embraced it. Vitalik Buterin talked briefly with Putin, and Russia appears to be interested in using the Ethereum technology to digitialize the Ruble.
Major step for blockchain technology
This is huge not only for Ethereum, but for every other cryptocurrency as well. It is a major stepping stone for the technology when a large economy like Russia moves towards utilizing a new technology instead of banning it. The largest threat for cryptocurrencies today is potential legislation making them almost impossible to buy with FIAT (traditional currencies, such as $ or €) and thus stopping any new in-flow of cash into the economy. When russia decides to legalize and embrace blockchain technology, it will send a message to the rest of the world as well.
Another major reason for the recent upswing is the fact that since the last bull run in the end of May, a lot of new investors has been stuck waiting for verification on the large exchanges such as Coinbase and Kraken. As the exchanges verify new users, more capital is flowing into the economy and it will continue to push prices.
Right now it seems like nothing can stop Ethereum with new ICOs being announced every day as well as major exchanges opening trade between FIAT currencies and Ether, but I would like to raise some cause for concern.
Bancor ICO coming up
The amount of ICOs that are announced every week is certainly interesting, but as developers of those dapps see at what rate the previous ICOs has sold out (most notably the BAT-token sale which was over in less than a minute and generated over 30M$ worth of Ether) my impression is that they are getting greedy. I believe that the Bancor ICO is very alarming for a few reasons. Bancor aims to allow users to create “smart” tokens backed by one or more other tokens that are held in reserve. This will allow users to instantly trade them for the token held in reserve and thus raise liquidity.
My biggest concern is not their business model, but the way that they have chosen to structure their token-sale. They first intended to keep the amount of tokens they release secret until 80% has been sold. After facing criticism, they announced that they are looking to raise 1M ETH and reach a 2M ETH market cap, the equivalent of 350 million $ and 700 million $, before the code has even been verified.
My belief is that the way developing teams of different dapps has become instantly rich has incentivised a lot of people to hype and overvalue their ICO, or even create scams, in order to get rich quick. By this I am not saying every ICO is a scam and a terrible investment, but I urge you who are considering investing in an ICO to make sure you know every detail of it before you decide to invest.