【1986 Archives】

I've been there for the early ICO (initial coin offering) days for cryptocurrencies. I've seen companies raise hundreds of millions of dollars within hours986 Archives and I've seen valuations for startups that don't even have a working product climb to billions.

And now that these clay giants have begun to crumble, I look back at the beginnings of the ICO craze, and ponder when did it all go wrong.

Well, it couldn't have been more than a few months ago, because this entire bubble has been going on for about a year.

Perhaps this is the real gift the blockchain technology, which is the basis for most of these companies: Speed. The ability to raise money fast, to build a product quickly, to burn brightly and, in some cases, die fast.

Don't believe me? Ethereum, the platform on top of which most of these ICOs are based, was launched July 2015. It took two years from that to Vegas clubs adopting the technology for cheaper drinks and stripper tips.

I'm not saying the ICO bubble has burst. The initial coin offerings -- digital token-based fundraisers for (mostly) blockchain-based startups -- are still going strong, with dozens of new ones lined up every month. More than a billiion dollars have been raised so far, but that's a paltry sum compared to the trillions raised (and lost) in the dot-com craze in the early aughts. The craze will likely go on for a while, but the early signs of decline are there: ICOs for companies that don't do anything; companies that raised hundreds of millions squabbling over what to do; authorities clamping down on scams.

I've been there every step of the way, writing about this trend and even investing in some ICOs, and the thing that impressed me the most is the insane pace at which everything is happening.

During the dot-com days, in the nineties, the money had flown into crappy companies at an unprecedented rate. Think of a web-based project, build a .com website, raise money, poof: You're rich.

But there were still some regulatory hurdles to overcome. You had to talk to lawyers, banks, VC funds. Yeah, the pace was crazy -- building an online store was way faster than building a brick and mortar one. But it still took roughly seven years for the bubble to peak and burst.

Seven years is forever in ICO land. The thing that was hot yesterday is dead today and forgotten tomorrow.

Just look at Kik's Kin, one of the largest, most high-profile ICOs. A month ago, the company raised nearly $100 million in its token sale. But right around that time the tide turned and most investors decided that any ICO (unless it has vast, game-changing potential, which Kin doesn't) that tries to raise over $50 or so million is too greedy and is not worth investing in. Right now, Kik tokens are trading at less than half of their ICO price, which was unimaginable just two months ago, when nearly every high-profile new token skyrocketed in value immediately after it hit the market. (Disclosure: I participated in this ICO and I own Kin tokens).

And does anyone still remember Hubii, the token that Floyd 'Crypto' Mayweather shilled in August? Despite a $2.7 million market cap, the token is being traded in mere thousands of dollars in daily volume, and from what I can see on social channels, near-zero buzz.

This Tweet is currently unavailable. It might be loading or has been removed.

And the next big thing? It literally changes from hour to hour. A few days ago, when the price of Bitcoin surged due to the promise of free money after the two upcoming forks, people sold ICO tokens en masse, with many proclaiming the golden era of ICOs dead on Slack channels and social media. Now that Bitcoin's price is retreating, ICOs are hot again, but only those with a small market cap, a solid team, a sound whitepaper, at least two advisors, and a big amount of a largely intangible asset called hype. Don't have the hype? You're as good as dead.

I'm not sure what lies ahead for ICOs; no one is. There will probably be more regulation, and there will surely be less space for crappy startups to raise millions, both of which are good things. While it does indeed look like the golden age is behind us, perhaps there is more growth ahead -- sound growth, with better foundations.

But following this world has taught me that when the next bubble comes along, it will blow up as fast as the hype around the new episode of Stranger Things. There will be no time to read books on investing or learn candlestick charting techniques. Perhaps even Slack, Telegram, and Reddit, currently the main hype-producing social channels, will be obsolete. If you want in, you won't be able to afford to stick with what you know; you'll have to jump head first and learn as you go along.

I'm not sure whether the next bubble will have anything to do with blockchain, but this technology definitely sped up the pace at which tech revolutions can happen. Just like the dot-com boom in the nineties, when so much business moved from offline to online, the blockchain (and, largely, Ethereum) have enabled startups to arise quickly, get funded quickly, and solve important problems in the way we do business. Make no mistake: Next time around, things will happen even faster.

It's both fascinating and scary, and I can't wait for it to happen.

Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.