The Ether Cryptocurrency & it’s Ever Worsening ICO Nightmare

Ethereum has had a largely fantastic year throughout 2017. On January 1st, the Ether cryptocurrency was trading at a respectable $8.24. Then in just five months, Ethereum experienced gains of over 2,000%, even at one point trading at over $400 per token.

Thankfully, the Ether cryptocurrency price has since stabilized at approximately $300, allaying fears of an Ether / Bitcoin bubble which could threaten to undermine the currency. As it happens, however, the blockchain applications which Ethereum touts as making it investable in the first place, might just be about to undermine the altcoin anyway.

Dramatic Ether Cryptocurrency Hacks & ICO Scams

Between January and May 2017, Ethereum cryptocurrency advocates were going full steam promoting two key benefits of Etherum. Namely that:

  • Ethereum had a more secure and scalable blockchain which many Bitcoin developers were actually leaving the Bitcoin network to help develop
  • Ethereum wasn’t an Ether /Bitcoin altcoin. Instead, third-party blockchain applications could be built on the network securely and easily and attract investment via Initial Coin Offerings (ICOs)

Fast forwarding to November 2017, however, and Ethereum has gone altogether quiet when it comes to pushing the PR bandwagon. What is more, it’s easy to see why.

At the start of November, a hack and subsequent update of the Ether cryptocurrency blockchain saw 513,774.16 of ETH ($160.8 million) immediately locked and frozen in 587 different ETH wallets. Worse, at the time of writing, those funds are still frozen. An even bigger problem for Ethereum, however, rests with increasing levels of blockchain application ICO fraud.

Understanding Why Ethereum Cryptocurrency ICO’s Simply Aren’t Working

Before going so far as to say that initial coin offerings don’t work, it’s important to understand that in the right context, they do. In fact, the Ethereum Cryptocurrency and blockchain is itself the product of past

Bitcoin investment in the project. What is more,  over 10,000 ICO token projects have been launched on Ethereum, some of which have generated over $100 million in market value.

Sadly, increasing numbers of third parties are starting to realize just how lucrative it can be to start raising funds via ICO investment, before grabbing cash and running without ever building or continuing to maintain the blockchain applications which they have promised to.

Ethereum as a way to Circumvent Regular Investment Security Checks

When taking into account recent blockchain hacks and ICO frauds, it’s hard to understand why Etherum hasn’t actually crashed already. If suddenly $160.8 million of peoples personal Bitcoin got lost due to a glitch in the Bitcoin network, you can be assured that the Bitcoin price would start to cave immediately. With Ethereum, however, things get a little trickier.

Because several independently profitable projects have already been built on the Ethereum network, investors associated with such projects are reluctant to start moving money away from the blockchain. After all, as soon as one investor does, everyone will start to.

In the meantime, however, ICO fraud is increasing unchecked on Ethereum, so much so that Jack du Rose, co-founder of Ethereum ICO project Colony, recently told Coindesk that: “Many ICOs seem like a cash grab from people who were unable to raise money from venture capitalists. In many cases, these are poorly thought out tokens predicated on centralized products.”

Ethereum Price Predictions for 2018

While the Ethereum cryptocurrency price is stable at present, it’s safe to say that 2018 won’t see anything like the 2,000% price rallies experienced by Ethereum in 2017. The currency has gone from being ultra secure and the coolest new way for startups to raise capital, to hacked, fraud burden, and embarrassed enough to keep a low profile in the space of just six months.

Of course, no one is saying that the idea behind the Ethereum network isn’t sound. In reality, however, the cryptocurrency is very much an experiment still in motion.

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  • Optimistic Reader says:

    Wasn’t the hack on Parity, not Ethereum? A hack on a lesser secure wallet is not really a reflection of Ethereum. It’s also the second one in the last 5 months, so probably shouldn’t have had funding in Parity after the first one.

    In addition, the fraudulent ICOs are not terribly different from any other scam where fake companies try to get you to invest in any other business idea designed to defraud you of your money.

    Investors should be wise enough to invest only in ICOs that have an established business model (much like they would invest in an IPO) rather than contributing to a well written white paper as a means of funding a new business idea. Hasty investors who don’t do their due diligence are scammed every day. ICOs are simply the newest mechanism of tricking them in to letting go of their money.

    This isn’t a reflection on Ethereum either.

    The blockchain technology the ETH has developed goes well beyond coin exchange and the financial market. It has an incredibly diverse future which is being used to develop secure, decentralized applications in healthcare, IT, professional services, cyber security and the list goes on. If the belief is that Ethereum is meant solely as the basis for other alt coins, then it’s very misguided.

    The new updates in 2018 to the Eth platform will continue to open the doors to more development as well as drive the use of the coin itself.

    I’m optimistic in my investment.

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