How much longer can the Bitcoin bubble hold?

Bitcoin - A new year brings the promise of long-awaited scientific breakthroughs. New Scientist looks ahead to 2018, the year in which crypto coins grow even bigger - or burst

Bitcoin is worth around 1900% more in 2017.

Are you tired of hearing bitcoin over and over again? Unfortunately, there will probably be little change in 2018, and you will also find it difficult to escape from initial coin offerings - or ICOs.

The American celebrities Jamie Foxx, Paris Hilton and Floyd Mayweather all presented their first initial coin offering in 2017. This wordplay is based on an initial public offering, the round-up that takes place when companies raise money from investors in exchange for shares. With ICOs companies can distribute so-called tokens for money. These tokens are crypto coins that are secured with the help of Blockchain, the technology behind bitcoin.

What does such a token yield to you? That is different. For example, Filecoin, a company that raised more than $ 250 million last year with an ICO, allows people to trade free space on their hard drives with their tokens. If you do not use a number of gigabytes on your computer, you can lend them to other people for storage in exchange for Filecoin tokens.

Risky investment

People who buy tokens during an ICO hope that its value will increase over time. Once the crypto platform is operational and successful, the demand for the tokens will rise, allowing early investors to sell them at a profit - at least which is the theory.

But if the company goes bankrupt or never gets popular, the tokens can quickly lose all their value. ICOs thus appear to be a form of crowd funding for the crypto-coin world; it is difficult to determine in advance whether you invest in a super product or in an onding.

Legislators have no idea what to do with the ICOs. In China they are already banned, elsewhere they seem to be largely ignored. In the United Kingdom, they are allowed, but the British financial regulator FCA advises that CIOs are 'speculative investments with a very high risk', and that people should not be surprised if they lose all their money.

And there is a lot to lose: in 2017 more than 3 billion dollars was raised with ICOs. So it seems clear that there is an ICO bubble, but if, and when it will burst, no one knows that.