Ethereum – Hype Building…ICO Fiat Liquidation Crash?

By | 26th June 2017

As Ethereum builds up past the $250 point, and ICOs start to garner speed, what does the future have in hold for this rapidly appreciated cryptocurrency?

One of the biggest differentiators between Ethereum and various other cryptocurrencies is the capability for meta-coins (coins built on top of the Ethereum network or technology) and ICOs (initial coin offerings, a way for these alt-coins to raise capital).

With ICOs like Aragon ($25M), BANCOR ($153M), EOS ($160M) raising literally billions of dollars in ETH/BTC in total, there are hundreds of Blockchain products looking to rapidly expand and gain market capitalization and control of their respective niches of the cryptocurrency and blockchain space.

But how do these projects get off the ground? Simple, rapid scaling and expansion. How do they achieve this? By liquidating their crypto holdings to fiat currency and using this to accelerate development.

As much as I love cryptocurrency, it’s currently not possible or viable to pay for the vast majority of development costs using them. You can’t pay rent in Ethereum. You can’t hire lawyers with Ethereum. You can’t buy servers with Ethereum (well, generally). You can’t buy a sandwich with Ethereum.

That’s not to say that you won’t be able to one day, but for now, you can’t. These companies are sitting on huge volumes of cryptocurrency which they need to liquidate in order to provide the fiat injection required to get their projects off the ground.

In the short term, it’s highly likely that these significant sales will hamper the ETH/BTC price (mass selling tends to have psychological market effects), so why am I not panicking?

Because this is the whole point of Ethereum.

These companies need to raise capital in order to build their products, which are what will drive the price and adoption of the cryptospace in general over the next few years. We’re in for a bumpy ride, but all in all, we’re on the up and up.

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