Wall Street has more gamblers than Las Vegas and speculative investments in cryptocurrencies exploit the same “fear of missing out” (FOMO) used by get rich quick scammers since the beginning of time.
In fact, the Wall Street Journal recently quoted a former SEC commissioner who sits on the board of a blockchain company describing initial coin officers (ICOs) and the frenzy surrounding cryptocurrency investments as “the freaking Wild West – it is ‘Wolf of Wall Street’ on steroids.” In this article I am going to attempt to provide some information and background around cryptocurrencies and ICOs that could be relevant for accounting professionals to know.
The late, great, P.T. Barnum is rumored to have once said, “There’s a sucker born every minute,” and the birth rate of ill-informed babies must clearly be on an upswing because the same bad decision making which gave us no-documentation mortgage loans in 2007, pet supply startups with $300 million in venture capital in 2001, 20th century llama farms, and 17th century Dutch tulip bulb futures has led to cryptocurrencies and ICOs in 2018.
For the record, cryptocurrencies are a new kind of digital money which is not backed by a central banking authority and initial coin offerings (ICOs) are the unregulated sales where investors exchange real money for units of digital money.
The market capitalization of the top 100 cryptocurrencies as I write this in early March 2018 is $382 billion and is fluctuating wildly from day to day. The top 100 currencies as I write this include Bitcoin, with a market capitalization of $167.4 billion; Ethereum ($72.5 billion market cap); as well as some other “currencies” which strain the already thin credibility of the industry, including the following:
About Brian Tankersley, CPA, CITP
Brian Tankersley CPA CITP is a technology consultant, educator, writer and serves as Director of Strategic Relationships for K2 Enterprises, where he works with vendors serving the industry to understand their existing and new offerings.