(Nov 13): There has been a sharp appreciation in the market price of digital currencies in the recent past. Bitcoin currently trades well above US$7,000. It was about US$600 just a year ago. Similarly, ether, which was at the US$12 level, has climbed to above US$300 in the last 12 months.
The boom in cryptocurrencies has resulted in a spate of new initial coin offerings (ICO). An ICO is made to finance a new digital currency. Individuals can invest with fiat or digital currency and, in return, they will get cryptocoins, or tokens. The motivation to invest is based on the hope that the cryptocoins will appreciate in value.
Take, for example, ether, the unit of cryptocurrency used on the Ethereum blockchain. When it was issued in 2014, it cost just 40 US cents a coin. Today, it trades at 750 times that amount. In view of the vast sums of money to be made, new digital currencies are being launched at the rate of one a day. At last count, there were 900 available on the market.