There are more than 1,000 failed cryptocurrencies and crypto-related projects, ranging from scam initial coin offerings (ICOs) to firms that overpromised a blockchain revolution. For every successful coin there are hundreds that didn’t gain traction and caused investors to waste money.
The price of major cryptocurrencies plunged on Thursday with nearly $13 billion of value being wiped out in a matter of hours. At around 10:23 a.m. HK/SIN, bitcoin had fallen nearly 5 percent to $6,303, while XRP and Ethereum both tanked over 10 percent, according to data from Coinmarketcap.com. It’s not unusual to see bitcoin lead other digital tokens lower.
In just three hours, nearly $13 billion of value had been erased from the entire cryptocurrency market. The drop comes amid fresh warnings from financial authorities about the rapid growth of digital coins and the potential threat to the economy.
“Continued rapid growth of crypto assets could create new vulnerabilities in the international financial system,” the International Monetary Fund said in a recent report.
At the same time, the year has been marked by high-profile hacks on cryptocurrency exchanges as well as a number of scams tied to people carrying out so-called initial coin offerings.
All of those factors have meant that bitcoin, XRP and ethereum have not recovered to the record highs seen toward the end of 2017 and beginning of this year. On Thursday, bitcoin was more than 68 percent off of its record high of $19,783.21, which it hit on Dec. 17 of last year.
In the past year, U.S. regulators like the Securities and Exchange Commission have (slowly) begun cracking down on suspected fraudsters in the crypto market, while their overseas counterparts in places like China have been far more aggressive. Cameron and Tyler Winklevoss, the twin brothers who once sued Facebook founder Mark Zuckerberg before investing heavily in cryptocurrency, had their bid to create the first-ever bitcoin exchange-traded fund shot down by the SEC earlier this year.
As CNBC noted, regulators reviewing the Winklevoss proposal were particularly concerned that bitcoin was susceptible to fraud and market manipulation. On Wednesday, Reuters reported that theft in the form of “hacking of exchanges and trading platforms” had risen 250 percent in the first nine months of 2018 from the prior year, with total losses estimated at $927 million.
Previously we saw a Bitcoin ‘bloodbath‘ – now we’re seeing the beginning of a cryptocurrency ‘horror show’.