NEW YORK: Almost a third of all cryptocurrencies that were financed through online fundraisers last year have lost “substantially all value”, while the vast majority are trading below their listing price, according to a report published on Friday by Ernst & Young.
The professional services firm analysed 141 projects that raised money in 2017 through initial coin offerings (ICOs), in which new virtual currencies are issued to buyers. It found that 86% of the coins have fallen below the initial price at which they traded on online exchanges.
Companies typically raise money through ICOs to build new technology platforms or to fund businesses that use cryptocurrencies and blockchain, the software that underpins them.
EY analysed 86 projects that raised funds in 2017 and found 71% still have no working product or offering in the market. The percentage is significantly higher than what could be expected with traditional venture-backed software startups, it said.
“This looks worse than we thought,” said Paul Brody, global innovation leader for blockchain technology at EY.
The EY report comes following a cryptocurrency investing frenzy, during which startups raised hundreds of millions of dollars online, with often little more than a business idea and a handful of employees. The 2017 ICO boom paralleled a spike in the price of bitcoin, which peaked last December at almost $20,000.
Source/More: Crypto failures ‘worse than we thought’ | Bangkok Post: business