As of writing this article, Ethereum is striding ahead of the competition when it comes to gains this week, while also hitting all time highs. However, there’s one big rug pull that you need to keep in mind while trading this coin.
What is the Ethereum Magic Carpet?
The Magic Carpet is our office phrasewe coined for when we are talking about Ethereum’s ERC20 smart contracts. So basically, when we mention Ethereum’s Magic Carpet in the future, we are actually talking about Ethereum’s ERC20 – this is what the vast majority of ICOs are using.
What the hell is an ICO?
ICO stands for ‘Initial Coin Offering’ – it’s a way for companies to raise funds for, well, pretty much whatever they want. And, as mentioned previously, we suspect there’s some ICOs out there that are not worth the space that their websites are taking up on the web (Rothscoin.io – read what we had to say about it here).
Ethereum’s Magic Carpet + ICOs = Dream Hype Machine
With the likes of the aforementioned coin and other, more lighthearted, but just as insane ICOs (CryptoKitties), I suspect we are reaching peak hype before the bust. But, you cannot blame those that have genuine, good reasons to have an ICO, but those ones are hard to come by in a sea of prolific moneymakers – verging on scammers, perhaps? Can you blame them? ICOs are a non-regulated area of financial gains, so while the going is good with this latest snake oil, you will always find willing scammers and just as willing speculators.
The Boom is here – make way for bust
We’re not on about crypto bubble bursting, but it could well be the first domino to fall that will see a collapse, in part, of many coins & blockchains.
Yes, that’s right, people keep coining the phrase of “This is the tulip market all over again” or the “internet bubble from the 90s”… indeed, I believe it could be just that, but how it comes about, there are many ideas, but our bet is on regulation – specifically of that around ICOs.
Something is going to happen that will trigger an overhaul of why regulation didn’t come sooner and while it will affect all coins, ICOs based on Ethereum, I believe will be hit hardest.
But how does this collapse Ethereum?
Well, if you hadn’t guessed where this article was going already, this is where we talk about our Ethereum party spoiler. We strongly believe that Ethereum’s ERC20 Smart Contracts are genius – it allowed Ethereum to create an ecosystem that has grown wildy, in to an uncontrolled, unregulated beast with all these thousands of ICOs avalable to buy in to, via ERC20 (full list here – https://eidoo.io/erc20-tokens-list/). Remember, while these ICOs have their own token – it’s backed by Eth, i.e., a purchase of an ICOs token (whatever they decide to call it), is in fact, a buy in to Eth, as that’s how the ERC20 token offerings are backed.
It is with no doubt in our minds that the continuous increase in Ethereum’s price, while others are hitting walls right now, is because of this vast ecosystem of ICOs that people are buying in to. It’s like, instead of Ethereum having 1 hand to pull people in to their coin, like the other top coin, they’ve got thousands of hands all across the cryptocurrency ecosystem, thus, multiple chances to have their coin purchased.
The collapse of ill-founded ICOs on mass, either by the general public becoming more aware that speculation on so many of these tokens is pure insanity, and they provide no value above and beyond the excitement of speculation, or, via strong regulation that will collapse many ICOs that are providing no value.
Be warned; If the Ethereum Alliance do not sort out their ecosystem of ICOs or come up with a fresh approach, sharpish, we could be seeing the bubble burst for Ethereum in 2018 once their magic carpet is pulled away from them and their investors.
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