Investing in Cryptographic Currencies – More Risks Than Benefits! A consultant explains


In the first half of 2018, 86% of the major initial offerings (ICOs) that were listed on a Cryptomonge Exchange in 2017 are below the initial quote price and a portfolio of these ICOs – up 66% since the market peak earlier this year. In addition, 30% of them lost substantial value, according to an analysis of EY Romania.

According to a recent EY study globally, Initial Currency Offers: The Class of 2017 – a year later, which examined the progress of the ICO and its investment income, things did not look as good as the expected investor frenzy last winter , according to the aforementioned analysis.

Gabriel Sincu, Associate Member EY Romania, explains: The EY study found that the lack of a reasoned assessment and a due diligence process by potential investors led to extreme volatility in the ICO's performance, which is still a problem. The study also found that UCIs claimed that they raised more than $ 15 billion in 2018, compared with $ 4.1 billion in 2017. However, EY found that only 29% (25) ICO projects in 2017 which EY has evaluated have produced prototypes or work products – an increase of only 13% since December 2017. The remaining 71% do not have offers on the market.

Virtual currencies decrease in value

The study also looked at the 25 companies with work products. Of the 25, seven accept payment in the current currency ("fiat") as well as ICO currencies for their product offerings. As a result, customers can make direct purchases without buying the coins issued in the ICO process, thereby avoiding the community of money holders and reducing the value of ICO currencies. In at least one case, an ICO company abandoned ICO investors by not accepting their currencies (de-tokenization).

The Ethereum platform remains dominant

Ethereum is the dominant platform and has the most activity among developers and social media. Although new platforms appear regularly, there is no sign that ICO's new infrastructure projects have had any success in reducing Ethereum's dominance as the main platform in the field.

The study concludes that in view of these developments, the level of benefits does not seem to justify the risks assumed in that market, and gains can only be achieved by exceptional luck or by a visionary portfolio strategy. The process of due diligence and risk awareness is therefore more important than ever.

In Romania we can not say that things are somehow different. After the effervescence that swept investors earlier this year, the field slowly fell into a shadow cone. The authorities did not rush to regulate or ban the phenomenon, pending a decision at European Union level (decision still to be expected).

Furthermore, from the tax point of view, the issue of cryptomonas appears to be completely ignored, since the authorities are not interested in providing solutions to those involved in such operations. For now, things seem frozen. Investors who have bet on the field from the start and now have potentially significant gains do not have the courage to go to the authorities and ask for clarification. On the other hand, taxpayers can not claim taxes on such gains, provided that the cryptomones are not tangible in real money to be transferred to taxpayers' accounts (individuals or legal entities).

Those who learned the domain later are also undecided. To the extent that things do not seem transparent, the risks are very high, and the ghost of the Caritas phenomenon over the last two decades is still haunted. Therefore, we expect the blockchain technology behind this field to demonstrate its enormous potential. Only then can we say that a new era of economics is beginning to be dominated by cryptomonas.

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