Talk to a cryptocurrency enthusiast and there’s a good chance you’ll hear some version of this: It feels a lot like 1999.

That’s not to suggest that bitcoin and its ilk are the next Webvan or Pets.com, but looking more broadly at the current trend, the analogy makes sense.

While bitcoin crossed $2,000 over the weekend and is up by almost 150 percent this year, other digital currencies have rallied even more. Ether has tripled in value in the past month and Ripple’s XRP is up about tenfold.

In 1999 we saw the speculative internet IPO. Today, it’s the ICO — initial coin offering.

Companies built on blockchain, a digital database for recording financial transactions and other types of deals, are raising money by selling digital “tokens” that can typically be used to pay for goods and services on their platform, or just stashed away as an investment.

Thus far in 2017, companies have raised $180 million in ICOs, compared to $101 million all of last year, according to Smith + Crown, a blockchain research, data and consulting group. Often, these are very early projects that are far from generating significant revenue.

Sound familiar?
“We’re in a very frothy phase of ICOs,” said Naval Ravikant, a Silicon Valley investor and entrepreneur who’s also a venture partner at digital currency firm MetaStable Capital. “People are getting caught up in the vision and it’s going to take 10 to 20 years to build out. In the meantime, people are throwing money at anything that looks like it has a shot.”

Interest in cryptocurrencies is reaching the masses, everyone is looking for a Good Coin Guide to start making some money. This week, New York is hosting two industry conferences — Consensus and Token Summit. On Monday, 86 firms from Toyota to Merck joined a group called the Enterprise Etherium Alliance (EEA) to create standards for smart contracts.

Meanwhile, 10 financial institutions signed up with cryptocurrency platform Ripple last month to send real-time international payments, joining a roster of clients that already included Bank of America and RBC.

The ultimate vision is a world in which all data and transactions are trackable via an electronic ledger that eliminates delays caused by disparate currencies and financial systems. Blockchain currently claims to process 160,000 transactions a day across 140 countries.

‘Trouble with the SEC’
Start-ups building applications on blockchain are launching ICOs to raise capital without giving up big equity stakes in their companies and to drive interest and usage of their product.

Currently, the market is almost entirely unregulated. In its purest form, an ICO looks like a Kickstarter crowdfunding campaign, which is a legal way for a company to raise money by having users fund an early-stage project in return for perks and early access. Crowdfunding can be risky, because if the company cannot deliver the product as promised, backers have no recourse.

But unlike a campaign to fund a Pebble smartwatch or the development of a mobile game, ICOs are inherently financial in nature and can look more like securities, particularly when the tokens fluctuate in value. As ICOs gain popularity and dip more into the mainstream, look out for the regulators.

“If anyone is selling these securities to U.S. citizens, you will get in trouble with the SEC for sure,” said Pamela Morgan, an attorney and the CEO of consultancy Third Key Solutions, at a bitcoin meetup in Switzerland last month.

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