Increase in ICOs have had a significant impact on the price surge of bitcoins.
With demands for the crypto currency soaring, bitcoins hit a record high on Tuesday helped by the creation of new tokens for raising funds for blockchain technology startups.
Blockchain is essentially a financial ledger maintained by a network of computers that can track the movement of any asset without requiring a central authority.
This year the price of bitcoins has surged by almost 80% to hit a record high of $1,760.40 on the BitStamp platform. As per data from coinmarketcap.com Bitcoin’s market capitalisation has now touched $52.5 billion.
Retailers, such as Overstock, have now started taking payments in bitcoins.
“We have an influx of new capital in the space and that capital goes back and forth among crypto-assets and bitcoin,” said Chris Burniske, blockchain products leader at ARK Invest in New York, which manages exchange-traded funds. “Bitcoin is still the main liquidity provider in the market and people use it to buy other crypto-assets.”
Neel Kashkari, the President of the Minneapolis Federal Reserve has however some reservations on bitcoin’s outlook. Blockchain technology has more potential in the future than the digital currency itself, said Kashkari.
“I think sentiment has shifted in the markets, in the Fed,” said Kashkari at a technology conference in Minneapolis on Tuesday.
The surge in the price of bitcoins can largely be attributed to increase in demand for digital currencies in “initial coin offerings”. During ICOs, blockchain startups sell their tokens directly to the public so as to raise capital which does not have any regulatory oversight.
Already more than 40 startups have launched ICOs this year, as per Smith + Crown data.
“For the first time in financial history, founders can access capital from both large and small investors armed with nothing more than a slick website,” said Arthur Hayes, chief executive at crypto-currency derivatives trading platform BitMEX.