Remember the dot-com bubble? It started in the late 1990s and ended – slowly and painfully – in the period between March 2000 and April 2002.
Here’s what happened; the world got excited about a product (in this case a generalised understanding of the Internet) and many people invested heavily, creating profits and large companies overnight. Businesses that didn’t produce any tangible or intangible product or service, were listing on what should have been a highly regulated stock exchange, and benefiting from the perception of profits. Founders and senior executives in these companies would spend lavishly, creating networks of offices around the world which would never fail because of their obvious substance.
These businesses were hyped up by the media, and everyone wanted to get on the bandwagon. People invested everything in companies that literally never produced a single item that could be sold.
In retrospect, it was idiocy.
In October 2001, the Enron scandal was publicised and when everyone learnt that a large, well-respected business was using an accounting practice called, “mark to market,” to bank profits that didn’t exist yet, the world was furious.
Meanwhile, the dot-com collapse continued, even while new tech businesses came online to create a vortex of investment for another group of would-be billionaires.
The world of Initial Coin Offerings (ICO’s) has several remarkable similarities to the dot-com bubble. Firstly, the businesses that are suddenly experiencing exponential increases in their share price, or are taking on seed capital investments that value them in the millions of dollars, haven’t done anything yet. In the case of Kodak – remember Kodak? The once proud champion of traditional photography that failed to accept the digital age was upon them and experienced one of the most meaningful collapses of all time – they are now telling the market that an ICO is on its way. If you are looking for a masterclass in how to write a press release without saying anything at all, here it is, courtesy of Kodak –

Utilizing blockchain technology, the KODAKOne platform will create an encrypted, digital ledger of rights ownership for photographers to register both new and archive work that they can then license within the platform. With KODAKCoin, participating photographers are invited to take part in a new economy for photography, receive payment for licensing their work immediately upon sale, and for both professional and amateur photographers, sell their work confidently on a secure blockchain platform. KODAKOne platform provides continual web crawling in order to monitor and protect the IP of the images registered in the KODAKOne system. Where unlicensed usage of images is detected, the KODAKOne platform can efficiently manage the post-licensing process in order to reward photographers.

Kodak stock jumped 44% following this release, another disturbing flashback to the early 90s.

It remains to be seen where the ICO market will go, but we have said before that bitcoin is not underpinned by any economy or product, and therefore ebbs and flows based on perception only. Caution is advised.