ICO to Bubble: The Crazy Era of Cryptocurrency in 2017
2017 was an extremely special year in the history of cryptocurrency, marked especially by the explosive growth of ICOs (Initial Coin Offerings). ICOs are similar to traditional stock market IPOs, but they raise funds by issuing digital currency tokens. Project teams typically issue a new cryptocurrency or token for their products or services, and investors purchase these tokens as part of the future project or for some functionality within the platform.
The Crazy Craze of ICOs
Definition and Mechanism of ICOs:
An ICO is a fundraising method similar to a stock market IPO, but instead of issuing traditional company shares, it issues cryptocurrency tokens. By purchasing these tokens, investors gain rights to use the project when it goes live, equity (typically not equivalent to traditional equity), or appreciation benefits of the tokens. Most ICO projects describe their goals, technical backgrounds, team information, market positioning, etc., through a white paper.
In 2017, the heat of the cryptocurrency market surged, and investors' interest in digital currencies increased significantly. Many began to follow blindly, seeing the massive funds raised by projects through ICOs, generating a 'buying frenzy' mentality.
Frenzy and Bubble:
ICOs Became a Capital Frenzy: In 2017, ICO financing almost reached explosive growth. Many cryptocurrency projects raised millions or even hundreds of millions of dollars in a short time by simply releasing a white paper and concept. The soaring prices of Bitcoin and Ethereum led many to flood into the market to buy these tokens.
Some Highlights Behind the ICO Frenzy: One of the most famous cases is Ethereum, which successfully raised over $18 million through its ICO, laying the foundation for the rise of DeFi (Decentralized Finance) and smart contract applications. However, projects like EOS and Tezos also successfully raised billions of dollars through their ICOs, demonstrating the market's frenzy.
Due to market enthusiasm for ICOs, many projects without actual products and technological support (i.e., 'air coins') received funding, exposing the risks for investors.
Scams and Dreams of Getting Rich:
Air Coins and Scams: During the ICO craze, many scam projects emerged. Many so-called 'blockchain projects' had no technological basis and not even any product prototypes. Investors poured large amounts of money into these projects, ultimately rendering their funds worthless. In 2017, some ICO projects faced issues due to immature technology, inexperienced teams, or malicious manipulation by backers, leading to the disappearance of funds.
This also led to an extreme contrast of 'getting rich overnight' and 'losing wealth.' Some ICO projects, like Filecoin and Tron, gained extremely high returns in the market, while many other projects without substantial content turned into scams.
The Burst of the ICO Bubble and Regulatory Intervention
2018 Bubble Burst: As 2018 began, the cryptocurrency market began to see severe fluctuations, especially with significant price drops in Bitcoin and other cryptocurrencies. Most of the funds raised by ICO projects failed to fulfill promises, leading to a sharp decline in the market value of many tokens and severe losses for investors.
Government and Regulatory Intervention: After the bubble burst, regulators began to strengthen oversight of ICOs. Many countries, such as the United States, China, and South Korea, began to introduce policies to restrict or prohibit ICO activities. In particular, the U.S. Securities and Exchange Commission (SEC) cracked down on the ICO market, determining that some ICO tokens were securities and requiring project teams to register and comply, even prosecuting violators.
At the same time, our beloved Binance also emerged during this period, facing numerous challenges.
Binance is one of the largest cryptocurrency trading platforms in the world, founded in 2017 by Changpeng Zhao (CZ) and He Yi, among others. In just a few years, Binance rapidly rose to become a leader in the global cryptocurrency exchange market, thanks to its efficient trading system, broad currency support, and flexible business model. However, behind its rapid growth, Binance also faces numerous challenges, particularly concerning regulation and compliance.
1. The Rapid Rise of Binance
Advantages in the Founding Stage:
Establishment and Positioning: At its inception, Binance was launched during a booming cryptocurrency market. Binance adopted flexible business strategies, such as waiving trading fees (or charging only low fees) to attract users, and it supported almost all major cryptocurrency trading pairs, becoming one of the largest and most comprehensive trading platforms in the world.
The issuance of Binance Coin (BNB): Binance gained a huge market share by issuing its native token BNB (Binance Coin). Initially, the main use of BNB was as a trading fee discount tool on the platform, but as Binance expanded further, the applications of BNB became increasingly diverse, making it an important asset in the cryptocurrency space. The value of BNB soared from a few cents at launch to hundreds of dollars, bringing enormous returns to early holders.
Global Expansion and Diversified Services:
Diversification: In addition to exchanges, Binance has expanded various businesses globally, including Binance Chain, Binance Academy, Binance Lending Platform, and Binance Insurance. Furthermore, Binance has entered the NFT market, launching its own NFT platform to further solidify its market position.
Internationalization: Binance has been pursuing an internationalization strategy, rapidly expanding into Asian markets as well as operating in regions like Europe, America, and Latin America, supporting multiple language versions and winning users globally.
2. Regulatory Challenges Faced
Regulatory Pressure and Compliance Issues:
Bans and Scrutiny in Multiple Countries: As Binance expanded globally, it gradually attracted the attention of regulatory bodies in various countries. Particularly in the United States, the United Kingdom, Japan, Canada, and Germany, Binance faced scrutiny for failing to meet regulatory requirements.
