2017 has been the year of cryptocurrencies, and along with those new forms of virtual currency, the initial coin offerings (ICO) craze has followed. ICOs have raised tens of millions of dollars individually, and many billions of dollars collectively. The entire cryptocurrency market is valued at $140 billion (down from a high of almost $180 billion earlier in the year).

There is no doubt that the space has a huge amount of interest amongst individual investors, specialized start-ups, the business world in general, and, increasingly, traditional Wall Street firms and banks. And yet, along with the rapid increase in interest in the cryptocurrency space, there has also been a rising concern amongst analysts and investors that the whole thing is a big bubble. In a recent report, Ars Technica suggests there may actually be several benefits to a cryptocurrency bubble.

Socially Productive?

According to Peter Van Valkenburgh, an expert in the blockchain and cryptocurrency spaces who works for an advocacy group called Coin Center, there may be benefits to being in a cryptocurrency bubble. (See more: Ethereum Founder on ICOs: 'We Are in a Bubble.')

"We're probably in a bubble," Van Valkenburgh admits. And yet, "you can look at bubbles as being socially productive," he explains. Bubbles serve to "allocate capital to long-shot, paradigm-shifting innovation," rather than via incremental modifications and improvements to existing technology. Taking the dotcom bubble as an example, there were many failed companies that suffered greatly as a result of that boom and bust. Nonetheless, it also produced some of the biggest and most successful companies which are still in operation today, including several of the FANG names.

There are other potential links between the cryptocurrency space and the dotcom bubble, too. When early successful internet companies in the late 1990s experienced huge revenue growth, new startups emerged. But that ended up feeding back into the revenue growth of the initial companies rather than growing the industry in a more sustainable way. The same could possibly be said of ethereum today, as it stands as the second most popular cryptocurrency after bitcoin. Ethereum has powered the ICO craze in a similar way.

From Many Possibilities Come Few Realizations

Ethereum's ICO craze has powered the development of dozens of new startups, each releasing their own tokens and currencies via initial coin offerings. While many of these projects are likely doomed to fail eventually, it's also probable that a select few will emerge successful, even if the remainder of the industry collapses. These could be the Googles, the Amazons, and the eBays of the next generation. While a cryptocurrency bubble would cause a lot of difficulties and problems for many people, it could also contribute to a wholesale change in the way the business world works for years to come.

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