People are raising hundreds of millions selling digital coins online

It's either the future of funding or a 'bubble'

Startups around the world are raising hundreds of millions of dollars by issuing new digital coins, a trend that has made people both excited and concerned.

Over half a billion dollars has been raised through so-called "Initial Coin Offerings" (ICOs) since the start of the year, according to Richard Kastelein, a partner at the Cryptoassets Design Group, a company that helps launch ICOs.

It's an incredible amount considering that ICOs were unheard of just five years ago.

The speed at which companies are raising money is turning heads too. Gnosis, a prediction market for digital currency Ethereum, raised $12 million in just 10 minutes in April. Brave, a new web browser startup set up by the founder of Mozilla, made that look pedestrian, raising $35 million in less than 30 seconds selling "Basic Attention Tokens" last month.

"The space itself started heating up in the back end of last year," says Jan Isakovic, the CEO of new ICO platform Cofound.it. "It really caught fire since April of this year. We believe this is only going wider and wider."

'If you had an analyst look at it, this is a typical kind of bubble'

Not everyone is so excited about ICOs. David Rutter, a Wall Street veteran who now runs fintech company R3CEV, told Business Insider: "I think people are way over their skis when it comes to these various digital currencies."

"There’s approximately 200 coins now. If you had an analyst look at it, this is a typical kind of bubble, in that folks that have made money in bitcoin are trying to parlay that into other kinds of cryptocurrencies and now they’re moving out of those."

What Lubin sees as thawing capital going to dorm room entrepreneurs, Rutter sees as dumb money going into flimsy startups.

"Many of them are based on powerpoint decks and not a lot more, not fundamentally sound business plans," he says. "Of course you would, if you can go and make $10 million or $15 million or $20 million on an ICO in a matter of hours, based on a really well put together powerpoint — if you think that’s good for the economy and the world and young entrepreneurs, that’s fine. I don’t."

Isakovic disputes this: "There has not been a project yet that has only had a powerpoint and raised more than, I don’t know, £1 million. All of the projects that have raised large amounts have really competent teams and products behind them."

Still, he adds: "I think we are in a period of inflated valuations, but not a bubble."

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