Is there still value in cryptocurrencies?

A FLURRY of initial coin offerings (ICO), beginning late last year saw billions of dollars being pumped into the purchase of digital currencies issued by startups aiming to raise funding for blockchain applications and development. However, as this bullish sentiment cools, investors are beginning to question the fundamental value of cryptocurrencies in circulation.

Broadly speaking, cryptocurrencies are either categorised as utility tokens or security tokens. Utility tokens act as "digital coupons" that a startup sells as pre-payment for a service or product.

For example, Singapore startup, Electrify, raised US$30 million earlier this year, by selling tokens that allow users to transact with energy retailers. Service tokens derive their value from an external asset and become subject to regulatory compliance hurdles, which is why most tokens in existence are utility tokens.