Crypto is booming. It's all over the news and everyone is trying to get a piece of the cake. While it might appear to be all sunshine and rainbows, the co-founder of the popular coin Ethereum says otherwise.

Hoskinson on the nature of startups

On January 8th, Charles Hoskinson joined CNBC for an interview regarding the state of cryptocurrency. One of the first things he claimed was "My personal opinion is that we're going to see a consolidation after a crash." With the rise of Bitcoin, endless startups are sprouting up in hopes of achieving the same level of success. A consolidation essentially means that the crypto market will have to fix flaws and work together to make it more stable for the future.

Hoskinson warned that many of these companies are unfortunately "certain to fail." This is due to many of these projects beginning with unrealistic goals, not enough technology, and weak fundamentals that will hurt them later. He also explained that these companies won't fail quickly because of high amounts of capital to back them up. Specifically, Charles said: "It's really hard to fail when your burn rate is $5 million or $10 million a year, and you have $1 billion of capital."

Hoskinson made these statements after coins such as Dogecoin, Dentacoin and Cardon experienced a huge spike in growth over the past few weeks. As a result, the interest from investors grew along with it and raised the crypto market capitalization upwards to $750 billion. Yes, you read that correctly. What began as a very niche investment that many didn't take seriously is becoming one of the most popular.

Hoskinson on ICO's

ICO's are beginning to happen left and right this year. ICO stands for initial coin offering which is the crypto [VIDEO]equivalent of an initial public offering. A startup offers early adopters access to their currency in exchange for money. Normally they will detail the company's goals, mission, and how the coin will benefit investors. An ICO allows startups to avoid many of the hassles you would face in a typical venture capital funding process.

Mr. Hoskinson commented in an earlier interview: “People say ICOs are great for ethereum because, look at the price, but it’s a ticking time-bomb." He believes companies are being blindsided by easy money and this may lead to issues later down the road.

Startups can learn from Hoskinson’s opinion by setting more realistic goals and aiming for success in the long haul instead of the short term. For the average consumer, perform your due diligence and educate yourself before investing your hard earned money into cryptocurrency.