There hasn’t been this much marketing hyperbole since the tech industry co-opted the word “cloud” to refer to huge server farms that store all our data. If we are to believe the pundits, blockchain technology is as important as the internet itself.

Blockchain started as a way to securely trade Bitcoin. At its core, blockchain is a digital record of transactions that is stored in the cloud. But blockchain functions like a shared accounting ledger written in indelible ink. Entries purportedly can never be changed without all participants in the blockchain knowing about it. When one party makes a change in a previous transaction, the change is recorded without overwriting the original. And proponents say the ledger is hackproof because it is protected by sophisticated cryptography.

Apparently, this will revolutionize everything. “You should be taking [blockchain] technology as seriously as . . . the development of the internet in the early 1990s,” says Blythe Masters, a former J.P. Morgan executive who founded a company called Digital Asset Holdings. Whether such predictions prove accurate or join the scrapheap of over-the-top forecasts that never materialized, one thing seems certain: people are going to lose money on blockchain. Possibly a lot of money.

Just as the early days of the internet produced an investment frenzy, funding hundreds of companies that had nothing more than a “dot.com” name, opportunists are now riding the wave of wild optimism about blockchain. At last count, there were over 950 new companies making outrageous claims about the tech’s potential to change the world.

Many of these startups are launching Initial Coin Offerings (ICOs), in which they sell cryptographic tokens (i.e. virtual coins) in order to raise money. An ICO is like an initial public offering (IPO), but participants receive these coins instead of traditional shares. There were more than 160 ICOs in 2017 raising more than $3 billion, according to research from Coindesk.

It’s hard to tell whether these coins represent anything but hot air. Like so many IPOs of the internet bubble 20 years ago, buying into these companies is risky. Also reminiscent of those days is the shameless way in which companies are promoting their ICOs and companies. Press release after press release talks about how blockchain will revolutionize this industry or solve that problem, yet offers scant information about how.

Here are just a few examples of startups that are helping expand the bubble:

  • Real estate: Propy claims to have enabled the first real-estate purchase on the Ethereum blockchain. Billing itself as a decentralized registry for titles, the company says that TechCrunch Founder Michael Arrington bought an apartment in Kiev, Ukraine, in September using Ethereum cryptocurrency and Propy’s tokens.
  • Journalism: Trive says it will use blockchain to fight fake news through “a social science consensus engine that researches and clarifies facts through human-swarmed crowd wisdom.” As near as I can understand, that means they are paying people to research and confirm news stories. The pay is not in traditional money, of course, but in Trive’s tokens. There’s no mention of the qualifications of these researchers or whether they are even vetted, so for all I know they may be the same people that create and spread fake news. Another company, called Civil, says it is enabling responsible journalism with an Ethereum-based marketplace of newsrooms and stations. They seem to be selling their tokens to readers who want to sponsor good journalism. Presumably the readers pay real money in exchange for these tokens, which are then used to pay the writers. (There’s no word on whether the writers can redeem the tokens for real cash, possibly creating yet another way to short-change freelancers.) Their website is sparse, but they do have a page soliciting “applications for our $1 million First Fleet fund.”
  • Medical data: In September BurstIQ launched an ICO for its business, which uses blockchain to store and manage healthcare data. The company sweetened the deal by offering early buyers of its BiQ coins a bonus, presumably in extra BiQ coins. The coins are redeemable for “for transaction credits on the platform, including a huge range of health-related products and services.” Although the ICO apparently ended on Oct. 31, 2017, I couldn’t find any information on the results, and queries to the company were not answered. I can only hope BiQ buyers are having better luck getting a reply.

All this froth has some observers worried. “The community [of cryptocurrencies] is full of trolls, hackers and scammers,” writes software engineer Haseeb Qureshi on his personal blog. He calls the rise of all these ICOs “a great Renaissance of technological speculation” and notes that “some say if you listen closely enough, you can hear a new shitcoin being born every minute.”

Although the U.S. Securities & Exchange Commission has expressed concern, it has been slow to act. Because they don’t occur on traditional exchanges, ICOs have no rules; there is nothing to restrain these company from making outlandish claims. The agency has warned companies that they may need to register as an exchange and has told investors in this note that that “Depending on the facts and circumstances of each individual ICO, the virtual coins or tokens that are offered or sold may be securities.  If they are securities, the offer and sale of these virtual coins or tokens in an ICO are subject to the federal securities laws.” In September it charged a businessman with defrauding investors in ICOs “purportedly backed by investment in real estate and diamonds.” The agency also warned investors to be wary of all those celebrity endorsements. (Actor William Shatner, heiress Paris Hilton and others have started touting ICOs.) “Any celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion.”

Meanwhile, Joseph Grundfest, a law and business professor at Stanford and a former SEC commissioner, is openly criticizing the agency. “ICOs represent . . . pervasive, open and notorious violation of federal securities laws,” he told The New York Times. “It’s more than the extent of the violation,” he said. “It’s the almost comedic quality of the violation.” Grundfest wonders why it’s taking the SEC so long to crack down on the potential fraud. “Most of the stuff we see today is total crap,” he said. “These are not hard cases. You don’t need teams of accountants poring over complex financing documents.”