Reuters (Repeats to update graphic) * Bitcoin and cryptocurrency market hit record highs * Fuelled by dozens of launches of new currencies via 'ICOs' * Critics warn of bubble, advocates say bull run ahead * Cryptocurrencies graphic: http://tmsnrt.rs/2gWgyLc?eikon=true By Jemima KellyLONDON, Aug 10 (Reuters) - Bitcoin and other"cryptocurrencies" are big money, virtually as big as GoldmanSachs and Royal Bank of Scotland combined. The price of a single bitcoin hit an all-time high of above$3,500 this week, dragging up the value of hundreds of newer,smaller digital rivals in its wake. Now some investors fear agiant crypto-bubble may be about to burst. It has been a year of unprecedented growth for the largelyunregulated market, with dozens of new currencies appearingevery month in "Initial Coin Offerings" or ICOs. They haveachieved value almost instantly, drawing in those who are eagerto get in and make a quick buck. At the start of 2017, the total value - or market cap - ofall cryptocurrencies in existence was about $17.5 billion, withbitcoin making up almost 90 percent of that, according toindustry data firm CoinMarketCap. It is now around $120 billion - around the same value asGoldman and RBS together - and bitcoin makes up only 46 percent. Bitcoin Cash, a clone of bitcoin that was split off from theoriginal last week by a rival group of developers, was valued atmore than $12 billion less than 24 hours after it had startedtrading. [nL1N1KN1WQ] "It's just created new value out of nowhere," said RobMoffat, a partner at Balderton Capital, a London-based venturecapital firm who focuses on fintech. "There's no fundamentalsbehind any of this - it's all based on public perception, so youcan start to see some really strange phenomena." For an interactive Reuters graphic of the topcryptocurrencies, click on: http://tmsnrt.rs/2gWgyLc?eikon=true Cryptocurrencies - so-called because cryptography is used tokeep transactions secure - allow anonymous peer-to-peertransactions between individual users, without the need forbanks or central banks. They use blockchain technology, a sharedrecord-keeping and processing system that means digital moneycannot be copied and spent more than once. Billionaire U.S. investor Howard Marks likens the market tothe dotcom bubble of the turn of the century - whose demise hepredicted. He said in a recent investor letter that digitalcurrencies were an "unfounded fad ... based on a willingness toascribe value to something that has little or none beyond whatpeople will pay for it". But advocates of cryptocurrencies say 2017 is just thebeginning of bull run. They argue the finite nature of thesecurrency units - there will never be more than 21 millionbitcoin, for example - as well as the technological innovationthat underpins them will ensure their enduring value. "The idea of this thing being a bubble is silly. We're inthe bottom of the first innings," said Miguel Vias of Ripple,the third-biggest cryptocurrency, who was previously global headof precious metals and metal options at CME Group. DASH TO ETHER Whichever way cryptocurrencies move, they are likely to movetogether because their values are highly correlated, feeding offeach other and magnifying the market effect. That's partly down to investor sentiment, but also becausethe start-ups issuing new coins in ICOs generally collect moneyin a more liquid cryptocurrency, such as bitcoin or, morecommonly, Ethereum's ether - the second-biggest cryptocurrencyin total value. That has driven demand for ether, which has climbed over3,000 percent so far this year and now has a market cap ofaround $28 billion. Bitcoin, which was launched in 2009, was the firstsuccessful cryptocurrency and is still easily the biggest, witha market cap of over $54 billion. Its price has shot up around 225 percent so this year, andperformed better than any conventional, central-bank issuedcurrency in every year since 2010 bar 2014. The blockchain-based currencies that have been built sincebitcoin - 842, at last count - vary hugely in terms of theircredibility. Sceptics say bitcoin and its rivals are not particularlyuseful as currencies, as they are still volatile and notaccepted by most merchants. They are mostly just used forspeculative trading purposes. There are some signs of acceptance of the biggest players bythe establishment, however; Ethereum has been piloted by theUnited Nations as a way to distribute funds to Syrian refugees.Ripple has been successfully used as a payment method betweensettlement systems in a Bank of England trial. Some other, smaller cryptocurrencies such as Dash, Moneroand Z-cash are seen as having real value by some users becausethey offer an even higher level of anonymity than the likes ofbitcoin. Whistle-blowing website Wikileaks this week said itwould accept Z-cash for online donations. [nL8N1II1MV] 'DARWINISM IN REAL-TIME' It is mainly the new "token" cryptocurrencies that areissued in ICOs with no regulatory oversight, which have explodedsince the start of the year, that are causing the most anxiety. One, the "Useless Ethereum Token", which appears to havebeen set up as a way of showing how worthless many of the ICOsreally are, is nonetheless changing hands for 3 cents a unit."No value, no security, and no product. Just me, spending yourmoney," its website states. "It's just so easy to raise money on an ICO right now, itjust feels like there's a gold rush going on there," saidMoffat. "Some of the new currencies - beyond bitcoin andEthereum - could crash to zero." By mid-July, about $1.1 billion had been raised in ICOs thisyear, roughly 10 times more than that in the whole of 2016,according to cryptocurrency research firm Smith + Crown.(Graphic: http://tmsnrt.rs/2ueAWvr) [nL1N1KG1XR] The rapid ascent of ICOs prompted the U.S. Securities andExchange Commission (SEC) to warn last month that some ICOsshould be regulated like other securities. [nL1N1KG1XR] This is new digital territory and how the rapidlyproliferating cryptocurrency market will play out is anyone'sguess. While critics say the highly correlated nature of thecurrencies means the weakness of newer entrants could bring thewhole house down; others argue market forces will ensure thebest players prevail. "Will some of these (currencies) go away? Of course," saidVias of Ripple. "We're going to see Darwinism in real-time here.Only the strong will survive." <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Graphic of top cryptocurrencies http://tmsnrt.rs/2gWgyLc?eikon=true ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Jemima Kelly; Editing by Pravin Char) ((jemima.kelly@thomsonreuters.com; +44)(0)(20 7542 7508;Reuters Messaging: jemima.kelly.thomsonreuters@reuters.net))Keywords: MARKETS CURRENCIES/CRYPTO (ANALYSIS, GRAPHIC, PIX)

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ANALYSIS-Buoyant bitcoin stirs crypto-bubble fears - Nasdaq