Bitcoin is on the verge of mainstream adoption. Some countries have already made it legal tender. At the same time, governments and central banks are testing their own version of a digital currency and introducing legislation regarding stablecoins.
And they wouldn’t be doing this for fun now, would they, Mr Buffett?
But let’s stop bashing Buffett for now. When you see an old man shouting at the sky, the best thing to do is leave him in peace. He’ll tire himself out (eventually.)
Plus, he does have a (small) point worth addressing. Because for every Bitcoin, there are a few thousand other projects that failed or then died.
Those dead coins are the subject of this latest study from CoinKickOff.
Using data from CoinMarketCap and Coinopsy, CoinKickoff’s researchers looked at how many crypto coins have died over the last decade.
Here’s a summary of what they found out…
The crypto coin death rate by start year
The study kicks off by looking at the volume of dead coins by start year. In other words, how many coins started each year since 2013 are now lying in the crypto graveyard?
Thousands of new projects were launched during the 2017 crypto summer of love. And as the real OG ‘hodlers’ know, when it comes to the crypto space, quantity very rarely (if ever) equals quality.
And that explains why 704 of the blockchain and crypto projects from 2017 no longer exist.
Nine of those were joke/meme coins that offered zero utility. 210 turned out to be scams of frauds, while 155 were part of those dreaded Initial Coin Offerings (ICOs.) The remaining 330 simply dropped out of existence after people lost interest and stopped trading them.
Some of the biggest names on the 2017 crypto death roll include the so-called Bitcoin killer OneCoin (ONE) and GEMZ, the native token of failed social media app GetGems.
2018 was a bloodbath year for crypto
2017 was a golden year for (some) crypto enthusiasts. An epic bull run was in full swing, with bitcoin topping out at a new all-time high of just under $20,000. Those who timed the market and cashed out in time reported ‘sick gains.’
But then there’s the other side of the coin. Those who held on during the downturn or invested in the more speculative digital currencies were left counting their (huge) losses and questioning the decision to ever get involved in the crazy world of crypto.
An 80% drawdown on the Bitcoin price during 2018 filled the market with fear, uncertainty, and doubt (FUD), causing big and small investors to ditch their bags and sell their stashes while they still had some value.
By the time the sell-off panic was over, 751 crypto projects were lying bloodied and battered on the digital trading floors, with zero chance of recovery. That makes 2018 the bloodiest year in the history of crypto investing.
Verge Wraith Protocol was one of the coins that didn’t survive the 2018 bloodbath.
GET RICH coin died with it, costing investors an estimated $500million. Ouch! Then again, what do you expect when you invest in a project called GET RICH? This had ‘scam’ written all over it from day one.
A 50% mortality rate for crypto projects
The crypto market is still super young and super speculative. Bluechip projects like Bitcoin and Ethereum are very much the exception, rather than the rule.
The average lifespan of a new crypto project is less than two years. Many never make it past the 15-month mark.
Over 50% of all coins launched between 2013 and 2017 are now dead. The class of 2017 performed worst of all; nearly 8 out of 10 (76.54%) of those projects are now defunct. Many died from low trading volumes, while the rest were abandoned by their founders.
The biggest crypto killers
Abandonment and low trading volumes are the two leading causes of death for crypto projects. In other words, most of the dead coins are dead because their investors or founders lost interest, gave up, or cut their losses and walked away.
The early years of crypto investing and speculation, 2013 and 2014, saw the biggest abandonment rates. Over 60% of projects started in both years died after founders decided this crypto stuff was harder than it looked.
The abandonment rates in 2015 and 2016 were nowhere near as bad, but they still can’t be classed as ‘good years’ for crypto. In both cases, around half of the projects disappeared due to abandonment or low trading volumes.
Since then, the death rates have been slowly falling, suggesting that (thankfully) more credible and experienced founders with long-term mindsets are entering the space.
All of the serious crypto projects launched in 2022 are still alive and kicking. Has the tide started to turn for the better?
Year of the scam coin
Let’s hope so!
Scams and frauds have plagued the world of crypto since its inception. And the space still has its fair share of bad actors looking to exploit an unregulated space for financial and even political gain.
Just look at the FTX fiasco.
The actions of Sam Bankman-Fried and his gang of cronies have left a giant stain on the industry and tanked the value and reputation of credible projects offering real value and utility.
The FTX collapse is the biggest scam we’ve ever seen in the crypto space.
However, the true year of the con was back in the heady days of 2017.
According to the data collected by CoinKickoff, 17.05% of all 2017 crypto launches and ICOs turned out to be scams, frauds, or Ponzi schemes.
Only 2010 can come close to that. Around 1 in 10 coins from this year were launched with the intent to pump and then dump.
Again, recent data paints a more positive picture of the current and future state of the market and the innovation of digital value. Since 2020, less than 1% of new coins have turned out to be scam coins.
The initial coin offering craze
Initial coin offerings (ICOs) are another way crypto projects can raise capital. Via ICO trading platforms, investors receive unique cryptocurrency tokens in exchange for their monetary investment in the business. Think of it like buying stock in a company.
In 2017, it felt like every wannabe crypto-king plus their grandma was launching an ICO. And many died a quick (and expensive) death – the ICOs, not the grandmas!
By the end of the ICO craze, 12.6% of new projects were dead due to a failed launch or initial offering. ICOs were (and still are) bad news. Anybody serious about crypto should be glad to see the back of them.
How NOT to invest in coins that will die
Here are some tips on how to avoid buying coins with a short lifespan:
- Stick to established coins or protocols, like Bitcoin or Ethereum
- Only buy coins listed on credible and regulated exchanges
- Research the founders and whitepapers before purchasing anything
There’s nothing wrong with a little bit of speculation in new markets. But please, keep those speculative investments small and never (EVER) go all-in on the latest craze or meme coin. It won’t end well.
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