The loss of investor interest seems to be the leading cause of death. Cryptocurrency projects called scams comprise the second most affected group.
Halloween is approaching, so it seems appropriate to observe the cryptocurrency graveyard. Even in such a young industry, many projects have already faced death, and websites like Coinopsy and DeadCoins are providing autopsy reports from collective sources.
Recently, data from Coinopsy were studied to learn more about those projects that fail, which led to some interesting patterns.
Coinopsy has over 700 entries extending until eight years ago, which is why this platform is considered one of the best available windows to the cryptocurrency graveyard. However, Coinopsy data are incomplete and come from collective sources, so the information may show inaccuracies.
The website also does not provide its information in downloadable formats or in graphics formats. Consequently, conducting this analysis required that the information be collected manually.
Why Cryptocurrency Projects Die
The data presented in Coinopsy include various causes of cryptocurrency death. The most common was death by abandonment, that is, investors simply stopped trading the token, so the trading volume decreased to zero or close to zero. According to the study, 63.1% of cryptocurrency projects died from this cause.
The next largest group of dead projects was that of the alleged scams, which are among 29.9% of the projects presented in Coinopsy. Most of these alleged scams appeared in 2017, probably inspired by the bullish market. In contrast to previous years, it was observed that the number of scams increased over five times.
Surprisingly, the data also include the names of the founders of some projects, among who are a user called Crunck and someone called Daniel Mendoza. Both names appear related to three different dead projects that were allegedly scams. However, it should be remembered that this information is purged at the suggestions of collective sources and may not be accurate.
Other reasons why cryptocurrencies die include the failure or stifling of some ICOs (3.6%) and obvious “joke” projects (3.2%) such as AnalCoin, BagCoin and BieberCoin.
Number of Existing Dead Projects
It cannot be determined how many cryptocurrency projects have died, and the answer depends to some extent on how “death” is defined. Coinopsy currently includes on its list around 705 dead cryptocurrencies, DeadCoins includes 1,779, and CoinMarketCap over 1,000 projects with a daily trading volume below USD 1,000, certainly placing them in this category.
Obviously, these three sources of information overlap, but there may be a few dead projects not included on any of these lists. Probably, some failed international projects mainly traded in a language other than English are outside these samples, since the three aforementioned websites are primarily aimed at English-speaking audiences.
Survival Length of Doomed Projects
Coinopsy information includes the “starting” and “ending” dates of almost all projects, which allows users a more complete view of how long each project has survived.
Not surprisingly, those “abandoned” projects that had started being successful but in the end lost investor interest tend to last longer, with an average lifetime of 1.7 years. Failed or stifled ICOs had a similar duration, with an average lifetime of 1.6 years. “Joke” projects had an average lifetime of 1.4 years while scam projects had the shortest average lifetime of the entire group, with only about a year.
By Willmen Blanco
