Despite the many risks and challenges, cryptocurrencies have proven their ability to disrupt traditional financial markets over the past decade.
Written by: CoinKickoff
Compiled by: Leo
The history of cryptocurrency can be traced back to the financial boom of the 1980s, when the financial culture was elevated by movies such as “Wall Street” and “The Big Chill.” In 1983, pioneering cryptographer David Chaum published research that laid the groundwork for electronic payments, blockchain, and cryptocurrency.
- The difficult moment of NFT: Multiple projects shut down, lending platforms face chain liquidation and bad debts in the overall market downturn.
- The long-standing DeFi projects COMP and MKR have been rising in recent days. This article explores the possible logic behind this.
- Comparison of NFT lending protocol mechanisms: price drop ≠ automatic liquidation
At the time, these were all cutting-edge ideas, and for many years, cryptocurrencies were rarely discussed outside of libertarian policy circles. But in 2009, a turning point occurred – Satoshi Nakotomo developed Bitcoin in 2009, and the crypto market exploded in growth in the early 2010s.
Today, there are thousands of cryptocurrencies on the market, making it a challenging market for investors and regulators alike. Many people believe that there are too many types of tokens in circulation, comparing it to the “dot-com bubble” of 25 years ago.
To analyze the crypto market, we conducted a visual analysis of tokens that have crashed and disappeared over the past decade, from failed ICOs to waning interest in the market.
We consulted data from Coinopsy on over 2,400 extinct tokens, compiled data on the current status of each token, analyzed the performance of each token over the past 10 years, and recorded the time and reason for each token’s elimination.
After compiling this data, we compared it with CoinMarketCap’s annual historical snapshots to provide us with accurate data on all tokens that have ever been in circulation on the market.
Data Overview
In 2017, 704 now-defunct tokens began to circulate, up from 224 in 2016.
2018 was the most dangerous year for the crypto industry, with 751 tokens disappearing.
2014 was the year with the highest token death rate, with 76.5% of the 793 tokens no longer in circulation, and 551 disappearing.
The 2014 Crypto Crash
When looking back at the price history of crypto tokens, 2013 can be seen as the first boom era for crypto. Against the backdrop of emerging technologies such as drones and smartwatches, the price of Bitcoin soared from $150 to $1,000 and reached a high of $1,127 in November 2013. Before Bitcoin’s meteoric rise, there were only 14 tokens in the crypto market, and as of 2022, only Bitcoin and Litecoin remain in the top 10.
The soaring price of Bitcoin has led to a wave of competition for market benefits. Data shows that in 2013, there were 84 tokens entering the market, and in 2014, there were 607 kinds, all for the purpose of profiting from the collapse of Bitcoin in early 2014, when most Bitcoin transactions were related to the dark web black market Silk Road.
However, the squeeze on emerging cryptocurrencies in 2014 did not last. Data shows that 91% of tokens established in 2014 eventually disappeared due to low trading volume or abandonment (with exceptions, such as Dogecoin), and many opportunists who tried to monopolize the early encryption market failed.
Second surge in cryptocurrency prices
2017 became the “summer of love” in cryptocurrency history, with everyone loving encryption and emerging blockchain technology first attracting the attention of global business leaders, leading to a surge in investment. In July 2017, Sheba Jafari, a technical analyst at Goldman Sachs, predicted that Bitcoin would reach $3,600 by the end of this year.
That year saw many profitable ICOs, with the most famous being Filecoin, which raised $257 million. However, everything was not as it seemed, with 704 now-defunct tokens entering the cryptocurrency market that year, the largest number in a decade. A 2018 report by ICO consulting firm Stasis Group found that 80% of ICOs in 2017 were identified as scams, accumulating $11.9 billion in assets.
Our research shows that of the 751 coins that died in 2018, 30% were fraudulent, the highest in a decade. The most famous ICO frauds were Vietnamese tokens PinCoin and iFan. Local journalists exposed companies of this type that defrauded as many as 32,000 investors, with an amount of up to $660 million, and the Ho Chi Minh City police investigated at the time.
2014 Token Data
But it is easy to forget one thing: cryptocurrencies are still in their infancy. The history of the stock market dates back hundreds of years, and the first Bitcoin transaction was carried out in 2010 at a pizzeria in Florida. The market has not yet really gained a foothold, and economists have a big disagreement about the future of the encryption industry.
The cryptocurrency market has proven to everyone how cryptocurrency trading and investment can easily disrupt traditional financial systems, but failures are also very common in this industry. A report from the China Academy of Information and Communications Technology (CAICT) shows that 92% of blockchain projects in the market are currently not active, and the average lifespan is only 1.22 years.
The situation in the early cryptocurrency market was fatal for many aspiring tokens. According to our research, more than half of the tokens launched each year between 2013 and 2018 no longer exist. In 2014, over three-quarters (76.5%) of tokens issued during the first major cryptocurrency boom disappeared.
The data has improved, and since 2020, only 16 types of tokens have been abandoned
According to data from blockchain research platform LongHash, 63.1% of cryptocurrency disappearances are due to investors giving up, leading to price collapses. In a saturated market with more than 12,000 types of tokens, well-intentioned projects naturally cannot attract people’s interest. Coinopsy summarized the reasons why a token might be abandoned, from outdated blockchain design to the personal situation of developers.
For example, tokens that have a trading volume of less than $1,000 in three months or projects with a stopped website are considered dead tokens.
The data shows that after the first price surge of cryptocurrencies in 2013, the probability of some tokens disappearing began to increase. In 2013, 61.1% of tokens and in 2014, 69.5% of tokens disappeared. However, looking at the data after that, the rate at which tokens are abandoned and disappear has been decreasing, which also indicates that the frequency at which people lose interest in cryptocurrencies is decreasing. Since 2020, due to a lack of investment, only 16 types of tokens have been delisted from the market. However, people are still worried that a significant drop in cryptocurrency value in 2022 will lead to more tokens being abandoned in the future.
2017 was the peak of cryptocurrency scams
Due to the lack of regulation in the cryptocurrency market, fraudulent schemes and opportunistic scams still exist in the cryptocurrency market today and account for a large proportion. In addition to these tokens born for fraud, criminals can also use mainstream currencies such as Bitcoin and Ethereum to defraud investors.
The Federal Trade Commission reported that over 46,000 people have become victims of cryptocurrency scams since the beginning of 2021, with total losses exceeding $1 billion. Chainanalysis data shows that, after the latest price surge in 2021, interest in the market has once again skyrocketed, leading to a wave of cryptocurrency-related crimes involving amounts as high as $14 billion.
Related reading: “Six most popular crypto scams in 2022”
However, less than 2% of tokens issued since 2019 have been exposed as fraudulent. In 2017, the peak of cryptocurrency scams, 17% of tokens were fraudulent (210 of 1232 tokens considered scams have since disappeared), with scammers earning $490 million during the ICO boom of that year.
When companies become large enough to trade on the stock market, they have an initial public offering (IPO) to raise funds from public investors. In contrast, ICOs are a primary way of attracting people to buy newly launched cryptocurrencies, with investors buying tokens that can also offer broader stakeholder interests in the company’s products, including the company’s own shares.
Mastercoin was the first project to launch an ICO in 2013, and the practice reached its peak in 2017 as mainstream interest in cryptocurrencies grew along with their prices. However, our research shows that 12.6% of all tokens launched that year failed due to ICOs, more than any other year in the past decade.
Related reading: In-depth analysis of token initial issuance and economic model design
The research firm Greyspark Partners found that nearly half of all ICOs launched in 2017 and 2018 failed to raise any funds, and the practice was susceptible to fraud, ultimately leading to increased regulation and harsh penalties for wrongdoing in the industry. As a result, our data shows that only five tokens failed due to their ICOs.
What will happen to cryptocurrencies after their first turbulent decade?
The cryptocurrency market is growing at an unprecedented rate, with rapidly advancing technology bringing new investment opportunities – most notably the NFT boom of 2021. Bitcoin remains the dominant player in the market, with some investors predicting that its value may reach $100,000 by 2023. However, in 2021, Ethereum saw a 409% increase in value. Despite global instability caused by the Russian invasion of Ukraine leading to a sluggish global economy, analysts predict that Ethereum will bring $4.9 billion in value to the crypto industry by 2030.
Many experts have drawn comparisons between the growth of cryptocurrencies and the “dot-com bubble” of the early 2000s, when innovations led to a surge in internet companies and investors sought the next Amazon or eBay. In contrast, cryptocurrency investment saw a surge in 2013 and 2017, with new currencies flooding the market and investors scrambling to profit from the “next big thing.”
While many of these tokens disappeared due to lack of investment, failed ICOs, or scams, the market faces numerous challenges in regulating cryptocurrencies to protect investors. But the investment world has taken notice of the crypto industry, with cryptocurrencies proving their ability to disrupt traditional financial markets over the past decade.
Like what you're reading? Subscribe to our top stories.
We will continue to update Gambling Chain; if you have any questions or suggestions, please contact us!
