A Post-Mortem of Deadcoins
It’s no surprise to anyone in this space that over 1000 projects have been declared dead or inactive. In 63 percent of deadcoins, the reason for death was loss of traction and investor interest whilst 30 percent died due to their scammy nature. Putting this together, LongHash estimates that 93 percent of coins dying can be explained by them being a blatant scam or their inability to execute their roadmap, October 12, 2019.
The Rise and Fall of Fallible Projects
Every year from 2013 to 2017, the number of scam projects killed goes up in nature. At first, this seems like a negative data point wheereas, in reality, it shows us that investors have become more vigilant and vocal in their efforts to suppress bad actors.
But from 2016 to 2017, the number of scammy projects rose almost 5x. This can be attributed to ICO madness and a sudden rush of new investors in the market.
Some projects were associated with the same founders, who have now become called out as obvious bad actors who are trying to make a quick buck off crypto euphoria. The least used reason for project death is associated with joke projects that were never meant to be taken seriously.
On average, these projects that are doomed to fail have an average life of approximately 1.7 years. For scams, this is a huge period as it allows them to accrue a massive chunk of capital before making off with their ill-gotten earnings.
Vigilance in the Space, Cracking Down on Scams
The retail market is slightly more mature than it was in 2017. This is because the ones who stayed to witness the happenings of 2018 and 2019 were shown the truth behind the ICO buzz.
Scam projects that were called out and killed in 2017 fell by almost 80 percent. But we can expect this number to shoot back up as a new bull market approaches – and a new string of retail investors with it.
The awareness in this space needs to be better disseminated and easily available to make it easier for newcomers to educate themselves. Those looking to prevent fraud through education must market their material with the same fervor that clout-happy ICO peddlers did.
Continuing to expose scams and bad actors is essential for this space to gain mainstream legitimacy.