Original link: CoinKickoff
Original translation: Leo, BlockBeats
The history of cryptocurrency can be traced back to the financial boom of the 1980s, when financial culture was sublimated by films such as "Upside Down" and "Wall Street". In 1983, pioneering cryptographer David Chaum published research results that laid the foundation for electronic payments, blockchain and cryptocurrency.
These were all very advanced ideas at the time, and for many years cryptocurrencies were rarely discussed outside of free-market “libertarian policy” circles, but a turning point came in 2009 when Satoshi Nakotomo developed Bitcoin, and the crypto market exploded around 2010.
With tens of thousands of cryptocurrencies on the market today, it’s a challenging market for both investors and regulators. Many people believe that there are too many different tokens in circulation and compare it to the “Internet bubble” about 25 years ago.
To analyze the crypto market, we visualized the tokens that have crashed and disappeared over the past decade, from failed ICOs to waning interest in the market.
We referenced Coinopsy’s data on more than 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 when and why the token was eliminated.
After collating this data, we compared it to historical snapshots from CoinMarketCap each year, giving us accurate data on all tokens that have ever circulated on the market.
Data Overview
In 2017, 704 now-defunct tokens came into circulation, 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 mortality rate, with 76.5% of 793 tokens no longer in circulation and 551 disappearing.
The Crypto Crash of 2014
When looking back at the history of crypto token prices, 2013 can be seen as the era of the first big crypto boom. Against a technological backdrop dominated by emerging technologies from drones to smart watches, the price of Bitcoin soared from $150 to $1,000 and reached a high of $1,127 in November 2013. Before Bitcoin's surge, there were only 14 tokens in the crypto market, and as of 2022, only Bitcoin and Litecoin remain in the top 10.
The surge in Bitcoin prices has led to a wave of competing tokens vying for market benefits. Data shows that 84 tokens entered the market in 2013 and 607 in 2014, all in an effort to profit from Bitcoin’s crash in early 2014, when most Bitcoin transactions were associated with the dark web black market Silk Road.
However, the run on emerging cryptocurrencies in 2014 did not last. Data shows that 91% of the tokens established in 2014 eventually disappeared due to low trading volume or abandonment (of course there are exceptions, such as Dogecoin), and many opportunists who tried to monopolize the early crypto market ended in failure.
Cryptocurrency prices surge for the second time
2017 became the "Summer of Love" in the history of cryptocurrencies. Everyone loved cryptocurrencies, and the emerging blockchain technology attracted the attention of global business leaders for the first time, 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 the year.
The year saw many lucrative ICOs, the most notable of which was Filecoin, which amassed $257 million. However, all is not as it seems, with 704 now-defunct tokens entering crypto circulation that year, the highest number in the past decade. A 2018 report by ICO advisory firm Stasis Group said that 80% of ICOs in 2017 were identified as scams, amassing a total of $11.9 billion in assets.
Our research shows that 30% of the 751 coins that died in 2018 were fraudulent, the highest in the past decade. The most famous ICO scams were Vietnamese tokens PinCoin and iFan. Local journalists revealed that such companies defrauded up to 32,000 investors of up to $660 million, and the Ho Chi Minh City police also investigated it at the time.
Token data in 2014
But it’s easy to forget that cryptocurrencies are still in their infancy. The stock market has been around for hundreds of years, the first Bitcoin transaction was made at a Florida pizza shop in 2010, the market has yet to really take hold, and economists are divided over the future of the crypto industry.
The crypto market has proven that cryptocurrency trading and investment can easily disrupt the traditional financial system, but failure cases in the industry are also very common. A report from the China Academy of Information and Communications Technology (CAICT) shows that 92% of blockchain projects on the market are inactive to date, with an average lifespan of only 1.22 years.
Conditions in the early crypto markets proved 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. More than three-quarters (76.5%) of the tokens issued in 2014, during the first big boom in cryptocurrencies, are gone.
The data is getting better. Only 16 tokens have been abandoned since 2020.
According to blockchain research platform LongHash, 63.1% of cryptocurrencies disappear because investors abandon them, causing prices to plummet and collapse. In a saturated market with more than 12,000 tokens, well-intentioned projects naturally fail to attract people's interest. Coinopsy summarizes the reasons why a token may be abandoned, ranging from outdated blockchain design to the personal circumstances of the developer.
For example, if the transaction volume is less than US$1,000 within 3 months, or the project website stops updating, it will be regarded as a dead token.
Data shows that after the first cryptocurrency price surge in 2013, the probability of some tokens disappearing began to increase. 61.1% of tokens disappeared in 2013 and 69.5% of tokens disappeared in 2014. However, the data since then shows that the rate of token abandonment and disappearance has become lower and lower, which also shows that people are losing interest in cryptocurrencies less and less frequently. Since 2020, only 16 tokens have been delisted from the market due to lack of investment. Despite this, people are still worried that the sharp drop in the value of cryptocurrencies in 2022 will lead to more tokens being abandoned in the future.
2017 was the peak year for crypto scams
Due to the lack of regulation in the crypto market, fraudulent schemes and opportunistic scams exist and account for a large proportion of the crypto market. In addition to these tokens born for fraud, criminals can also use mainstream currencies such as Bitcoin and Ethereum to deceive investors.
The Federal Trade Commission reports that more than 46,000 people have fallen victim to cryptocurrency scams, losing more than $1 billion in total since the beginning of 2021. A renewed interest in the market after the latest price surge in 2021 has led to a wave of cryptocurrency crime involving as much as $14 billion, according to Chainanalysis.
Despite this, less than 2% of tokens issued since 2019 have been revealed to be scams. In 2017, the peak of crypto scams, 17% of tokens were fraudulent (210 out of 1,232 tokens were believed to be scams and have now disappeared), and fraudsters made $490 million during the ICO boom of 2017.
When companies become large enough to be traded on the stock market, they launch an IPO to raise money from public investors. In contrast, ICOs are a major channel for attracting people to buy newly launched cryptocurrencies. Investors buy tokens, but they can also offer broader interests related to the company's products, including shares in the company itself.
Mastercoin was the first project to launch an ICO in 2013, and the practice peaked in 2017 as mainstream interest in cryptocurrencies grew along with their prices. Despite this, our research shows that 12.6% of all tokens launched that year failed due to ICO failures—more than any other year in the past decade.
Research by consultancy 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 stiff penalties for noncompliance in the sector. As a result, our data shows that only five token ICOs failed.
After crypto’s first turbulent decade, what happens next?
The cryptocurrency market is growing at an unprecedented rate, and rapidly advancing technology is bringing new investment opportunities - most notably the NFT boom in 2021. Bitcoin still dominates the market, with some investors predicting that its price could reach $100,000 by 2023. However, in 2021, Ethereum's value increased by 409%. Despite global instability caused by Russia's invasion of Ukraine, which led to a global downturn, analysts expect Ethereum to bring $4.9 billion in value to the crypto industry by 2030.
Many experts have compared the growth of cryptocurrencies to the “dot-com bubble” of the early 2000s, when innovation led to a surge in internet companies and investors looking for the next Amazon or eBay. In contrast, the surges in cryptocurrency investment in 2013 and 2017 flooded the market with new coins and investors competed to profit from the “next big thing.”
Although many of these tokens have disappeared due to lack of investment, failed ICOs or scams, and the market faces numerous challenges in regulating cryptocurrencies to protect investors, the investment community has taken the crypto industry seriously, and cryptocurrencies have proven their ability to disrupt traditional financial markets over the past decade.
