Crypto Market is believed to be $750 Billion according to 2019 and it is expected to grow to anywhere between USD 1.7 and 5 trillion by 2026. In the beginning of 2021, the market reached to $1 trillion. As more people are investing in cryptocurrencies, they tend to buy wrong crypto or failed cryptocurrencies. By May 24, 2021, at least 2,047 cryptocurrencies have failed, according to Coinopsy which tracks such failures. As investors are hyped because of the low price they tend to invest on those coins.
Why do cryptocurrencies fail?
Frauds and scams
Failure to make business plans
Loss of traction
Personal problems faced by the developers
Some of the failed cryptocurrencies:
- OneCoin (ONE): This was one of the fraudulent currency in the crypto market. As launched on 2014, the founder Ruja Ignatova known as the “Crypto Queen” organized different events around the world and promoted the currency as “Bitcoin Killer”. Millions of investors poured their money on the coin which later turned out to be a $4 Billion Ponzi scheme.
- BitConnect (BCC): It was launched on 2016 with a price of $0.17 and by 2017, it was all time high to $463. By March 2019, it declined to $0.43 and investors lost everything.
- BoringCoin (ZZZ) : Just like any joke currency, this had no drama, dump or pump. Launched on 2014 but did not survive till the end of the year. Just like its name, it was too boring.
- GetGems (GEMZ): It was founded on 2015 as a messaging app which allowed people to send and receive Bitcoin. It roughly raised $1 million by direct investment and crowdfunding. By 2017, it was all time high at a price of $0.05 but couldn’t progress much till the coin completely stopped trading.
Spotting Failed Cryptocurrencies:
1. Founders: Find out who are the founders of the coin, if that can’t be found, this is a big red flag. Research the founders if they have been in any successful projects or the vice versa (fraudulent ventures).
2. Plan: Find out the plan and purpose of the coin. Just like any business if it has no plan then what is the purpose of the business. Similarly, the coin must have plan and to understand this one does not need to be a technical wizard. For example: Ethereum, launched in 2015, is the second-biggest cryptocurrency by market cap after Bitcoin. But unlike Bitcoin, it wasn’t created to be digital money. Instead, Ethereum’s founders set out to build a new kind of global, decentralized computing platform that takes the security and openness of blockchains and extends those to a vast range of applications.
3. Platforms: Where is the coin listed? Is it a secure and trusted platform. For example: Chinese based platform Binance has been banned in US due to fears of customer protection and money laundering. Some trusted platforms in US are: Coinbase, Gemini, Voyager and Robinhood. In UAE, BitOasis is a popular and trusted platform.
4. Social Media: Is it popular on social media or has an active website. Different coins are popular on the Twitter feed and many YouTube channels. Get involved and watch out any news regarding the coin.
5. Meme or Joke coin: Is it a joke or meme coin and it has no purpose. Somehow, Dogecoin started as a meme coin but it succeeded and it is still going strong and not crashed. This might not be the case for other meme coins though.