Ten Years of Countless Crypto Failures – Finance – Kommersant

Back in early 2013, Bitcoin was only worth about $10. But already in April, he managed to overcome the $100 mark and thereby attract the attention of almost all the world’s media, and after that, those who decided that they had finally found a way to make money out of nothing. Since then, tens of thousands of cryptocurrencies have appeared in the world. Only two cryptocurrencies that existed before the boom of 2013 remained in today’s top 10 by market capitalization – bitcoin and litecoin. And over the past decade, thousands of projects have sunk into oblivion.

Over the past ten years, Bitcoin, the very first and most popular cryptocurrency in the world, has increased in price by about 1750 times. And this is despite all the volatility of the bitcoin rate, which reached $61,000 in November 2021, but then managed to lose two-thirds of its value.

The cryptocurrency industry continues to attract billions of dollars of investments, and the number of projects that have appeared since 2013 is in the tens of thousands. That’s just the lion’s share of them is already dead. According to analysis portal Coin Kickoff, on average, cryptocurrency projects exist for just over a year.

The analysis of Coin Kickoff does not cover all the cryptocurrencies that have existed over the years – there were thousands of them, the lion’s share of these currencies did not reach any centralized database of cryptocurrencies. Therefore, the authors of the report decided to focus on the list from Coinopsy of 2400 cryptocurrency projects that died over the past ten years, and supplemented it with a list of cryptocurrencies from CoinMarketCap.

After analyzing this data, Coin Kickoff concluded that over the past ten years, the industry has experienced two waves of mass destruction of cryptocurrencies.

The first one came in 2014. It was then that hundreds of enthusiasts decided to try to repeat the success of bitcoin, which rose in price from about $10 to almost $1,000 in 2013. In 2014, 793 projects were created at once – 607 of them ended up dead. And almost half of them died in the same 2014.

2014 is still the most tragic year for the cryptocurrency industry. Of all the cryptocurrency projects launched that year, 76.54% did not survive to 2023, according to Coin Kickoff.

The first years of the development of the industry were generally distinguished by the fragility of projects: in the period from 2013 to 2017, the mortality rate of cryptocurrencies averaged about 66%.

But the second half of the decade is characterized by an extremely low percentage of failure of new projects. So, of the cryptocurrencies launched in 2018, only 27.6% died by 2023.

In 2017–2018, the second wave of mass loss of cryptocurrency projects took place. By that time, bitcoin was already trading in the range of $10-13 thousand, and the industry itself began to attract institutional investors. During the same period, there was also a boom in ICOs – initial placements of tokens. This resulted in two achievements at once: 2017 was distinguished by the birth of a record number of cryptocurrency projects, which then collapsed – there were 704 of them, and 2018 – a record number of deaths – 751. As for the ICO, then, according to the Stasis Group, 80 % of placements in 2017 were scams.

In recent years, the mortality rate of cryptocurrency projects tends to zero. However, in this case, the statistics are not very revealing, since not much time has passed since the founding of these projects, and the industry is not as reckless as it was in the early years of its existence. But analysts are sure that it is too early for market participants to rejoice – in 2023 they will face the third wave of mass closures of cryptocurrency projects, which is likely to be provoked by an extremely unsuccessful year for the industry in 2022.

Kirill Sarkhanyants