Although cryptocurrencies are made a big change in the technology and financial worlds, not all of them bring real value to their owners. Most of them don’t. These coins are called dead coins.
The cryptocurrency world is littered with the remains of so-called “dead coins” that were launched with awesome fanfare but finally had no benefit to anyone. These coins often suffered an ignoble and often deliberate death as their founders cashed out users’ investments and left bagholders to wonder where the value of their portfolio went.
The proliferation of these coins started during the initial coin offering (ICO) craze in 2017. ICOs raised the number of available coins from 29 to over 850 projects. In 2018, developers launched more than 1,200 projects, adding even more to the space. In December 2020, the total number of cryptocurrencies hit nearly 8,000. During this year, a new type of scam, so-called “rug pulls,” increased a new generation of dead coins.
Not all of these coins have maintained or even begun active circulation. Lots of investors may likely be holding on to dead crypto coins.
What are dead coins?
Dead coins are coins that have been abandoned, turned out to be scams, have low liquidity or have insufficient funding, and many other reasons.
On the crypto meter, they are so-called “s***coins” that have been flushed of all value but continue to float around in the murky depths of crypto’s most depressing blockchains, devoid of all hope, abandoned for all eternity, running out of oxygen on the race to the moon.
You’ll often find them by clicking the “Show All Balances” tab on your Binance wallet section, or by searching for your wallet’s public address. Keep in mind that for any crypto user with more than two years of investment under their belt, the sight of their vanquished moonshot coins may be too much to bear.
There are websites like Coinospy and Deadcoins that track deceased crypto projects floating in this dead space. Reporting dead coins can even earn you more money or recognition from these sites.
How can we distinguish them?
Scams: If It Looks Like a Duck and Quacks Like a Duck, It Is a Duck
Scams are crypto projects that lure investors with promises of extreme returns, often followed by empty promises once investors have invested. Unfortunately, it is estimated that 80% of all 2017 ICOs were indeed scams.
Negligible Trading Volumes
Every bonafide project begins with high expectations and great intentions, believing fervently that they’ll find favor among traders. However, some of them quickly fall victim to low trading volumes, due to limited listings on top exchanges. In the cryptocurrency world, up to 60% of all projects have inferior liquidity.
Normally, low trading volumes imply that the crypto-asset lacks either the utility or trader interest, and this leads swiftly in most cases to complete abandonment. It’s said that six in ten coins with negligible volumes are no longer supported by their creators. Platforms tracking dead coins consider a coin dead or abandoned if it has had a trading volume of less than $1,000 in three months.
Joke projects are projects without a concrete plan, yet they still seek investments, some of them getting unexpected interest way over what they had intended. Interestingly, some people see value in them initially and bet their money. For instance, Useless Ethereum Token (UET) held an ICO and attracted more than $300,000.
While there are outliers such as Dogecoin and MEMEcoin, for every joke coin that makes it, nine others fall flat. In the current list of dead coins, joke projects account for 3%.
Less or No Funding
Failure to attract funding or not having enough funds to support development may kill a project. Around 3.6% of dead coins are in this part. However, failure to attract funding does not mean a project lacks utility or viability. It could be because it doesn’t provide enough lucrative profit margins for investors to be interested.
BitConnect (BCC) – BCC was the biggest Ponzi scheme in the crypto industry. It offered a platform to trade Bitcoin for its native currency and receive high yields.
A bot programmatically calculated yields due — however, the calculations raised eyebrows among investors. Its woes started towards the end of 2017 when UK financial authorities raised concerns about its legitimacy.
BitConnect enjoyed early success thanks to its marketing budget and the rise of Bitcoin, however, in early 2018, regulators in Texas labeled it a Ponzi scheme. Shortly after, it shut down, causing the price of BCC to drop by 9%. Soon enough this infamous signature rallying call by main cheerleader Carlos Matos became Bitconnect’s death rattle and has since become an enduring crypto meme out there. All together now kids. “BitConneeeeeeeeectttt!”
Aeron (ARNX) –Originally, ARNX was tradable on Binance. The exchange later delisted the coin, sending its price spiraling down by up to 90%.
Its creator minted 10X more tokens but never distributed them to the community. Unfortunately, whoever raised the issue on social media platforms was blocked. Although the core team noted it would unlock the extra coins later, they continued distributing them over seven days instead, negatively impacting the price.
Cause of Death: Suicide
VegasCoin (VEGCOIN) – This was an abandoned project. Reports show the project was acquired by another company that discontinued operations. VEGCOIN targeted the sports betting ecosystem.
Cause of Death: Vegas!
Storeum (STO) – It died due to a dwindling market. On its website, it has an order book with only 18 entries. It also has a liquidity depth of zero Ethereum coins, with a price of $0.000012. Not such a great store of value as its name implied after all.
Cause of Death: Hypothermia (Crypto Winter)
0xBitcoin (0xBTC) – The first 0xBTC coin was mined in 2018 and reached a price of up to $5. Later, the price dropped to roughly $0.10. After that, the project’s core team left the project.
Cause of Death: Abandonment
How to avoid projects that might become dead
In the crypto world, you can easily add a dead coin to your portfolio. However, due diligence when investing in altcoins can provide critical insights into trustworthy projects.
For instance, scams of them can be avoided by evaluating their ROI promises. Most of them promise “guaranteed returns” despite cryptos being highly volatile and speculative.
How to distinguish a dead coin? Observing a project’s presence and activity on social media platforms can be an alarm. Moreover, viable coins are listed on leading exchanges like Binance, which have noticeably high liquidity.
Stayin’ Alive, Stayin’ Alive
Dead coins have often derailed developments. Fortunately, just the knowledge that these types of currencies exist can help investors make informed decisions.
As more dead coins continue to keep up the illusions of good projects, investors can rely on extensive background checks, profit statements, availability on exchanges, and trading volumes to choose a valuable currency in a sea of junk coins.
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