Why Coin Age Matters in CryptocurrencyWhen most people hear about the 1600 cryptocurrencies and ICO tokens listed on CoinMarketCap, they assume that number includes every one ever launched. This assumption may come after they scroll down to the end and notice hundreds that have no marketcap and/or no volume. The bottom of the list is often referred to the graveyard – a place where abandoned coins go to die. The real graveyard however, is wherever they go after they are removed from the listing. At least while they are on CoinMarketcap, for better or (usually) worse, there is a marker of their demise.
CoinMarketCap routinely removes coins from their site that are no longer active or have no exchange to trade on. A list of 1250+ cryptocurrencies launched to date was compiled by CryptoDatabase in March 2015, and posted on Bitcointalk [1]. However, according to this Historical Snapshot on CoinMarketcap, they had only 525 currencies listed on March 22, 2015. Delisted coins could account for some of this difference, but there are likely other factors such as those that never met the criteria to get listed in the first place.
A more current complete listing is provided by Coinranking[2], showing there has been at least 3,073 coins launched. The last 32 pages are dead coins with a marketcap of $0. It still doesn’t include every coin that has been released or at least attempted to do so. There is a long list of shady projects where the funds raised disappeared early enough that they may not be listed anywhere. Bitcointalk is littered with eager-beaver attempts to start a new cryptocurrency that never make it past a few posts or pages.
Adding to the list, are many of the close to 2100 Initial Coin Offerings (ICO) listed on TokenData[3] that don’t appear on Coinranking and/or CoinMarketcap. The TokenData list includes 500 that are planned or currently underway, which wouldn’t show up on listings that use exchange data. Regardless of their status, the outlook is grim for any chance of long term success. A study done by Bitcoin.com released in February 2018, revealed that 46% of ICOs launched in 2017 had already failed.[4] A recent study completed by Satis Group that uses quality as the metric to classify ICOs, concluded that 81% were scams, 6% had failed, and 5% were dead.[5]
What is the point of this trip down memory lane?The information above reveals just how short the lifespan can be of most cryptocurrencies and ICOs. It’s difficult to tell exactly how many of these projects have been started, but the number is looking like it may be closer to 5,000. While some of them never made it to an exchange or caused financial losses, they wasted valuable time that could have been spent working on something worthwhile. New coins and tokens carry an extreme amount of risk, and it seems as though it is only the gamblers, speculators, and fraudsters that pitch them, pump them, and dump them, that are enjoying any of the rewards.
Reputation must be earned, and it takes time to prove yourself. As an investor, it would be wise to check out the cryptocurrencies that have been around for a few years and find out why they’re still alive when so many others have failed.
Is it the team? If a project is going to reach mainstream adoption, it needs a mature dedicated team that is in it for the long haul. Jumping from one flashy-tech project to the next, shows neither dedication or maturity. Measuring the quality of the team isn’t about how many cryptocurrencies or tokens they have worked on, it’s about the one they made work.
What have they actually accomplished? Forget the promises – does the list of all development to date, products, revenue generating properties, partnerships, and anything else that gives the coin or token real value, justify the marketcap? Those that have a huge marketcap have obviously been heavily promoted and made all their news public, or could simply be caught up in speculative hype – but what about the others? If they are actively working and have accomplishments to show for it, but don’t have the massive marketcap, why? Is it a good project that is different from the others, and the herd doesn’t get it yet? Are they avoiding the hype? Is it the original team that still believes in what they are working on, and are committed to make it work?
Is this where you find value?
It may be, but see how they measure up under scrutiny – Cryptocurrency and ICO Screening Guide for Investors.
Coinmarketcap Historical Snapshots –
https://coinmarketcap.com/historical/[1] Bitcointalk –
https://bitcointalksearch.org/topic/simple-list-of-1250-coins-998409.
[2] CoinRanking –
https://coinranking.com/[3] Token Data –
https://www.tokendata.io/[4] 46% of Last Year’s ICOs Have Failed Already –
https://news.bitcoin.com/46-last-years-icos-failed-already/[5] ICO Quality: Development & Trading –
https://medium.com/satis-group/ico-quality-development-trading-e4fef28df04fhttps://dnotesedu.com/2018/04/why-coin-age-matters-in-cryptocurrency/