Ten years of turbulent development history of cryptocurrency: disappearing Token, failed ICO...

Original link: CoinKickoff

Original compilation: Leo, BlockBeats

The history of cryptocurrencies can be traced back to the financial boom of the 1980s, when financial culture was sublimated by movies such as Upside Down and Wall Street, when pioneering cryptographer David Chaum published research in 1983 , laying the foundation for electronic payments, blockchain and cryptocurrencies.

These were anachronistic ideas at the time, and for many years cryptocurrencies were rarely discussed outside of free market "liberal policy" circles, but an inflection point occurred in 2009 - Satoshi Nakotomo developed Bitcoin in 2009 The encryption market around 2010 ushered in explosive growth.

With tens of thousands of cryptocurrencies in the market today, it is a challenging market for both investors and regulators. Many people think that there are too many types of tokens in circulation, and compare it to the "dotcom bubble" about 25 years ago.

To analyze the crypto market, we visualized tokens that have crashed and vanished over the decade, from failed ICOs to waning interest in the market.

Using Coinopsy's data on more than 2,400 vanished tokens, we compiled data on the current state of each token, analyzed how each token has performed over the past 10 years, and documented when and why tokens were retired.

After collating this data, we compared it to CoinMarketCap's yearly historical snapshots, giving us accurate data for all tokens that have ever been in circulation 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 encryption industry, with 751 tokens disappearing.

2014 was the year with the highest token death rate, 76.5% of the 793 tokens were no longer in circulation, and 551 disappeared.

The Crypto Crash of 2014

When looking back at the history of crypto token prices, 2013 can be seen as the first era of crypto boom. Bitcoin's price has soared from $150 to $1,000, reaching a high of $1,127 in November 2013, amid a technological backdrop dominated by emerging technologies ranging from drones to smart watches. Before Bitcoin skyrocketed, 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 the price of Bitcoin has led to a wave of competing tokens vying for the benefit of the market. The data shows that 84 kinds of tokens entered the market in 2013 and 607 kinds in 2014, all of which were to take advantage of the collapse of Bitcoin in early 2014, when most of the Bitcoin transactions were related to the darknet black market Silk Road.

However, the run on emerging cryptocurrencies in 2014 did not last. The data shows that 91% of the tokens established in 2014 eventually disappeared due to low transaction volume or being abandoned (of course there are exceptions, such as Dogecoin), and many opportunists who tried to monopolize the early encryption market ended in failure.

Second surge in cryptocurrency prices

2017 became the "summer love" in the history of encryption. Everyone loves encryption. The emerging blockchain technology attracted the attention of global business leaders for the first time, resulting in a surge in investment. In July 2017, Goldman Sachs technical analyst Sheba Jafari predicted that Bitcoin would reach $3,600 by the end of the year.

The year saw a number of lucrative ICOs, most notably Filecoin, which amassed $257 million. However, all was not as it seemed, with 704 now-defunct tokens entering the crypto market that year, the highest number in the past decade. A 2018 report by ICO consulting firm Stasis Group said 80 percent of ICOs in 2017 were deemed scams, accumulating $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 are Vietnamese tokens PinCoin and iFan. Police in Ho Chi Minh City also investigated the defrauding of as many as 32,000 investors from as many as $660 million by local journalists.

2014 token data

But it’s easy to forget that cryptocurrencies are still in their infancy. The history of the stock market has been hundreds of years, the first bitcoin transaction was carried out at a pizzeria in Florida in 2010, the market has not really gained a foothold, and economists are quite divided on the future of the encryption industry .

The crypto market has proven to everyone that cryptocurrency trading and investing can easily disrupt the traditional financial system, but failures in this industry are also very common. According to a report by the China Academy of Information and Communications Technology (CAICT), 92% of blockchain projects on the market so far are inactive, with an average lifespan of only 1.22 years.

Conditions in the early crypto market were 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 the context of the first big cryptocurrency boom in 2014 have disappeared.

The data is getting better, only 16 kinds of tokens have been abandoned since 2020

According to data from blockchain research platform LongHash, 63.1% of cryptocurrencies disappeared because they were abandoned by investors, causing prices to plummet and crash. In a saturated market with more than 12,000 tokens, well-meaning projects naturally fail to attract interest. Coinopsy summarizes the reasons why a token may be abandoned, ranging from outdated blockchain design to the developer's personal situation.

For example, if the transaction volume is less than 1,000 US dollars within 3 months, or the project website stops updating, etc., it will be regarded as a dead token.

The data shows that after the first price surge of cryptocurrencies in 2013, the probability of some tokens disappearing began to increase. 61.1% of tokens in 2013 and 69.5% in 2014 disappeared. However, according to the data after that, the rate of tokens being abandoned and disappearing is getting lower and lower, which also shows that the frequency of people losing interest in cryptocurrencies is getting smaller. Since 2020, only 16 tokens have been delisted from the market due to lack of investment. Still, there are concerns that a sharp drop in the value of cryptocurrencies in 2022 will lead to more tokens being dumped in the future.

2017 was peak year for crypto scams

Due to the lack of regulation in the crypto market, fraudulent schemes and opportunistic scams have existed and accounted for a large proportion of the crypto market. In addition to these fraudulent tokens, criminals can also use mainstream currencies such as Bitcoin and Ethereum to deceive investors.

The Federal Trade Commission reported that since the beginning of 2021, more than 46,000 people have become victims of cryptocurrency scams, totaling losses of more than $1 billion. After the latest price surge in 2021, renewed interest in the market has led to a wave of cryptocurrency crime worth as much as $14 billion, according to Chainalysis.

Still, less than 2% of tokens issued since 2019 have been revealed to be scam tokens. 2017 was the peak of crypto fraud, when 17% of tokens were fraudulent (210 of 1232 tokens considered scam coins have now disappeared), and fraudsters made $490 million during the 2017 ICO boom.

When companies become large enough to trade on the stock market, they launch IPOs to raise money from public investors. In contrast, ICOs are a primary channel for attracting purchases of newly launched cryptocurrencies, with investors buying tokens, but they can also offer a wider stake in a company's product, including a stake 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 the cryptocurrency grew along with its price. Nonetheless, our research shows that 12.6% of all tokens launched that year expired due to failed ICOs — 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 prone to fraud, leading to increased regulation and severe penalties for non-compliance in the industry . Therefore, our data shows that only 5 token ICOs failed.

After a tumultuous first decade for cryptocurrencies, what's next?

The cryptocurrency market is growing at an unprecedented rate, and rapidly advancing technology is bringing new investment opportunities—most notably 2021's NFT boom. Bitcoin still dominates the market, with some investors predicting that its price could reach $100,000 by 2023. However, in 2021, the value of Ethereum has increased by 409%. Analysts expect Ethereum to be worth $4.9 billion to the crypto industry by 2030, despite the global instability caused by Russia’s invasion of Ukraine, leading to a global economic downturn.

Many experts have compared the growth of cryptocurrencies to the "dotcom bubble" of the early 2000s, when innovations led to a surge of internet companies and investors looking for the next Amazon or eBay. In contrast, 2013 and 2017 saw a surge in cryptocurrency investment, with new currencies flooding the market and investors racing to cash in on the “next big thing.”

While many of these tokens disappeared due to lack of investment, failed ICOs, or scams, the market also faces numerous challenges in regulating cryptocurrencies to protect investors. But the investment community has taken the crypto industry seriously, and cryptocurrencies have proven their ability to disrupt traditional financial markets over the past decade.