There were more than 500 failed cryptocurrency projects in 2019, the majority of which were scams.
By Christina Comben
The cryptocurrency space is infamously ravaged with bad actors and fraud.
Indeed, of the 1,840 failed cryptocurrency projects since 2017, the majority were outright scams.
But despite a total of 518 blockchain and crypto projects falling by the wayside in 2019, that still marks a 20% decrease from the previous year.
Fewer failed cryptocurrency projects in 2019
It’s not surprising that most cryptocurrency project failures happen when the market is bleeding. The largest number of cryptocurrency projects disappeared during the early months of 2019 when the bear market was at its most savage.
115 folded in January, with 48 collapsing in February and a further 120 in March, accounting for more than half of the total failures of the year. An alarming rate, you might say. However, it was still a 20% decrease from 2018, according to data from DeadCoins.com.
So, how did these cryptocurrency projects die? DeadCoins divides them into four categories: deceased, hack, scam, and parody. Most of the dead projects have been categorised as scams.
In both 2018 and 2019, 55% and 58% of projects respectively entered this category. The rest failed due to hacks or impersonator projects.
Another one bites the dust
Despite the high number of failed cryptocurrency projects, in the second quarter of 2019, only 83 projects disappeared. This very likely coincides with the fact that market conditions took a turn to the upside.
The prices of Bitcoin and other cryptocurrencies increased steadily during most of the second quarter of 2019.
Most scam projects have a life cycle of less than one year, while legitimate projects that fail generally tend to have a life cycle of one to three years.
The number of ICO projects in 2019 decreased significantly throughout the year, according to ICObench.
In January, there were 151 published ICOs, while December closed with just 30. Fewer projects but more substance
The high number of failed cryptocurrency projects may not be an encouraging sign. However, in some ways, it has meant that the quality projects have risen to the top.
Rather than ideas and whitepapers, blockchain projects have started to grow up and find real use cases and purpose.
In 2019, for example, more military and business blockchain projects emerged. According to Deloitte’s Global Blockchain survey in 2019, the overall quality of the projects was higher than in 2018 as “blockchain is getting down to business”.
So, what can we expect as we move into 2020? Of course, many projects are still vulnerable to market conditions. Given the high amount of deceased projects to date, it’s likely that the number of deaths will continue to rise – along with the birth of more viable solutions.
By Christina Comben
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