A recent study has brought to the fore staggering figures regarding cryptocurrencies that are actually “dead projects.” A widely known fact in the world of cryptocurrency is that some virtual currencies and tokens are specifically designed by their originators to last for a period of time. The exact quantum was not known, not even in approximate terms, perhaps the non-availability of empirical data accounting for this.
“Dead cryptocurrency projects”
According to data pulled together by two cryptocurrency tracking websites, namely Dead Coins and Coinopsy, approximately 1,000 virtual currency projects are deficient in ‘development or future activity in… protocol.’ This is in spite of the fact that in the course of time, they had been able to raise bitcoin and ethereum worth billions of US dollars.
The study also revealed that the likes of Snowballs, CryptoMeth and OreoCoin were able to rack in millions of US dollars on the back of the ignorance of many amateur investors. These investors for the most part were unable to on their own scrutinize some of these token issuers to ascertain their legitimacy and credibility.
Many amateur investors have fallen victim to cryptocurrency-related scams and in some cases made investments into virtual currency projects that had shown signs of fizzling out of the market sooner or later. This has been so even though law enforcement authorities and regulatory bodies in parts of the globe have been known to be particularly concerned about the virtual currency market and have largely taken stringent measures intended to scrutinize literally hundreds of token issuers.
The research also disclosed the reasons for which many of these projects folded up, perhaps much earlier than expected. Reasons cited included neglected code to intentional ‘pump and dump’, common exit scams, website closure, alleged demise of project developers and faulty wallets among others.
A Bloomberg business markets author Aaron Brown shared some revealing insights about Initial Coin Offerings (ICOs) when he opined: “There has obviously been significant fraud and hype in the ICO market. I have seen 80 percent of ICOs were frauds, and 10 percent lacked substance and failed shortly after raising money. Most of the remaining 10 percent will probably fail as well.”
Fraudulent ICOs rack in over a billion US dollars in 2017
According to a May report published by CCN, a research conducted by Satis Group revealed that counterfeit ICO`s accounted for well over $1 billion worth of funds generated last year and that more than 271 firms that were considered for the study exhibited signs that are cause for great concern. The study noted that these companies showed clear signs of their involvement in dodgy deals, impersonation of team members and copying white papers without the relevant authorization to do so.
Some studies have shown that blockchain technology business start-ups have a low survival rate compared to those within the traditional business space. In October last year, CB Insights released a report that disclosed that of the many blockchain technology start-ups there are, only 28% of same survive their first round of seed funding.
The CB Insights report affirmed that traditional business start-ups do way better than their counterparts in the blockchain technology industry, accounting for a 46% survival rate. CB Insights analyst Arieh Levi stated: “I don’t think we found the killer app yet. It just seems like there’s been many projects tried, but there aren’t many users of blockchain protocols beyond speculators and traders.”
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