A decade of cryptocurrency development: issuance, circulation, disappearance, and turmoil.
Original link: CoinKickoff
Original translation: Leo, BlockBeats
The history of cryptocurrency can be traced back to the financial boom of the 1980s, when the financial culture was glorified in movies such as "Wall Street" and "The Big Chill". In 1983, pioneering cryptographer David Chaum published research that laid the foundation for electronic payments, blockchain, and cryptocurrency.
At that time, these were all futuristic ideas. For many years, cryptocurrencies were rarely discussed outside of the free market "liberal policy" circle. However, a turning point occurred in 2009 when Satoshi Nakamoto developed Bitcoin. The encrypted market experienced explosive growth around 2010.
There are tens of thousands of cryptocurrencies in the market today, which poses a challenge for both investors and regulatory agencies. Many people compare the current situation to the "dot-com bubble" of 25 years ago, as there are too many types of tokens in circulation.
In order to analyze the encryption market, we conducted a visual analysis of tokens that have collapsed and disappeared over the past decade, from failed ICOs to the weakening of people's interest in the market.
We have referenced the data of over 2400 disappeared tokens from Coinopsy, compiled the current status data of each token, analyzed the performance of each token in the past 10 years, and recorded the time and reason for the token being eliminated.
After organizing this data, we compared it with CoinMarketCap's annual historical snapshots to provide us with accurate data on all tokens that have ever circulated in the market.
Data Overview
In 2017, 704 tokens that have now disappeared began to be issued and circulated, which is more than the 224 in 2016.
2018 was the most dangerous year for the encryption industry, with 751 tokens disappearing.
2014 was the year with the highest mortality rate for tokens, with 76.5% of the 793 tokens no longer in circulation and 551 tokens disappearing.
2014 Crypto Crash
When reviewing the history of cryptocurrency token prices, 2013 can be seen as the first boom era of cryptocurrency. Against the backdrop of emerging technologies such as drones and smartwatches, the price of Bitcoin soared from $150 to $1000, reaching a high of $1127 in November 2013. Prior to the surge of Bitcoin, there were only 14 tokens in the cryptocurrency market, and as of 2022, only Bitcoin and Litecoin remain in the top 10.
The soaring price of Bitcoin has led to a wave of competition for market benefits in the token industry. Data shows that in 2013, there were 84 kinds of tokens entering the market, and in 2014, there were 607 kinds, all aiming to profit from the collapse of Bitcoin in early 2014, when most Bitcoin transactions were related to the dark web black market Silk Road.
However, the squeeze on emerging cryptocurrencies in 2014 did not last. Data shows that 91% of tokens established in 2014 ultimately disappeared due to low trading volume or abandonment (with some exceptions, such as Dogecoin), and many opportunists attempting to monopolize the early crypto market ended up failing.
Cryptocurrency prices surge for the second time
2017 became the "summer love" in the history of encryption, and everyone loved encryption. The emerging blockchain technology attracted the attention of global business leaders for the first time, leading to a surge in investment. In July 2017, Sheba Jafari, a technology analyst at Goldman Sachs, predicted that Bitcoin would reach $3,600 by the end of this year.
This year saw many profitable ICOs, the most famous of which was Filecoin, which raised $257 million. However, things were not as they seemed, as 704 tokens that have since disappeared entered the cryptocurrency market, making it the year with the highest number of tokens in the past decade. According to a report by ICO consulting firm Stasis Group in 2018, 80% of ICOs in 2017 were deemed scams, accumulating a total of $11.9 billion in assets.
Our research shows that of the 751 coins that died in 2018, 30% were fraudulent, the highest in the past decade. The most famous ICO scams were Vietnam's PinCoin and iFan tokens. Local journalists exposed these companies for defrauding up to 32,000 investors for a total of $660 million, and the Ho Chi Minh City police investigated the matter at the time.
2014 Token Data
But the fact is, people tend to forget one thing: cryptocurrency is still in its infancy. The stock market has a history of hundreds of years, while the first Bitcoin transaction took place in 2010 at a pizza shop in Florida. The market has yet to truly establish itself, and economists have differing opinions on the future of the crypto industry.
The cryptocurrency market has proven to everyone that cryptocurrency trading and investment can easily disrupt traditional financial systems, but the industry also has a very common failure case. A report from the China Academy of Information and Communications Technology (CAICT) shows that 92% of blockchain projects in the market are inactive, with an average lifespan of only 1.22 years.
The situation in the early days of the encryption market was fatal for many ambitious tokens. According to our research, more than half of the tokens launched each year between 2013 and 2018 no longer exist. In 2014, during the first major boom of cryptocurrencies, over three-quarters (76.5%) of the tokens issued have disappeared.
According to data from LongHash, a blockchain research platform, 63.1% of cryptocurrencies disappear due to investors abandoning them, leading to price crashes. In a saturated market with over 12,000 tokens, well-intentioned projects naturally struggle to attract interest. Coinopsy has summarized reasons why a token may be abandoned, ranging from outdated blockchain design to personal situations of developers.
For example, tokens that have a trading volume of less than $1000 within 3 months or project websites that have stopped updating will be considered as dead tokens.
According to data, after the first price surge of cryptocurrency in 2013, the probability of some tokens disappearing began to increase. In 2013, 61.1% of tokens and in 2014, 69.5% of tokens disappeared. However, looking at the data after that, the rate at which tokens were abandoned and disappeared became lower, which also indicates that the frequency of people losing interest in cryptocurrency is decreasing. Since 2020, only 16 types of tokens have been delisted from the market due to lack of investment. Nevertheless, people are still concerned that a significant drop in the value of cryptocurrency in 2022 will lead to more tokens being abandoned in the future.
2017 was the peak period of cryptocurrency scams
Due to the lack of regulation in the encryption market, fraudulent schemes and opportunistic scams have been prevalent and account for a large proportion of the market. In addition to tokens specifically designed for fraud, criminals can also use mainstream currencies such as Bitcoin and Ethereum to deceive investors.
The Federal Trade Commission report states that since the beginning of 2021, over 46,000 people have become victims of cryptocurrency scams, resulting in a total loss of over $1 billion. According to Chainanalysis data, after the latest price surge in 2021, people's interest in the market has once again skyrocketed, leading to a wave of cryptocurrency crime involving up to $14 billion.
Related reading: "Top 6 Cryptocurrency Scams of 2022"
However, since 2019, less than 2% of tokens issued have been exposed as fraudulent. In 2017, the peak of crypto scams, 17% of tokens were fraudulent (210 out of 1232 tokens were considered scams and have since disappeared), and scammers made $490 million during the ICO boom of 2017.
When companies become large enough to trade on the stock market, they initiate an IPO to raise funds from public investors. In contrast, ICO is a primary channel for attracting people to purchase newly launched cryptocurrencies, where investors buy tokens but can also provide broader interests related to the company's products, including shares in the company itself.
Mastercoin was the first project to launch an ICO in 2013. As mainstream interest in cryptocurrency grew with its rising prices, this practice reached its peak in 2017. However, our research shows that 12.6% of all tokens launched that year became invalid due to failed ICOs - more than any other year in the past decade.
Related reading: In-depth analysis of token initial issuance methods and economic model design.
Research from consulting firm GreySpark Partners found that nearly half of all ICOs launched in 2017 and 2018 failed to raise any funds, and this practice is susceptible to fraud, ultimately leading to increased regulation and harsh penalties for misconduct in the industry. Therefore, our data shows that only 5 types of tokens failed in their ICOs.
After experiencing the first turbulent decade, what will happen to the cryptocurrency?
The cryptocurrency market is growing at an unprecedented pace, and rapidly advancing technologies are bringing new investment opportunities - most notably the 2021 NFT craze. Bitcoin still dominates the market, with some investors predicting its price to reach $100,000 by 2023. However, in 2021, Ethereum's value grew by 409%. Despite global instability caused by Russia's invasion of Ukraine and resulting economic downturn, analysts predict that Ethereum will bring $4.9 billion in value to the cryptocurrency industry by 2030.
Many experts have drawn parallels between the growth of cryptocurrency and the "dot-com bubble" of the early 2000s, when innovation led to a surge in internet companies and investors searching for the next Amazon or eBay. In contrast, the investment in cryptocurrency surged in 2013 and 2017, with new currencies flooding the market and investors competing to profit from the "next big thing".
Although many tokens have disappeared due to lack of investment, failed ICOs, or fraud, the market also faces many challenges in regulating cryptocurrencies to protect investors. However, the investment community has already begun to take the cryptocurrency industry seriously, as cryptocurrencies have proven their ability to disrupt traditional financial markets over the past decade.
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