Why do some crypto projects die and others succeed?

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The global crypto market is a big business, with a market capitalization of over $ 2.5 billion and the total number of projects gradually approaching 15,000 as of November 29, 2021, according to CoinMarketCap.

However, while there are thousands of crypto projects out there, not all of them have been or will be successful. Matt Johnson, crypto analyst and chief executive of Primary Vision, told Capital.com that about one in four of those created have failed, or their development has been halted or abandoned.

To dig a little deeper into why some crypto projects fail and others succeed, Capital.com asked Johnson as well as Alan Chiu, CEO of Boba Network and Enya, and the analyst. crypto Alex Benfield of Weiss Ratings.

First, to recap: As of November 29, the total volume of the crypto market over the past 24 hours was $ 109.8 billion, and the price of bitcoin (BTC) was $ 57,115, in Top of the CoinMarketCap ranking. It’s widely regarded as one of crypto’s greatest achievements, while Ether (ETH), another notable hit, is ranked second behind BTC on the site’s market cap list.

However, not all crypto offerings followed in their footsteps.

Why do some crypto projects fail? Analysts’ opinions

Alan Chiu, CEO of Boba Network and Enya, knows all about running a cryptocurrency project.

BOBA is the first governance token to represent the DAO of an Ethereum Layer 2, which Chiu described to Capital.com as “The People’s L2, democratizing access to Ethereum and making it more affordable and inclusive.” Thanks to the BOBA token and the Boba DAO, anyone can join the Boba community and participate in the governance of the network.

However, as with most innovations, there is competition to make it successful, which Chiu recognized with Layer 2 scaling.

“There is definitely competition, and this is great for growing the Ethereum ecosystem as the scaling challenges are complex. It helps to have multiple teams of really smart engineers to explore different design spaces to evolve Ethereum together. “

On the question of which crypto projects have failed and why it has happened to some, Chiu said there are many factors to consider.

“There are many reasons crypto projects fail, but ultimately I think one of the most important parts of a successful project is building a strong community,” he said. declared.

“We work in an open source ecosystem, so you have to listen to users and build on a philosophy that people can rally around. Often times, projects fail not because their technology isn’t working, but because they haven’t galvanized a community that cares about their mission.

Capital.com has also sought advice from other experts in the field, including Alex Benfield, crypto analyst at Weiss Ratings.

“Crypto projects and cryptocurrencies rarely ‘die’, as few projects are officially closed. Plus, they crumble into nothingness when developers stop updating the project, traders stop trading the asset, and subscribers stop talking about the project on social media, ”he said. .

“Crypto projects tend to fail when they don’t gain popularity or create a strong community of subscribers. Even weak crypto projects can survive when they are able to build a loyal community. A strong community can attract new investors to a project through continuous social media posting and new awareness of the project, ”he added.

Matt Johnson, chief executive of Primary Vision, also shared his take on why crypto projects are dying with Capital.com.

“Funding, project development stop / interrupt / terminate and / or fraudulent projects (known as carpet draws). What is a carpet pull? A raffle is a malicious maneuver where the development team abandons a project taking the majority of crypto project funds, ”he said.

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What else can go wrong with crypto projects?

Alan Chiu explained to Capital.com that there are many potential challenges to consider when it comes to preventing crypto coins from failing.

“There are a lot of risks that you need to mitigate with new projects, such as network security, building a strong team, designing the right economic incentives and listening to your community,” he said. he declares.

Matt Johnson of Primary Vision was of the same opinion – there are many reasons that can cause a project to stop and lead to a dead cryptocurrency – pointing out the abandonment or stopping of a development, as well as the loss of funding, community disinterest and the carpet pulls.

Cryptocurrency that failed and why

How many crypto projects have actually failed? Alex Benfield explained to Capital.com that since the “death” of a crypto project is quite subjective, it’s difficult to give a true number for crypto coins that have died.

“In fact, we’ve seen projects that had few followers and that seemed dead come back in force before, OmiseGo (or OMG) is actually a good example of that,” he noted.

“According to CoinMarketCap, there are over 14,000 different cryptocurrencies, but we can say with certainty that there are not 14,000 relevant crypto projects. In fact, the vast majority of these 14,000 projects are totally irrelevant, ”he continued.

“There are only a few hundred projects that really build something with real value, but it is very difficult to quantify with certainty which projects are ‘alive’ and which are ‘dead’. The 99bitcoins.com website reports that there are over 1,600 ‘dead’ projects as of November 2021. That’s probably a conservative estimate, ”he added.

0Xbitcoincash is among the dead crypto coins listed on the website. The site also indicates why they are considered to have failed: For this token, 99bitcoins.com attributed the failure largely to inactive development. 1coin was also on the list, and its “death indicator” was the result of inactive development and low volume, among other factors.

The list of failed cryptocurrencies also includes 1Credit, 2Chcoin, 300Cubits, 3D Coin, 4New, 66Coin, and 8Coin – to name just a few of the 1,679 dead coins mentioned on the site.

Have cryptocurrencies failed in 2021?

According to Coinopsy, cryptocurrencies stranded this year include Ice Rock Mining,

Tsuzuki inu, Uranium Finance, Squid Game, VeloChain and Minereum, among others.

The site describes the dead coins as “cryptocurrencies that have been ditched, used as a scam, their website is down, has no nodes, has wallet issues, has no updates social, has a low volume or the developers have moved away from the project “.

How To Avoid Investing In Cryptocurrencies That May Fail

Alan Chiu told Capital.com the importance of independent reading when it comes to investing in cryptocurrency.

“It is very important to do your own research and understand where you are putting your money. You don’t just invest in a token, you put your trust in a project and a team. So before you buy the next hot altcoin, take the time to join the community channels (make sure they’re official), ask questions, and get to know the community before you start “ape” something new “, did he declare.

While Matt Johnson explained to Capital.com Primary Vision’s approach to the matter.

Alex Benfield also gave us his conclusions on how to avoid a potential bad crypto investment.

“The main thing that helps crypto projects avoid death or failure is a strong community. Community forums on Discord, Telegram, and Reddit are good indicators for a strong community. Mentions in tweets are another good indicator. A strong community is always talking and actively promoting a crypto project and raising awareness about new developments.

“A crypto project that listens to its community and tries to please its subscribers will outlive its competition that does not actively work with its community. A strong community is more important than good technology or good fundamentals. Technical differentiators only matter for large projects which all have good communities, strong follow-up is the most important basic factor for a good crypto project, ”added Benfield.

When researching analysts ‘opinions regarding the strength and failures of crypto projects, it is important to keep in mind that analysts’ opinions can be wrong. Analysts’ projections are based on a fundamental and technical study of the cryptocurrency’s performance to date – but past performance is no guarantee of future results.

It is important to do your own research and always remember that your decision to trade depends on your attitude to risk, your market expertise, the allocation of your investment portfolio and your ease of losing. money. You should never invest money that you cannot afford to lose.

Read more: 5 most common cryptocurrency scams and how to avoid them

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Capital Com is an execution-only service provider. The material provided on this website is for informational purposes only and should not be construed as investment advice. Any opinion that may be provided on this page does not constitute a recommendation of Capital Com or its agents. We make no representations or warranties about the accuracy or completeness of the information provided on this page. If you rely on the information on this page, you do so entirely at your own risk.

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