Dead Coins List Waits for New Altcoins
With 2017 over and 2018 upon us, many experts and commenters in the blockchain community are coming forward with predictions about what we could encounter this year. A number of these voices are saying that many altcoins will soon be disappearing from the market or lose all their value.
Is there any truth to this sentiment? In this article, we’re going to take a look at the future of altcoins, and the potential validity of the idea that most of them will be gone eventually. The site deadcoins.com lists hundreds of such supposedly failed projects from years past.
Why do some altcoins fail?
Back in 2013, there were only about 40 cryptocurrencies to choose from. Today, there are thousands, and that number is growing every day. 2018 will likely see another wave of new cryptocurrencies hitting the market.
When considering what caused the death of an altcoin, we need to consider a few factors. That being price, market capitalization, community support, and development. It’s safe to call the cryptocurrency dead when all four of these factors point to such a conclusion.
For an example of what is essentially a dead coin, let’s look at BBQ coin. Launched sometime around 2013, BBQ coin was once listed on coinmarketcap.com and had a price of USD 0.29 each. It had a total market cap of around USD 8 million at the end of 2013.
The currency had its own web page, sub-Reddit, and development team. Fast forward to today and almost no trace of the coin can be found. It is no longer listed on coinmarketcap, it’s sub-Reddit has seen no new posts in three years and its homepage has been taken over. By these definitions, we can consider this currency to be effectively dead. What was it created for originally? According to its archived homepage, “just for fun”.
Is a large scale altcoin crash coming?
As the rate of cryptocurrencies coming out now is so rapid, and valuations of many of them are purely based on speculation, it’s conceivable that a crash could be on the horizon.
It’s likely that such a crash could be similar to the great video game crash of 1983. The cause of the crash was too many low-quality products entering the market too quickly. The same could be said for cryptocurrency as many projects are popping up without much guidance, forethought, or innovation, and are just attempting to get as much cash as possible before disappearing.
Are all altcoins doomed? The answer to that, most likely, is no. While a lot of the ones we see today probably will not exist in a few years, there is still a lot of room in the cryptocurrency field for a wide range of niche cryptocurrencies.
As bitcoin expert Andreas Antonopoulos suggests in one of his talks, many of these currencies will find homes in very specific niche markets and use cases. The ones that don’t survive will be left for the history books.
How can a new currency survive today?
In order to compete in today’s extremely competitive cryptocurrency market, new assets and smaller blockchains need to be competitive and need to have a compelling reason for existing. Making a new altcoin just for fun is simply not enough anymore. Additionally operating as only a means of exchanging value is not enough, either.
Quite a few projects are appearing where they claim to be the bitcoin of a certain market. For example, a large number of cryptocurrencies have appeared that claim to be the bitcoin of adult entertainment. However, all that these cryptocurrencies are offering is essentially the same as bitcoin, but without the brand recognition, support, or technology and platform innovations.
There is no incentive for any specialized industry to take on an entirely new and untrusted payment method simply because it was aimed at them by a developer.
Innovation is essential
Conversely, a number of blockchain projects are appearing today that not only act as a medium of exchange, but also use their technology in exciting and innovative ways.
For example SALT tokens are used for an innovative lending platform, Golem tokens are used to power distributed computing, OmiseGo is used for a distributed peer to peer exchange, and so on.
We have also seen a growing number of privacy-centric tokens like Monero and PIVX that allow for anonymous exchanges of value, something that bitcoin is not able to do currently.
History tells us that to stay alive, an altcoin needs to innovate, be unique, have regular development, and service a real need or use case. We’ve seen a number of projects that match this description nicely, as well as many that don’t. It is this author’s opinion that projects that meet this need will stay alive for the foreseeable future. Those that don’t? The history books are waiting for their pages to be filled.
