When the enigmatic Satoshi Nakamoto developed Bitcoin a decade ago, he or she (as nobody knows) probably didn’t expect it to become a stock market commodity to be traded like stocks and shares. Yet, that’s precisely the fate which has befallen Bitcoin. The reason the world’s first cryptocurrency has survived this long is also the reason why few retailers will accept it any more – its value yo-yos dramatically from one week to the next. A company advertising a product at one Bitcoin during July would have received anywhere between $9,500 and $12,500. That’s not ideal in terms of maintaining a healthy profit and loss account.
Yet Bitcoin’s survival after ten years contrasts with some of the also-rans and never-weres which followed it out the gate. The deadcoins.com website lists a total of 1,735 failed cryptocurrencies, ranging from corporate launches to Ponzi schemes. Similarly, coinopsy.com reckons 264 altcoins failed to survive in 2018 alone. And while some coins were clearly scams or jokes (though even Dogecoin ended up making a doomed bid for respectability), many were initially perceived to stand a reasonable chance of success.
The demise of these failed cryptocurrencies provides salutary lessons for anyone considering launching their own Initial Coin Offering (or ICO). It should also prove instructive to companies contemplating whether to accept crypto as a payment platform, alongside PayPal and credit card transactions…
Reason for its demise: SpaceBIT attracted huge attention in 2014 by promising to fund nanosatellites for a globally-accessible blockchain. No proof of concept or prototypes emerged, and the team behind SpaceBIT quickly moved onto an unrelated blockchain venture.
Lesson to learn: If you’re going to invest in (or support) a new cryptocurrency venture, make sure there’s something tangible which demonstrates commitment by the developers.
Platform: Ethereum DAO
Reason for its demise: Ethereum was already an established crypto brand when it developed a Decentralized Autonomous Organization. However, the investors who poured $168 million into DAO then watched in horror as a hacker waltzed off with over $50 million.
Lesson to learn: Security can never be too tight. DAO was rushed into existence without proper testing, and a gaping hole in its security resulted in the brand’s reputation being ruined.
Reason for its demise: Founded by the man behind another doomed cryptocurrency, it was no surprise that CryptoCopy’s active users were ultimately left out of pocket.
Lesson to learn: Perform due diligence on the person or people underpinning new crypto. If they have a dubious track record or remain anonymous, your investment probably isn’t safe.
Reason for its demise: Uniquely on this list (though not in the febrile world of failed cryptocurrencies), ScoreCoin has collapsed twice. It failed to take off after a 2013 launch, then was resurrected in 2017 in response to bullish market sentiment – with a similar outcome.
Lesson to learn: If an ICO failed at the first time of asking, there’s no reason it will flourish in the second attempt. Approach hard forks of struggling cryptos with similar caution, too.