Cryptocurrency projects have been popping up left, right and center in the past 18 months, but over 800 of those are now dead, adding to comparisons between the current digital coin market and the dotcom bubble in 2000.
New digital tokens are created via a process known as an initial coin offering (ICO) where a start-up can issue a new coin which investors can buy. The investor doesn’t get an equity stake in the company, but the cryptocurrency that they buy can be used on the company’s product. People usually buy into an ICO because the coins are cheap and could offer big returns in the future.
However, hundreds of these projects are now dead because they were scams, a joke or the product hasn’t materialized. Dead Coins is a website that lists all the cryptocurrencies that fall into those categories. So far, it has identified just over 800 digital tokens that it considers dead. These coins are worthless and trade at less than 1 cent.
Bitcoin, which is the biggest cryptocurrency by market capitalization or value, has also had a tough year. The price of bitcoin has fallen roughly 70 percent since its record high near $20,000 last year, according to CoinDesk data. The big plunge in bitcoin’s price has has drawn comparisons with the Nasdaq’s sharp fall in 2000 and the failure of many cryptocurrencies has been likened to some of the companies that crashed during the dotcom boom.
Some of the recent bearish sentiment came after two South Korean cryptocurrency exchanges .
ICOs are incredibly risky investments and there is a lot of fraud in the space. The fake start-up ended up running off with $2 million of investor money. Still, many advocates see a future for ICOs as an alternative to initial public offerings and venture capital funding.
Kristina Taylor is a highly knowledgeable journalist who has been following the financial news and cybercrimes space since 2011. She holds a degree in communication and media studies from Aarhus University and has always had a passion for writing.
Throughout her career, Kristina has become a well-traveled journalist within the industry and has contributed to many well-known publications. She has a keen eye for detail and is often found poring over white papers to gain deeper insights into the latest trends and developments.
Kristina’s extensive knowledge and experience in the field of finance and technology make her an invaluable contributor to Financial Magazine. She is highly respected in the industry and is known for her ability to break down complex concepts into easy-to-understand pieces for her readers.