More than 800 cryptocurrency projects that entered the market in the recent times have died, most of them were scams or frauds that ran off with the investors’ money using faux ICOs.
In addition, Bitcoin, the most popular cryptocurrency, has also seen a 70% decline in its record high value of around $20,000. This has also led to a general distrust of new ICOs with people cashing out or avoiding them altogether to avoid another Bitcoin like scenario.
The market is becoming more and more saturated, and the death of most cryptocurrency can be attributed to adverse supply ratios.
An ICO, or initial coin offering, is when a cryptocurrency startup enters the business by issuing out a new coin to investors at a minimal price. But unlike an IPO (initial public company) done by public entities, investing in an ICO does not get investors an equity stake in the company. The newborn cryptocurrency is handed out to the buyers instead, and it can be used for trading and entering transactions that involve the company’s product.
It’s a good investment for some, as it’s quite cheap in the early stages and has the potential to yield great profits in the future. According to CoinSchedule, the cryptocurrency market, so far, has raised a stumbling $11.9 billion in 2018 through ICOs and the number is expected to show marginal growth in the coming years.
However, numerous projects died out before materializing, as they were either scams that simply hauled in investors’ funds in exchange for nothing or did not develop into a sustainable product. It’s a risky investment indeed and requires a lot of patience and research to find the right coin.
Dead Coins, a website that tracks dead cryptocurrency projects, has identified over 800 such products – these currencies have turned worthless and cost less than a cent.
Some experts are still optimistic about Bitcoin’s future, Arthur Hayes of BitMEX – CEO of a cryptocurrency exchange – told CNBC that he expects Bitcoin to climb to at least $50,000 by the end of 2018.