What are Dead Coins in the Crypto Market?

What are Dead Coins in the Crypto Market?

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Cryptocurrencies may be a game-changer in both the IT and financial industries, but not all digital currencies are worth keeping.

The crypto market is riddled with the ashes of so-called “dead coins” released with tremendous excitement but eventually had little to no utility to anybody. To put it another way, the inventors of these currencies would pay out their customers’ money, leaving them to wonder where their capital went.

It was during the ICO mania of 2017 that the multiplication of these currencies took off. From 29 to over 850 projects, ICOs have increased the number of coins accessible for purchase. More than 1,200 new crypto projects were launched in 2018 alone, further expanding the market. Scams known as “rug pulls” have been causing a new generation of dead coins this year.

What Is a “Dead” Coin?

For various causes, dead coins are digital assets associated with projects that have been abandoned or turned out to be frauds, have a low level of liquidity, or have inadequate financing.

Dead coins are often discovered by clicking on the “Show All Balances” button in your Binance wallet area or searching for your wallet’s public address in Google. Keep in mind that the sight of their defeated moonshot currencies may be too much to take for any crypto user who has more than two years of financial experience under their belt.

Websites like Coinospy and Deadcoins keep track of the crypto projects that have died and are floating about in this “dead space.” Reporting dead coins may result in you receiving further compensation or credit from these websites.

What Are the Signs That a Cryptocurrency Is Dying?

Trading Volumes are Shallow

The beginning of each legitimate initiative is marked by great aspirations and the best of intentions, with the hope that bitcoin traders would reward their efforts. However, because of the local listings on major exchanges, some rapidly become victims of low trading volumes. According to some estimates, up to 60% of all projects have poor liquidity in the cryptocurrency market.

In general, low trading volumes indicate that a crypto asset lacks either usefulness or trader interest, resulting in the investment being abandoned very quickly in the vast majority of instances. According to estimates, their creators no longer maintain approximately six out of ten coins with insignificant quantities. In the case of a cryptocurrency with a trading volume of less than $1,000 in the previous three months, platforms that monitor dead coins consider it lifeless or abandoned.

Projects that are Intended to be Amusing

These are initiatives that do not have a clear strategy, but they are still looking for investors, and they have occasionally received unanticipated interest that much exceeds their expectations. Surprisingly, some cryptocurrency enthusiasts first find value in them and place bets with their money. For example, the Useless Ethereum Token (UET) performed an initial coin offering (ICO) and raised more than $300,000 in funding.

Even if certain outliers, such as Dogecoin and MEMEcoin, nine others fail miserably for every joke coin that succeeds. Joke projects account for 3% of the total number of dead coins in the cryptocurrency market today.

Funding that is Insufficient or Non-existent

A project’s failure to acquire finance or a lack of sufficient cash to enable development may result in the project’s inability to get off the ground.

This group contains around 3.6 percent of all dead coins. A project’s inability to acquire money does not always imply that it lacks usefulness or feasibility. This may be because it does not provide enough good profit margins to attract investors’ attention.