Research by Coinopsy and Dead Coins, two digital currency tracking websites, shows that over 1,000 cryptocurrencies and ICOs are dead.
Qualifications to be a dead coin requires “lacking any development or future activity in their protocol”. The reasons for their deaths are wide reaching, but including “common exits scams, website closure, and abandoned code to deliberate pump and dump, malfunctioning wallets and alleged death of project developers”.
Interestingly, the failure rate is higher than normal for investments since a recent CB Insights report indicated that only 28% of blockchain companies could reach second round seed funding, whereas the normal is 46% for startups. Another report by Satis Group shows that only “8 percent of cryptocurrency projects make it to reputable exchanges after their ICO.” However, it also tends to be common knowledge that most startups and new businesses fail initially and that it typically takes many attempts before success, especially for innovative new technologies like cryptocurrencies.
Creative Destruction turns failure into benefits for consumers
“This process of Creative Destruction is the essential fact about capitalism”, said Joseph Schumpeter, the famed economist. Schumpeter developed the theory of Creative Destruction, which basically says that new production methods are constantly being developed (creativity) and tested in attempts to replace (destroy) old production methods. Through this process, there are many failures; there are failures by old businesses being replaced by the new and failures by the new businesses attempting to replace the old. However, everyone is attempting to serve consumers in ways that they believe to be the most appropriate, and those that do it best, win in the competitive marketplace. A good example is the so-called dot-com bubble since there were a ton of internet companies that were attempting to creatively destroy old brick and mortar stores, as well as each other. Most of them failed, but out of that competition and failure emerge companies like Amazon, which has immensely benefited consumers today.
Cryptocurrencies are not only attempting to replace the traditional monetary and financial system, but also attempting to replace each other. This causes intense competition in the attempt to provide consumers with better services, some of which might be really good and some of which might be out right scams. However, through repetitive consumer offerings in the free marketplace, the best entrepreneurs and businesses rise to the top, in this case, the best cryptocurrencies. This system not only rewards consumers with better services and cryptocurrencies, but also rewards consumers and entrepreneurs with better judgement and investment skills by rewarding their risk taking with profits. Thus, many coins and tokens have and will die, but there will be a handful that are successful and offer consumers revolutionary new services.
Dash already lived through this cycle and came out a winner
Dash started out as a fork from Litecoin, which at the time, just recently forked from Bitcoin. However, Litecoin soon became a dead coin and development ceased. This caused the Dash community to innovate by re-forking from Bitcoin and initiating its own updates to adapt to the marketplace in order to provide the best possible services to consumers. The Dash community continued to innovate and initiate updates, while other coins had faltered. Litecoin eventually got revived, but Dash had already built a trusted track record with consumers and was well on its way to becoming the reliable and consumer friendly cryptocurrency that it is today.
When this all occurred, the cryptocurrency market was a lot smaller and ICOs were not nearly as popular as they are today. Nevertheless, there was still competition between coins in an attempt to gain more users to replace the traditional monetary and financial system. The bad coins got filtered out, while the good coins became more popular and successful. As Schumpeter noted, this cycle is constantly ongoing, so the the currently ineffective coins will fail, while the useful cryptocurrencies will succeed. Dash has consistently demonstrated itself to be a reliable and revolutionary cryptocurrency through its technological innovations and consumer and merchant adoption. As other coins continue to fail, Dash continues to rise to the top.
