What are dead coins?
Dead coins or dead coins are the digital assets of abandoned projects, fraudulent projects, low liquidity or insufficient funding, among many other reasons.
On the cryptocurrency meter, dead coins used to imply copper has been making the most of all value but continues to float in blockchains without hope and abandoned forever.
You will usually find the Dead coin by clicking on the “Show all balances” tab on the Binance wallet section or by performing a search on the wallet’s public address.
There are sites like Coinospy and Dead Coins that track cryptocurrency projects that have floated in this dead space. Reporting dead coins can even earn extra money or recognition from these sites.
The cryptocurrency industry is awash with “dead coins” that are launched with great fanfare but ultimately have a near-zero minimum benefit for anyone. These coins are often subjected to a deliberate and incomprehensible death when their creators withdraw users’ investments and leave bags holders – i.e. investors who continue to hold large quantities of a particular coin or token, regardless of its performance, then wonder where their portfolio value has gone
The rise of these coins gained momentum in the ICO craze that rocked the space in 2017. The ICO has raised the number of coins available from 29 to more than 850 projects. In 2018, developers launched more than 1,200 cryptocurrency projects. In December 2020, the total cryptocurrency reached nearly 8,000. Also this year, a new type of scam, called “rugpulls”, created a new generation of dead coins.
Not all of these coins have maintained or in fact even started to circulate actively. In fact, it is likely that many investors may be holding dead cryptocurrencies.
How to recognize dead coins
Negligible trading volume
Every real project starts with high expectations and big intentions, believing that they will find the backing of cryptocurrency traders. However, some of them quickly fell victim to low trading volumes, due to the limited listings on the top exchanges. In the cryptocurrency market, up to 60% of all projects have poorer liquidity.
Low trading volume implies that crypto assets lack the interest of utilities or traders, and this leads to having projects quickly abandoned. It is estimated that six out of ten coins with negligible volumes are no longer supported by their developers. Platforms that track dead coins often consider a cryptocurrency to be dead or abandoned if it has a trading volume of less than $1,000 within three months.
The Joke project carries the meaning of the word “joke” – joke. These are projects that don’t have a specific plan, but they’re still looking for investment, sometimes getting unexpected interest in what they’ve planned. Some cryptocurrency enthusiasts initially saw value in them and bet their money. For example, infinite Ethereum Token (UET) organized an ICO and raised more than $300,000.
While there are exceptions like Dogecoin and MEMEcoin, for every joke coin that creates it can cause 9 other coins to fail. In the current list of dead coins in cryptocurrencies, joke projects account for 3%.
Less or no funding
Failure to attract funding or not having enough funding to support development can bring a project to the brink. About 3.6% of the dead coins are in this category. However, failure to attract funding does not mean that a project lacks benefits or viability. That’s simply because it doesn’t provide enough profit margins for interested investors.
Some notable dead coins
BitConnect (BCC) – BCC is the largest Ponzi scheme in the cryptocurrency industry. It provides a platform for trading Bitcoin for its native currency and getting high yields.
A bot is calculated under the yield program due – however, the calculations have increased skepticism among investors. Its woes began in late 2017 when UK financial regulators raised concerns about its legality.
BitConnect achieved initial success thanks to its large marketing budget and the rise of Bitcoin, however, in early 2018, regulators in Texas labeled it a Ponzi scheme. Shortly thereafter, the project closed, causing the BCC price to drop by 9%. Soon, the infamous call to gather signatures in the video below by main cheerleader Carlos Matos became bitconnect’s death and has since become one of the most enduring cryptocurrency memes.
The cause of dead coin: Fraud
Initially, ARNX was one of the coins that could be traded on Binance. The exchange then delisted the currency, causing its price to drop by up to 90%. Its founders minted 10 more tokens but never distributed them to the community. Although the core team noted that they would unlock the additional coins later, instead, they continued to issue them for seven days, causing a negative impact on the price.
Causes of death coin: Suicide
This is an example of an abandoned project. Reports suggest the project was acquired by another company that had ceased operations. VEGCOIN targets the sports betting ecosystem.
STO dies due to market decline. On its website, STO has an order book with just 18 categories. It also has a liquidity depth of 0 ethereum (ETH), at a price of $0.00000. Not as great a store of value as its name implies after all.
Causes of death coin: Crypto Winter
The first 0xBTC coin was mined in 2018 and reached a price of up to $5. After that, the price dropped to about $0.10. In return, the core team of the project left the project.
The cause of death coin: Abandonment
How to avoid projects that can become dead coins?
In the vast cryptocurrency ecosystem, the possibility of having a dead coin in your portfolio is highly likely – but don’t ask “is crypto dead?” Because the diligence of investing in altcoins can give you important insights into reliable projects. Just the knowledge that dead coins exist is enough to help investors make informed decisions.
How to detect the signs of a dead coin? Observing the project’s presence and activity on social media platforms can also shed light on the potential of a dead coin in the future. In addition, viable currencies are listed on reputable exchanges such as Binance, which are remarkably liquid.
For example, dead coins scams in crypto can be avoided by evaluating the ROI (return on investment) promises of project owners.
As more dead coins continue to create the illusion of good projects, investors can rely on extensive background checks, profit reports, availability on exchanges, and trading volumes to choose a valuable currency in a sea of junk projects.