Why Crypto Projects Get Abandoned

Ups and downs in the Crypto World

From scam schemes to weak planning, there are plenty of issues that drown cryptocurrency projects.

According to the Statista portal, there are over 10,000 cryptocurrencies on the market right now. Some of them have already replaced fiat money in thousands of holders’ wallets. Others are even aiming to change the finance sector and infiltrate most of the life spheres like health, education, logistics and digital technologies.  

Considering the huge level of competition, it’s no surprise that many concepts have failed. Coinopsy, the website that tracks dead crypto projects, says that over 2,400 coins have derailed since the very birth of Bitcoin in 2009. Let’s dive into the topic and see the most common reasons for such a breakdown tendency. 

Why ICOs and crypto projects disappear

As we previously mentioned, there could be dozens of reasons for cryptocurrency to leave the market. However, the losses are offset by the newborn projects offering better ideas and solutions for users. The creativity of crypto founders truly has no limits this time, if we remind STEPN motivating people to have more active lifestyle, or Cardano which is designed to lower the power consumption along with many other green coins we have told you about on our SimpleSwap Blog.     

Talking about the most frequent causes of crypto projects’ death, we can distinguish a few core ones — initial fraud, poor planning, low budget, tough competition, market volatility and a weak idea along with the absence of community support. Below we will talk more about each point and give examples of projects that left the market due to these circumstances.

Initial fraud

One of the reasons is that some crypto projects and ICO (initial crypto offerings) are made as scam schemes. From the very beginning, the teams have a detailed plan on how to grab as much money as possible and disappear. These projects turned out to be fraudulent after the ICO stage, when they left their community with wrappers instead of real cryptocurrencies and abandoned all the social networks without saying a word.

A bright example of such a project is Squid Game (SQUID) (see our Meme tokens post to learn more about it) whose value went up from around $2 to $2,861 for one token. Unfortunately, when the market cap reached $30 million, the developers disappeared with approximately $3.38 million. 

It’s important to say, that even though some crypto projects do have such a risk, you don’t have to be afraid of the entire Crypto World. Do your best to make your own research about the project, look for Whitepapers and ask the team about their further plans on their work. We have already discussed the types of crypto scam schemes and gave some advice on how to avoid them in our previous Blog post.

Poorly planned

Poor planning is an important issue many founders are facing when starting their first projects. Setting goals is not that easy — you have to be sure you will be able to complete the stages, because the community awaits regular updates. The planning includes not only the core idea of the concept but also the development part as well as the marketing strategy. Promotion is very important these days because in the age of the Internet you ought to tell people about your idea through any available channels.

This reason could fit to explain why NanoHealthCare Token (NHCT) has left the stage. They wanted to utilize blockchain technology for impacting healthcare problems such as data privacy and high cost. But since April 2020, there is no information from the team.

The most upsetting thing is when a great idea gets shut down because of a weak road map, which, in turn, is a central piece of what we see when exploring the project.

Out of budget

The next point on our list is more a consequence of poor planning, but it should be highlighted as a separate cause as sometimes the lack of funds literally kills the project. Although the idea may be fresh and relevant, funding of the crypto project may not be sufficient to continue providing its life support.

This could be caused by many reasons — from disloyal community members not being interested enough in the concept to a lack of partnerships that could make a significant contribution to development.

1coin (ONE) went through tough times from the very start and now is considered to be dead. Probably, this happened because the budget planned for the project was not enough, and this stopped the whole development process. According to the 99bitcoins website, the additional issues the 1coin team faced were low volume and inactive development.

Competition is too tough

Sometimes, cryptocurrency projects just can’t stand the competition and it’s an absolutely normal situation considering the size of the market. After all, when newborn turtles crawl to the water, not everyone gets to the ocean. The same situation we see here — among thousands of projects appearing every year, only a few get global acceptance and fly to the moon.

Let’s take a look at PayCoin (XPY), which is a dead coin now. Launched in 2014, PayCoin was one of the largest crypto projects, with a market cap of $115 million in its 1st forty-eight hours. However, to deliver on promises and hit the market, the team has harried up too much with production and faced a huge issue of compromised privacy. That was the sad death of the promising project trying to become the best in this crypto race.

Market volatility

Not every project is able to withstand what is happening on the market today. The crypto winter, so often spoken of by enthusiasts and experts, seems to have become a reality. The value of many coins has reached the bottom, and is not going to rise yet.

Storeum (STO) is one of the concepts that has died because of a dwindling market. Its price has dropped down from $35 in March 2020 to $0.000000963 in July 2022.

It is impossible to predict how many more projects will fall from the winter’s cold, but it is clear that we will lose even more coins, which will not be able to bear such strong volatility of the market.

No support from the community

Weak support from the community members is not just a small issue but a huge problem that prevents the project from developing and becoming more popular. Everyone knows that, in addition to governance, the community works as an instrument to promote an idea and carry it to the masses. When this does not happen, it is very difficult for the team to get back on their feet and work on the project.

0xBitcoin (0xBTC) – its coin reached a price of up to $5. Later, the price fell to $0.04. In return, the project’s core team left the project. This is the case when the entire idea of the project turned out to be too weak to fight for.

Conclusion

To sum up we’d like to say that, of course, not all projects that enter the market will die. This depends on many factors, including those mentioned in our article.

If the founders initially know what they are going for, and have a clear understanding of the concept and its implementation, if there is a competent plan and a motivated team ready to go into the bright future and work hard, then everything will be fine. Useful and well thought-out projects have been on the market for years. Besides Bitcoin, have a look at Solana, Polkadot, Litecoin and many other ones, existing for years and only getting stronger!

SimpleSwap reminds you that this article is provided for informational purposes only and does not provide investment advice. All purchases and cryptocurrency investments are your own responsibility.