Blockchain technology is often hailed as a new type of business entity. Yet, despite its advantages over traditional applications, there remains a constant between the two. Small start-up businesses have a fairly high failure rate at 30% within the first year and up to 66% by the tenth. For cryptocurrency, many of the smaller projects fail to deliver on promises and ultimately fizzle out and die as a result of lack of interest and insufficient validation power.
The market fixates on success stories, but for every Ethereum (ETH) or Ripple (XRP), there is a BitConnect that failed to deliver on big promises. As the cryptocurrency market still lacks even a basic regulatory framework, fraudulent ICOs and exit scams are still fairly common. While the current market health has depressed these dangerous products – they still exist, and they are still preying on new investors.
It’s not always fraud or ill intent that can sink a prospective project. Created in 2014, Coinye West – later just Coinye – could have been the Dogecoin (DOGE) of the hip-hop community. A solid development team and an early start suggested that the project could have found some level of success in the future. Unfortunately for everyone involved, the coin’s namesake celebrity, Kanye West, took offense to the entire project. Notoriously thin-skinned, the rapper spared no expense in his legal actions against anyone even marginally associated with the project. The development team shuttered the coin soon after – although their legal nightmare did not end until months later.
On the opposite side of the cryptocoin, the BitConnect fiasco is one of the highest profile scams in the history of the industry. Touted as revolutionary investment platform, BitConnect’s marketing blitz drew a staggering number of investors. In turn, this drew the attention of financial regulators – who quickly determined that BitConnect’s promises were unrealistic, if not outright fraudulent. Vocal critics in the community accused the BitConnect of running a classic ‘Ponzi’ scheme. After receiving two ‘cease and desist’ letters from separate states, the BitConnect platform was shuttered. However, their BCC coin remained listed on at least one exchange until August of 2018.
While Coinye and BitConnect are high-profile enough to remain in the community’s memory, there are hundreds of others. CryptoSlate maintains a list of some coins that can be confirmed abandoned – but other small projects never gained notice in the first place. Hundreds of these small coins failed to find backing, lost all of their validating power or performed an exit scam with initial investments. While the environment that allowed these coins to flourish will shrink in the face of looming regulations, savvy users should always consider the merits of a small project before
Article By: Adam Stone