Will only 1% of coins survive?

By raven | Investment | 2 weeks ago

$2.53 tipped


Some months ago Ripple's CEO Brad Garlinghouse said that

99% of coins and tokens will go away.

This sounds plausible, but is it actually true? To give some insight into this issue I decided to take a look on the crypto market of exactly 5 years ago: November of 2014. What was happening then? Or more specifically, what happened to the top 100 coins (by market cap) by that date? How many survived? How many are doing well?

Methodology

What I did was quite simple. I collected the price data from coinmarketcap.com (CMC) on the top 100 coins by market cap on November 2014. Then I looked at how those coins are faring today in terms of price, ranking and volume on CMC or CoinGecko. The results are quite interesting.

Dead Projects

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Image source

Have you ever heard about Counterparty, Namecoin, SuperNET, NuBits? Me neither. Those are some of the top 20 coins of November 2014. In the top 100 of that time there were also coins with exotic names such as DopeCoin and one with symbol BALLS. But I digress.

The first category of coins, which we can say are definitely dead, are the coins for which there is not even price data available at CMC or Coingecko. Thirty eight out of the top 100 (i.e. 38%) are in this category. Some names include: FuelCoin (FC2), BitcoinDark (BTCD), XCurrency (XC), NeoDICE (DICE), WorldCoin (WDC) and Gridcoin Classic (GRCX).

Now we can also put together in the basket of dead coins the ones for which neither CMC or Coingecko have volume data. We can imagine that the reason for that is that there is no trade happening -- even though some of them have a price, somehow. Coins without volume data comprise 49% of the top 100 of 5 years ago. These include names such as SuperNET (UNITY), YbCoin (YBC), Quark (QRK), ShadowCash (SDC) and UltraCoin (UTC). So right off the bat we have that almost half the top 100 coins of 5 years ago are utterly dead: no price or volume.

Zombie Projects

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Image source

So, leaving half of the coins behind, we go for the next category. These are projects which are not technically dead -- they do have some price and some volume -- but almost dead, in the sense that they have too low a volume. First, the coins with volume below 1,000 USD in the last 24h. Those are 65% of all top 100 coins: the 49 dead coins, plus 16 coins that have volume data, but this volume is below $1K. Some examples include Counterparty (XCP), NuShares (NSR), Novacoin (NVC), Megacoin (MEC) and Unobtanium (UNO).

If we are a little bit more demanding and raise the bar to 10,000 USD, then as many as 81% of all the top 100 coins of late 2014 are out. Some coins that enter in this category are Namecoin (NMC), NuBits (USNBT), Feathercoin (FTC) and Bytecoin (BCN). We cannot really say that those projects are dead, because even some coins traded on Binance sometimes get daily volumes below $10K. Have in mind also that I just took the daily volume for 1 day. Maybe they were unlucky.

Bad Investments

Four (4% of) coins passed all the previous criteria but failed in an important one: they have lower prices today. They are Nxt (NXT), Peercoin (PPC), Zetacoin (ZET) and DNotes (NOTE). On the one hand, it is impressive for any crypto project to be alive after 5 years, but on the other it is disappointing for anyone investing in them to have less value after 5 years.

Fine Coins

Now there are 4 coins, BlackCoin (BLK, rank: 302, 258% price gain), ReddCoin (RDD, rank: 148, 2147% gain), Viacoin (VIA, rank: 359, 316% gain) and VeriCoin (VRC, rank: 685, 133% gain), which passed all the previous tests and also had gains in price, but their daily volume was between $10K and $100K, which might be a problem for liquidity.

BitShares (BTS, rank: 66) has daily volume above $100K and passed all previous tests, but only had gains of 61%, which might be a bit disappointing after 5 years (you can do better with stocks with much lower risk). So we have 5% of coins in this category.

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The Big Champions

Finally, only 10 coins (that is, 10%) passed all the previous tests, with daily volume above $100K and price growth of more than 100% over the last 5 years. They are: Bitcoin (BTC, rank: 1, 2287% gain), XRP (XRP, rank: 3, 3074% gain), Litecoin (LTC, rank: 6, 1597% gain), Dogecoin (DOGE, rank: 31, 975%), MaidSafeCoin (MAID, rank: 74, 337% gain), Dash (DASH, rank: 23, 2923% gain), Stellar (XLM, rank: 10, 3427% gain), Monero (XMR, rank: 13, 12134% gain), MonaCoin (MONA, rank: 60, 2274% gain) and Vertcoin (VTC, rank: 206, 437% gain).

All these projects proved to be very solid. It is also interesting that we find that Monero was really the "Bitcoin of 2014", with the highest returns of all in this period -- a 122 fold increase.

Summary

We learned that 81% of all top 100 coins of November 2014 have now less than $10K daily volume. Moreover, looking at the data we can see that all coins from rank 46 to 100 then are in that group (less than $10K volume). Of the 10 successful coins, six were already in the top 10 at the time, two others in the top 15, and the other two in ranks 31 and 41. Besides these 10 great champions, we had 5 more coins that can be deemed successful, at least in terms of surviving. So 15% of the top 100 "survived". The further down we go in the list, the more likely it is that the coin is now dead. It is telling that all coins from the bottom half are now at best in the "zombie" category (exist, but with very low volumes). Given that CMC lists now 4798 coins, if only 15 of the top 100 plus very few others below the top 100 survive, Garlinghouse might well be correct: 1% of this would be 48 coins, which seems to fit our analysis. It is important to note, however, that the crypto market today, despite being still in its infancy, is far more mature than it was 5 years ago, and what happened then might not apply so well nowadays.

Key takeaways:

  • In the long term, it is safer to bet on the "blue-chips": 70% of the top 10 coins are still doing fine;
  • It is incredibly hard to find successful projects below the top 10. Only 3 among the ranks 10 to 20, 5 between ranks 21 and 45, and from then on (up to rank 100) all failed;
  • Half the coins in the top 100 are dead now, after 5 years;
  • The "new Bitcoin" might be right under our nose, in the top 15, as Monero was in 2014.


For those interested in the complete data:

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Cover image source here.


raven
raven

I've heard of bitcoin a long time ago, but only recently I became interested in investment in general, which brought me to the world of cryptocurrencies. I am also interested in learning to develop blockchain applications.


Investment
Investment

In this blog I will talk mainly about cryptocurrencies and other forms of investment. The intention is to share and discuss ideas, so do not take any of this as investment advice.

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