Here's How Many Crypto Coins Failed Last Year

Cryptocurrency has been around for over a decade now, and it has already had its fair share of ups and downs. The cryptocurrency market was hit hard last year, losing over $2 trillion in value since reaching its height in 2021. After the crypto market reached $3 trillion in November 2021, it dropped by close to 75% in just over a year. This decline is a big reason why numerous crypto funds, exchanges, and crypto billionaires like Sam Bankman-Fried went bankrupt.

Last year saw some significant coin failures (and an increase over 2021), but nowhere near as many as in 2018, when 751 cryptos failed. Here's a look at failures from 2013 to 2022, and what we can learn from these changes in the marketplace.

How many cryptocurrencies are there?

At this point in time, it's hard to give an exact number of how many cryptocurrencies exist. With new ones being introduced to the market almost daily, it's safe to say that the number is constantly changing.

According to CoinMarketBase, there are 24,378 as of this writing, to be exact. However, CoinMarketBase only tracks 9,754 of them. Crypto.com tracks 16,303 coins, Investing.com tracks 9,430, and Statista's data shows there are nearly 9,000. With so many currently out there and new ones popping up every day, it is important to do your research before investing.

Why are there so many cryptocurrencies?

One of the primary reasons is the growing simplicity of creating new cryptos. Smart contract blockchains such as Ethereum and Solana (SOL) offer users the ability to develop decentralized apps (dApps) utilizing digital tokens.

In addition, platforms like OpenSea and Rarible are making it possible for those without any coding expertise to create non-fungible tokens (NFTs). With these advancements, cryptocurrencies are opening up new avenues for developers, artists, and investors alike.

How many cryptocurrencies have failed?

According to CoinKickoff, from 2013 to 2022, there were 2,383 crypto coin failures. The average lifespan of a cryptocurrency is 15 months and older coins are more likely to fail than new ones. Here is the breakdown of each year's failures.

One of the main reasons why cryptocurrency projects fail is due to the lack of demand for their tokens. Many of these coins were created without a clear use case or utility, which led to low demand and ultimately failure. These coins that were abandoned made up two-thirds of all failures.

Unfortunately, the second biggest reason for failure was due to fraudulent or scam projects that deceived investors. These types of projects offer high returns or promise to revolutionize the industry, but in reality, they are just Ponzi schemes. One example of this is OneCoin, which was pitched as an alternative to Bitcoin and claimed to have a market capitalization of 50% of Bitcoin. It turned out to be a scam, and investors lost $4 billion dollars.

Is the crypto industry beginning to mature?

The cryptocurrency industry has come a long way since its early experimental days, which were characterized by volatility and uncertainty. But a shift has occurred in recent years, as failure rates for launched coins have steadily decreased. From 2013 to 2017, the mortality rate for new crypto coins was above 50%. 2014 saw the highest failure rate for new crypto coins, and of the 793 coins released that year, 76.5% no longer exist.

While in terms of numbers 2018 saw the most failures at 751, the proportion of dead coins dropped to 27.62%. This figure fell even further to 4.74% and 1.03% in 2019 and 2020, respectively. The number of crypto coins that failed in 2022 increased to 83 from the 74 that failed the previous year, but the failure rate hit an all-time low of 0.06%.

This trend suggests that the crypto sector has become more mature and stable. Investors are also becoming wiser about potential scams. Despite the drop in market cap, as newer projects establish themselves more securely, the crypto industry may be entering a new era where innovation and stability go hand in hand.