‘Certified Newly Baked Carcasses’ – CNBC’s Wafer-thin Analysis of the 800 Dead Cryptos
According to CNBC, the cryptocurrency arena is a market for undertakers, morticians, and grave diggers. Approximately 800 coins — all of which are priced at less than one cent — are considered “dead”.
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CNBC: Crypto’s Self-Designated Undertakers
The CNBC coverage refers to a website called DeadCoins.com, which tracks initial coin offerings (ICOs) deemed scams, deceased, hacks or malware (or victims of hacks), and parody. So far, the platform has identified approximately 800 separate assets that can be labeled as either “dead” or “dying”.
CNBC’s coverage needs to be taken with a grain of salt, as does DeadCoins. The latter allows anyone to anonymously report a token as a scam. And CNBC’s coverage begins with the ominous sentence: “Over 800 cryptocurrencies are now dead and worth less than one cent.”
Experienced crypto enthusiasts know a vast number of coins are worth less than one cent, with two appearing among the top 30 coins by market cap, per Coinmarketcap at press time. In the opening sentence, CNBC implies that one cent — an entirely arbitrary figure — is the dead coin litmus test. The industry is fully aware of widely suspected scam coins worth more than 1 cent, as well as promising projects with tokens worth a lot less.
Furthermore, as CNBC itself reports, many ICOs are verifiable scams. Including scams in a dead coin list to indict the entire cyptocurrency arena appears to be somewhat disingenuous. Scam tokens are “dead” and worthless because they started out as scams, not necessarily because there is an inherent problem with the industry or the ICO fundraising method.
Every New Industry Follows a Similar Pattern
Cryptocurrency is just like any other industry. Someone starts out with a solid idea that gets things going. From there, competitors emerge, boasting all the benefits of the original product along with additional advantages. Sometimes, the companies deliver and stay in business for years to come.
But other times, ventures prove either false, weak, or incapable of holding their ground, which is increasingly apparent among ICOs. The dead coin website attributes the number of dead currencies to scam ICO programs, in which the currency was only built to steal money from inexperienced or naive investors.
How Does an ICO Work?
ICOs are generally tied to startups seeking to attract early capital. A company creates a cryptocurrency that the investor can buy and ultimately use as a redeemable utility token in the endeavor in which the company is involved. Investors receive no equity in the business; only digital tokens. Most investors lack an underlying belief in, or understanding of, the project, and buy tokens for purely speculative purposes.
For the most part, ICOs have proven popular among cryptocurrency investors. According to CoinSchedule.com, companies around the world raised a whopping $3.8 billion USD through ICO funding in 2017. That number has jumped to $11.9 billion within only the first half of 2018.
Not Always What They Seem to Be
But many ICOs have no intention of following through on their promises, and seek only to scam investors out of their hard-earned dollars. A recent Wall Street Journal report found that almost 20 percent of ICOs are fraudulent, whereas a Satis Group study has that figure up around 80 percent.
The contrast is possibly due to the latter survey using a more expansive definition of “scam” that goes beyond the mere intention of the creators to commit fraud. The Satis definition of scam includes the term “… and/or was deemed by the community (message boards, website or other online information) to be a scam”.
CNBC states that bitcoin’s fall from near $20,000 has taken a huge toll on many up-and-coming digital currencies. When bitcoin falls, many other currencies follow suit, which can put newer and less-established coins at risk. New assets usually aren’t worth much when they’re starting out (remember even bitcoin started out at five cents), and once they fall, it’s very hard for them to recover.
Does this news make you a little crypto concerned? Post your comments below.
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