What are Dead Coins?

While cryptocurrencies are seen as a transformative force in both the tech and financial sectors, not all of them deliver real value to their holders. In fact, the majority fail to offer any significant worth.

What follows in this article:

• What are dead coins?
• How can we identify if a cryptocurrency is dead?
• How to avoid investing in projects that may turn into dead coins?
• How to spot a dying coin?

What Are Dead Coins?

Dead coins are digital currencies associated with projects that have been abandoned, turned out to be scams, have minimal liquidity, or lack adequate funding. In the cryptocurrency world, these coins are often referred to as “worthless coins” that have completely lost their value.

You can often find dead coins by selecting the “Show all balances” option in the wallet section of your Binance account, or by searching for them through your public wallet address.

How Can We Identify if a Cryptocurrency is Dead?

Is the cryptocurrency dead or a scam? These kinds of projects typically lure investors with promises of high returns, but once they secure funding, their promises often turn out to be empty. Sadly, it’s estimated that 80% of all ICOs launched in 2017 were scams.

Minimal Trading Volume

Most legitimate projects start with high hopes and good intentions, aiming to draw in cryptocurrency traders. However, some projects suffer from low trading volumes due to limited listings on major exchanges. In the cryptocurrency realm, about 60% of projects encounter liquidity issues.

In general, low trading volume suggests that a digital asset either lacks utility or fails to capture traders’ interest, which in most cases leads to its abandonment. It is estimated that six out of ten coins with minimal trading activity are no longer supported by their development teams. Platforms that track dead coins typically classify a cryptocurrency as dead or abandoned if its trading volume is less than $1,000 over three months.

Joke Projects

These are projects with no clear business plan, yet they still seek investment and sometimes attract more attention than expected. It’s interesting that some crypto enthusiasts initially put money into these ventures. For instance, the Useless Ethereum Token (UET) ran an ICO and managed to raise over $300,000. While successful examples like Dogecoin exist, nine out of ten joke coins ultimately fail. Joke projects make up 3% of the current list of dead coins.

Lack of or Insufficient Capital

A project’s inability to secure adequate funding or to raise capital for further development can lead to its collapse. Roughly 3.6% of dead coins fall into this category. However, a lack of funding doesn’t always mean a project is without utility or potential; it may simply not provide attractive profit margins for investors.

How to Avoid Projects That May Turn Into Dead Coins?

In the broad cryptocurrency ecosystem, you may likely end up with a dead coin in your portfolio. However, it’s important not to rush into questioning, “Is this cryptocurrency dead?” Conducting thorough research before investing in altcoins can offer valuable insights into trustworthy projects. For example, assessing the return on investment (ROI) promises can help avoid scams linked to dead coins. Many of these projects offer “guaranteed” returns, even though cryptocurrencies are inherently volatile.

How to Spot a Dying Coin?

Monitoring a project’s social media presence and activity can provide clues about whether a coin is on its way to becoming dead. Moreover, reputable coins tend to be listed on well-known exchanges like Binance, which ensures higher liquidity.

Conclusion

Simply being aware of the existence of these types of coins can help investors make more informed choices. As more dead coins—often appearing as promising projects—continue to emerge, investors can rely on prior research, profit claims, exchange listings, and trading volumes to select valuable cryptocurrencies from the growing pool of worthless projects.

Source: CoinMarketCap