There’s been a lot going on with altcoins lately.
If you’re a fan of altcoins you probably have a strong feeling that almost all altcoins fail.
At Altcoin Herald we’ve been keeping track of launches and what happens to the cryptos after. Our recent research took a look at what happened with altcoins Launched in May.
As you probably correctly guessed, the results were not pretty.
Only 23 out of 122 altcoins we tracked are currently active! That’s right. One month later only 18.9% of altcoins that launched have any semblance of activity.
It’s not accurate to say these coin projects have succeeded, either. So far they just haven’t outright failed. That does not mean they’ll eventually succeed. It simply means the community and the ‘Dev’ have yet to completely abandon the project.
We’ll study these coins in July to see what further erosion happens. The research bolstered what our intuition has been telling us. Altcoin City is a place fraught with failure.
Why Do Altcoins Fail?
Altcoins fail for many reasons, chief among them are:
- Project leaders abandon project.
- Community refuses to embrace the cryptocurrency.
- Exchange volume is non-existent or low.
- Social media marketing failed.
- Lack of positioning/bad branding.
- Project leaders underestimated the amount of time and effort the project would take.
Let’s not forget the most obvious reason new coins are failing: they are being launched into an environment where hundreds and hundreds of similar projects already exist! The competition is already bad and it’s getting worse all the time.
Dissipation Of Resources And Dilution Of Market Share
Endless launches of altcoins have caused a major dissipation of resources as well as massive dilution of market share.
For the most part, all altcoin launches are forced to pull from the same pool of existing people and resources in order to find their audience and market. No altcoin has ever shown the ability to create a new market in the way that Bitcoin has. Therefore all cryptocoins that launch are forced to deal with a certain reality that has played itself out time and time again.
This ‘pool‘ of people I speak of continuously diverts attention from older alts and places it on newer ones. This innate bias towards launches is what is guaranteeing failure for new coins over the long-term. Yes, coins can launch and make a splash for a short period of time. Once several months pass, the feat becomes harder and harder to pull off. With the initial burst of enthusiasm for the project gone the only thing that’s left is the hard work of fighting an uphill battle to gain widespread acceptance.
In Altcoin City, when the going gets tough, the tough get going - to another launch that is!
As we’ve speculated before, it’s realistic to assume that a high percentage of the launches are the work of the same people. They’ve learned to capitalize on the current system, even though it smacks of a scam and desperation. These people KNOW that their coin has no long-term chance of success and they launch it fully aware of that fact. Mammix2, who recently launched MaiaCoin is a prime example of a coin Dev who’s well aware that long-term success is outside of his reach. Instead he’s focusing on the mindless launch cycle to make profits while they still exist.
So What’s The Point Then?
If I were making recommendations to a friend about ‘investing‘ in altcoins it would go something like this.
“Realize you’re probably buying a piece of shit. Set trading rules to get out as soon as possible on a loss or profit. If you do make a profit, count your blessings. Don’t let your temporary success go to your head because if you think you’re an altcoin trading genius you’ll be proven wrong in seconds. Most importantly NEVER EVER HOLD this crap for long periods of time.”
Holding an altcoin forces you to be a bagholder long after the project has lost its luster and has been replaced by countless other clones that are fresher and of more interest.
Get out fast! Don’t delude yourself into thinking that your altcoin investment is going to pay off long-term because of ‘development.’ There’s still NO proof that most altcoins are used by ANYBODY of significance. Go ahead and ask five of your best friends if they’ve purchased anything using Litecoin lately. I’ll wait.
Until a coin Dev comes up with an actual marketing plan that could be executed on a worlwide basis, most cryptcoins are going absolutely nowhere.
With the amount of dissipation of resources going on in conjunction with dilution of market share it seems highly improbably that any cryptocurrency will be able to unite the community in the way that Bitcoin has done. Right now it appears that altcoins are mostly earning their reputation for being ‘scams.’
Not only are most of them scams, they are generally poorly conceived and executed ones.
We’ll continue to record our results and track the movements of altcoins. Maybe one will surprise us!
Right now please exercise caution when trading in alts. A scam-rich environment like this one makes it very easy to lose your capital.
Thanks for stopping by and reading. If you have any comments, please leave them. We’d love to hear from you!