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The Power of Smart Contracts on the Blockchain

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The Power of Smart Contracts on the Blockchain

The world is waking up to the impressive capabilities of the blockchain.

As a foundational technology that things can be “built on top” of, the potential applications of the blockchain go way beyond just payments or cryptocurrencies. In fact, the blockchain could revolutionize how we interact with intellectual property, capital markets, insurance, healthcare, government, and many other sectors.

Introducing Smart Contracts

In particular, an exciting enabler of blockchain technology is the concept of self-executing “smart contracts”.

Today’s infographic comes from Etherparty, a smart contract creation tool, and it helps provide a welcoming introduction to how smart contracts work on the blockchain.

Smart contracts are going to change everything from the legal industry to the backbone of the stock market.

Here’s how these self-executing contracts actually work.

The Anatomy of a Smart Contract

Smart contracts help you exchange money, property, shares, or anything of value in a transparent, conflict-free way while avoiding the services of a middleman. Built upon the blockchain, a smart contract is usually:

  1. Pre-written logic in the form of computer code
  2. Stored and replicated on the blockchain
  3. Executed and run by the network of computers running the blockchain
  4. Can result in updates to accounts on the ledger (i.e. payment for an executed contract)

Using the Ethereum platform, smart contracts can be programmed using basic logic. On the most basic level, they can:

  • Perform calculations (i.e. calculating interest)
  • Store information (i.e. membership records)
  • Send transactions to other accounts (i.e. payment for a good or service)

But most importantly, it is important to know that smart contracts are autonomous. They are not controlled by anyone – instead, they self-execute based on a set of instructions that two parties have agreed to (ie. the code).

Benefits of Smart Contracts

Smart contracts are appealing for a variety of reasons:

  • Autonomy: There is no need to rely on third parties, which could be biased or not have your interests at heart.
  • Trust: Your documents are encrypted on a shared ledger, and all parties can have access to them.
  • Redundancy: Documents are duplicated many times over on the blockchain, and can’t ever be “lost”.
  • Safety: Documents are encrypted, making them near-impenetrable by hackers.
  • Speed: These contracts automatically self-execute, saving you precious time.
  • Savings: Smart contracts save you money by taking out the middleman.
  • Precision: Smart contracts execute the exact code provided, ensuring zero errors.
  • Transparency: For organizations like governments, they could add another level of transparency to dealings.

The blockchain is already a disruptive technology, and with these benefits – the potential behind smart contracts is another facet to be excited about.

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Technology

Charting the Number of Failed Crypto Coins, by Year (2013-2022)

We visualize over 2,000 crypto failures by year of death, and year of project origin. See how and why crypto projects die in these charts.

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The Number of Failed Crypto Coins, by Year (2013-2022)

Ever since the first major crypto boom in 2011, tens of thousands of cryptocurrency coins have been released to market.

And while some cryptocurrencies performed well, others have ceased to trade or have ended up as failed or abandoned projects.

These graphics from CoinKickoff break down the number of failed crypto coins by the year they died, and the year they started. The data covers a decade of coin busts from 2013 through 2022.

Methodology

What is the marker of a “dead” crypto coin?

This analysis reviewed data from failed crypto coins listed on Coinopsy and cross-referenced against CoinMarketCap to verify previous market activity. The reason for each coin death was also tabulated, including:

  • Failed Initial Coin Offerings (ICOs)
  • Abandonment with less than $1,000 in trade volume over a three-month period
  • Scams or coins that were meant as a joke

Dead Crypto Coins from 2013 to 2022

While many familiar crypto coins—Litecoin, Dogecoin, and Ethereum—are still on the market today, there were at least 2,383 crypto coins that bit the dust between 2013 and 2022.

Here’s a breakdown of how many crypto coins died each year by reason:

Dead Coins
by Year
Abandoned /
No Volume
Scams /
Other Issues
ICO Failed /
Short-Lived
Joke / No
purpose
20139000
20142772052
20152232712
20161522245
201716971466
201839023711212
201920373512
2020771990
2021343622
2022502382
Total1,58452823833

Abandoned coins with flatlining trading volume accounted for 1,584 or 66.5% of analyzed crypto failures over the last decade. Comparatively, 22% ended up being scam coins, and 10% failed to launch after an ICO.

As for individual years, 2018 saw the largest total of annual casualties in the crypto market, with 751 dead crypto coins. More than half of them were abandoned by investors, but 237 coins were revealed as scams or embroiled in other controversies, such as BitConnect which turned out to be a Ponzi scheme.

Why was 2018 such a big year for crypto failures?

This is largely because the year prior saw Bitcoin prices climb above $1,000 for the first time with an eventual peak near $19,000. As a result, speculation ran hot, new crypto issuances boomed, and many investors and firms got bullish on the market for the first time.

How Many Newly Launched Coins Died?

Of the hundreds of coins that launched in 2017, more than half were considered defunct by the end of 2022.

proportion of launched crypto coins each year that have died

Indeed, a lot of earlier-launched coins have since died. The majority of coins launched between 2013 and 2017 have already become “dead coins” by the end of 2022.

Coin Start YearDead Coins by 2022
201366.67%
201476.54%
201568.42%
201660.87%
201757.14%
201827.62%
20194.74%
20201.03%
20210.59%
20220.06%

Part of this is because the cryptocurrency field itself was still being figured out. Many coins were launched in a time of experimentation and innovation, but also of volatility and uncertainty.

However, the trend began to shift in 2018. Only 27.62% of coins launched in that year have bit the dust so far, and the failure rates in 2019 and 2020 fell further to only 4.74% and 1.03% of launched coins, respectively.

This suggests that the crypto industry has become more mature and stable, with newer projects establishing themselves more securely and investors becoming wiser to potential scams.

How will this trend evolve into 2023 and beyond?

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