Survivor Bias and Its Lies: Top 5 Failed Crypto Projects
Survivor bias is a real threat to any resistance force. When you look at the history of warfare, you’ll notice that only the successful battles are celebrated, and the failed ones are often forgotten. The same applies to the world of blockchain, where only the successful blockchains are given attention, and the failed ones are quickly forgotten. But as a battle-hardened soldier, I know that there are valuable lessons to be learned from the failures. In this post, I’ll take you through the top 5 blockchains that have collapsed due to survivor bias, and what we can learn from their mistakes. So, grab your gear and let’s dive in.
The first example of survivor bias in the blockchain world is perhaps the most infamous. Mt. Gox was once the world’s largest Bitcoin exchange, handling over 70% of all Bitcoin transactions. However, in 2014, the exchange suffered a catastrophic hack and ultimately filed for bankruptcy, resulting in the loss of over 850,000 Bitcoins.
Commander John’s Pro Tip: When analyzing the success of blockchain projects, it’s important to take into account those that have failed. By studying the failures of Mt. Gox and other collapsed projects, we can learn important lessons about the potential pitfalls of blockchain technology and how to avoid them in the future.
NEM was a promising blockchain platform launched in 2015 with the goal of offering faster and more scalable transactions than Bitcoin. However, the platform suffered a major setback in January 2018 when hackers stole $530 million worth of XEM tokens from the Coincheck exchange. This led to a decline in confidence among users and investors, which ultimately contributed to the collapse of the platform.
Commander John’s Pro Tip: Don’t fall into the trap of survivor bias by assuming that just because a blockchain platform is promising, it is immune to vulnerabilities and risks. Always stay vigilant and keep an eye out for potential threats to your investments.
Commander John’s Tip #3: Don’t be Fooled by Hype
Many blockchain projects fall prey to the hype surrounding new and emerging technologies. Investors and developers alike can be swept up in the excitement of a new project, without thoroughly examining its long-term viability.
This is where survivor bias comes into play. Just because a blockchain project has survived to the present day does not mean it will continue to do so in the future. It’s important to critically evaluate a project’s fundamentals, including its technology, community, and financial backing.
For example, in 2018, the cryptocurrency project BitConnect collapsed in spectacular fashion, losing over 95% of its value in a matter of days. The project had been heavily promoted on social media and other channels, leading many investors to put their faith in the project without fully understanding its flaws.
Don’t fall victim to hype and survivor bias. Thoroughly research and evaluate a blockchain project before investing time or money into it.
Peercoin was launched in 2012 as the first proof-of-stake (PoS) cryptocurrency, aiming to address the energy consumption concerns of proof-of-work (PoW) blockchains like Bitcoin. However, despite its innovative approach, Peercoin has struggled to gain widespread adoption and maintain its value over the years. In fact, the coin’s price has plummeted over 95% since its all-time high in 2018.
While Peercoin’s PoS consensus mechanism may have offered some advantages over PoW, it still faced significant challenges in terms of network security and decentralization. As a result, the project failed to attract enough users and developers to sustain its growth and development.
Commander John’s Pro Tip: Don’t be swayed by the hype around new blockchain innovations. Look for real-world use cases and a strong community before investing in a blockchain project.
The DAO was a decentralized autonomous organization built on the Ethereum blockchain in 2016. It was meant to act as an investment fund for the development of decentralized applications on the Ethereum network. The DAO was unique in that it allowed token holders to vote on which projects to fund, giving them a direct say in the organization’s decisions. However, in June of that same year, a hacker exploited a vulnerability in the DAO’s smart contract, siphoning off around one third of its funds, which at the time were worth around $50 million.
The hack was a major blow to the DAO and the entire Ethereum ecosystem. It led to a hard fork of the Ethereum blockchain, which resulted in the creation of two separate networks: Ethereum (ETH) and Ethereum Classic (ETC). While Ethereum continued to thrive and is now one of the most widely used blockchains in the world, the DAO never recovered from the hack and was eventually dissolved.
Survivor Bias Lesson: The DAO was an ambitious project with noble intentions. However, its downfall serves as a cautionary tale for any blockchain project. No matter how well-planned or innovative a project may be, it’s always vulnerable to attacks and vulnerabilities. As investors and developers, we must remain vigilant and aware of the risks and challenges involved in blockchain projects, and be prepared to adapt and respond to any potential threats.
Dismissed: Carry Out Your Due Diligence and Stay Vigilant for the Next Battle
As we wrap up our top 5 list of collapsed blockchains, it’s important to recognize the impact of survivorship bias on our understanding of the blockchain landscape. Remember, just because a blockchain has survived and thrived in today’s market doesn’t mean it’s immune to failure in the future. As blockchain technology continues to evolve and disrupt various industries, we must remain vigilant in our analysis and evaluation of both successful and failed projects. Only then can we truly understand the potential and limitations of this revolutionary technology. Stay alert, stay informed, and stay ahead of the game. Over and out. – Commander John.
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