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If you were to question a group of random people on their views on what makes a cryptocurrency successful, you are likely to receive a ton of different ambiguous answers. Now more than ever, especially with the current upsurge of new cryptocurrencies, this question demands a more conclusive answer.
Currently, there are nearly more than 1,000 cryptocurrencies, and crypto success stories are becoming less and less frequent. You might be wondering what the characteristics of a successful crypto-coin are, and what makes them attractive to investors, some of these factors include
The demand for a cryptocurrency may depend on various factors, but for a crypto to be successful, it should be able to generate enough demand for itself. While the rest of the elements on this list are all crucial in determining the success of a cryptocurrency, its demand is the backbone required for a cryptocurrency’s success.
The more usable a cryptocurrency is, the more likely people will invest in it. The more investors willing to purchase a cryptocurrency, drive up the demand, hence increasing the likelihood of its success. A cryptocurrency should be versatile, for example, we have crypto coins such as bitcoin that can be used during transactions in online casinos and gambling
If cryptocurrency is effortlessly and swiftly transferred between users and exchange platforms, more investors will prefer it over other cryptos which may be more difficult or slower to transact with. Also, a successful crypto coin should be able to allow investors to convert it into currency easily.
- Ease Of Acquisition
A successful crypto must also be easy to acquire through the three primary methods of crypto acquisition
- Purchasing and trading
- Faucets and other reward systems
The community involved in creating and managing the cryptocurrency has a considerable impact on the coins growth and overall success. A cryptocurrency requires a large team of dedicated members and investors to guarantee a quick rise to stardom.
Following the immense success of bitcoin, many successful cryptocurrencies were created in its image and likeliness. This resulted in a handful of highly successful cryptos with many unique strongholds. These strongholds include attributes such as speed, privacy, and anonymity. An example is Litecoin, set up in 2011, it was similar to bitcoin but featured more qualities that made it very successful. Litecoin had more effective mining protocols and superior processing speeds. Due to its amazing attributes, Litecoin is the 5th most successful cryptocurrency following Bitcoin, Bitcoin Cash, Ripple and Ether(regarding market valuation). Another example of a successful crypto coin is Monero, although its similarity to bitcoin, it features more improvements in privacy and scalability. Other successful cryptocurrencies include Anoncoin, which prides itself with high levels of anonymity and Stablecoin which features military-grade encryption
From the above information it is evident that for a cryptocurrency to be successful, there must be enough traders to invest in the coin. The cryptocurrency must also have enough people in its blockchain.
The main reasons that may cause a cryptocurrency to fail include
1. Low availability of miners caused by poor marketing and multiple technical anomalies.
2. Slow and inefficient methods of transactions due to poor privacy systems and inadequate financing
3. Feeble blockchain mechanism.
The worst of these cryptocurrency failures begin with high hopes, and most of them generate lots of hype and end up raising vast amounts of starting capital. Unfortunately, most of them flop and end up crashing spectacularly disappointing many investors.
Some of the cryptocurrencies that gave us high hope but failed miserably include
There is a myriad of factors that contribute to a cryptocurrency’s success. The factors discussed in this article are just the tip of the iceberg and do not provide an exhaustive list. There are many more small factors such as market saturation, global factors and proper timing of launch that also contribute to a crypto-coin’s success. There is no assurance that a crypto-coin will be successful once launched, but the aforementioned factors drastically increase its chances of being successful.