The total return for the sample was -86% (i.e. an investment of $1000 would have left you with $140); excluding Tether, it was -93%. That compares to the Bletchley 20 index return of -90.5% and a Bitcoin return of -72% in the period. I’m awarding myself full points on three tokens and partial victories on four others.

Let’s go into detail for each project. I’ll explain why I thought there was a chance each of them would be crippled or cease development in 2018, and where I went wrong.

Raiblocks (rebranded as Nano)

Yes, I misspelled “raiblocks.” For the longest time, I read it as railblocks. Either way, it is a DPoS coin that claims to have free transactions with no tradeoffs. It was heavily astroturfed on Reddit. I felt that its consensus mechanism might entirely fail, and that the considerable enthusiasm was contrived. Amazingly, January 1 was almost its precise all time high — its market cap on that day was an eye-watering $4.6 billion dollars.

In fact, the consensus mechanism for Raiblocks (rebranded to Nano) did not fail, but its major source of liquidity, the Bitgrail exchange, did get extremely hacked in February. This wasn’t a trivial hack, either — approximately $150m (at February prices) went missing. That was a mammoth 13% of the entire supply. Despite the immense setback, and a truly impressive price collapse, development appears to be ongoing.

📉 Price change: $36.86 ➡️ $0.94

✅ Drawdown: 97.6%

❌ Developer status: active

⚠️ Notable event: 13% of supply stolen in exchange hack.

‍⚖ ️Verdict: still under active development, but sufficiently drawn down to be considered crippled.

IOTA

Oh, IOTA. I was naive in thinking that 2018 would be the year it would suffer a catastrophic consensus failure and its fans would finally give up their support. But that was not the case — IOTA still relies on a central coordinator which obviates the need for any actual distributed consensus, and so it neatly avoids those kinds of hard problems.

So what happened in IOTA land this year?

The developers leaked the transcript of an email exchange they had with the MIT DCI who exposed their broken hash scheme. It unsurprisingly paints the picture of a staggeringly incompetent and unprofessional developer team, and a very patient DCI

There was some incomprehensible drama in the IOTA foundation, which if nothing else proves that these projects are not exempt from normal issues of corporate governance

The central coordinator did not shut down. It has relied on that centralized hack for its entire existence. The fans do not seem to mind

IOTA still doesn’t work on IOT devices because it uses Proofs of Work which are, unsurprisingly, computationally expensive

Despite this, IOTA is firmly not dead. I’ve given up on expecting its demise.

📉 Price change: $4.31 ➡️ $0.36

❌ Drawdown: 91.6%

❌ Developer status: active

⚠️ Notable event: IOTA is widely panned by professional cryptographers for relying on a broken hand-rolled hash function, and for organizing a smear campaign against the DCI.

‍⚖ ️Verdict: still under active development and with an enthusiastic community. Its reckoning is deferred.

Verge

Verge is/was a privacy coin which relied not on enhancing actual privacy at the blockchain level but rather by bolting Tor on to Bitcoin. It was heavily shilled on Twitter and Reddit last year, but the #VergeFam has gone quiet recently. Development and social media activity all but ceased when Verge was repeatedly 51% attacked earlier this year. The culprit was its unnecessarily complex five hash function Proof-of-Work algorithm, which led to it being much, much easier to exploit.

These weren’t small attacks either:

Development may be happening, but it doesn’t look lively at all.

📉 Price change: $0.16 ➡️ ️️$0.00706

✅ Drawdown: 95.2%

❌ Developer status: active

⚠️ Notable event: Verge was 51% attacked into oblivion.

‍ ⚖ ‍Verdict: Verge was exploited on multiple occasions, with the developers unable to steel the protocol against those attacks. The future does not look bright for this pseudo privacycoin.

Dash

Dash did not die in 2018. However, in the words of this Dash fan on reddit, this year “kinda sucked”. In the quixotic Dash way, he inexplicably suggests trying to get Dash profiled on NPR (a popular US radio network). I selected Dash for the list with the knowledge that it would be very hard to kill off — but I thought there might be a liquidity cascade with the masternodes.

You see, Dash has about 4900 masternodes (each costing 1000 DASH) active. That’s about 57% of total supply locked in these masternodes (which receive 45% of all block rewards!) I felt that it was possible that in a bear market, some of these would start to unwind, causing massive sell pressure on an illiquid market, inducing more masternode sales, and more sell pressure as people rushed for the exits, etc etc. This did not happen.

I realized there’s a negative feedback loop which inhibits this. As masternodes are liquidated, the pool of cash flows remains the same (in Dash terms), driving ROI back up for all the other extant masternodes as pro rata cashflows increase. So as long as there are individuals willing to buy and hold Dash, who cannot afford a masternode, and ok with being diluted by inflation to subsidize their masternode overlords, masternodes will continue to provide yield. Mind you, 7% annualized return is miserable for such a volatile asset, in my opinion.

Dash remains fairly active both on the development side and the community development side. The plutocratic “governance” process continues to fund (mostly unproductive) projects with a pool of capital subsidized by 10% of new issuance. On the adoption side, Dash has been redirecting its marketing budget towards buying ads on planes (smart: you literally can’t look away!) and lobbying businesses in Venezuela to accept the currency. I’ll admit it, I’m pretty impressed with the willingness of the Dash community to stubbornly crusade about banking the unbanked… with an asset that exists to facilitate rent-seeking on a massive scale (see above on masternodes).

📉 Price change: $1043 ➡️ ️️$81

❌ Drawdown: 92.2%

❌ Developer status: active

⚠️ Notable event: KFC Venezuela denied that Dash was accepted in its locations. Dash TV ads played on United Airlines flights.

‍ ⚖ ‍Verdict: The Dash crew are still plugging away. More power to them, I guess.

EOS

EOS did not die in 2018. That was definitely the most ambitious of my predictions. I felt that EOS and Block.one were ripe to be hit with an enforcement action by the SEC and the project (reliant on $4b in claimed funding from Block.one) would be crippled as a result. I’m still not ruling this out, but Block.one is a serious adversary and it looks like the SEC is opting to go after low-hanging fruit first.

To EOS’ credit, it went to mainnet and some EOS Dapps gained a smattering of usage (although websites where you could buy glamor metrics on DappRadar also emerged).

So what happened with EOS in 2018?

It did not release the promised audit demonstrating that Block.one had not recycled funds into its own ICO (thus gaining a free and hidden stake of EOS)

Sidenote: here’s a brief explainer on why EOS’ tokensale mechanics were bad

EOS devolved within weeks into a Kafkaesque bureaucracy wherein an unelected arbitrator gained the right to reappropriate funds from users at will

Block.one decided to scrap the constitution they launched with and rewrite it entirely

Block producers, as expected, created a mutualistic system of vote-assignment, entrenching the oligarchy and reducing churn in the validator set

EOS continued to demonstrate in myriad ways that it lacks the social scalability to become a neutral layer for global value transfer

EOS actually ground to a halt due to a bug and was offline for several hours before being restarted

However, EOS did not die, and as such, it beat my expectations. When audit?

📉 Price change: $9.45 ➡️ ️️$2.61

❌ Drawdown: 72.4%

❌ Developer status: active

⚠️ Notable event: Mainnet launch, controversy over balance-freezing, chain grinds to a halt and has to be restarted.

‍ ⚖ ‍Verdict: Despite a litany of problems, EOS is chugging along.

Bitcoin Gold

Bitcoin Gold was one of two major BTC forks that was actually worth redeeming. Amazingly the hype around the GPU-mined fork of Bitcoin lasted for a few months, enabling most holders to recognize at least a few hundred dollars per Bitcoin. However, BTG has become a sad case study in why ASICs are actually worthwhile. It got ruthlessly 51% attacked on a number of occasions and major exchanges lost $18m as a result. BTG has been delisted from many of these exchanges and is widely considered an unreliable and risky chain.

There have only been six commits in the last six months, and none in the last three months. Lead Developer Jack Liao has also left the project. With under 1000 transactions a day on average, BTG is as close to zombified as you can get.

📉 Price change: $276.42️️ ➡️ ️️$12.80

✅ Drawdown: 95.2%

✅ Developer status: inactive

⚠️ Notable event: at least $18m worth of BTG was stolen from exchanges through successful 51% attacks. BTG was subsequently delisted from many exchanges due to its vulnerability. ️

‍⚖ ️Verdict: Bitcoin Gold has been all but abandoned by its developers, and is considered unreliable by exchanges due to the inherent vulnerabilities of smaller GPU mined coins.

Bitconnect

Ah, Bitconnect. Everyone’s favorite scam. Bitconnect was quite impressive, in its own way. It had MLM elements, through the affiliate program, and ponzi elements, in that it guaranteed returns deriving from the inflow from new suckers. It also was/is a functioning blockchain.

Bitconnect’s fate was by far the easiest to forecast. By definition, it was unsustainable. Being a Bitcoin-denominated ponzi scheme, it did however last much longer than expected, since its lifetime coincided with a massive bull run in Bitcoin. I started paying attention to it in spring 2017 and watched, mouth agape, as it rose up the ranks on CoinMarketCap, reaching #8 at one point.

Without getting too self-congratulatory, I was an early voice vocally decrying Bitconnect, and by extension CoinMarketCap which legitimated it in many ways (not only by hosting banner ads for BCC but also by unhesitatingly accepting BCC’s own exchange data as reliable). I even reported Bitconnect to their domain registrar but was told they were not in violation of the ToS due to a lack of evidence of illegal or fraudulent activity.

During the time of the Bitcoin Cash fork in late July 2017, I also pointed out the absurdity of defending Bitconnect’s right to the BCC ticker, as many were doing — I found the deference being granted to a verifiable ponzi scheme to be unwarranted.

(Sidenote: It is curious that people who were dead silent about Bitconnect through the summer and fall of 2017 crowed victory when it dissolved. The time to speak up was earlier, not later. More victims could have been spared if industry leaders had taken a stance. Think about this next time you claim that the word “scam” is overused in the industry)

So on January 1st, with Bitconnect sitting at the #20 position on CoinMarketCap, with a market cap north of $2 billion, it was trivial to predict its demise. And unsurprisingly, soon thereafter, payouts were suspended and the scheme unraveled. Ye will not be missed.

📉 Price change: $381.43 ➡️ $0.67

✅ Drawdown: 99.8%

✅ Developer status: inactive

⚠️ Notable event: was outed as a ponzi scheme and the entire project dissolved. Law enforcement in multiple jurisdictions is currently pursuing the orchestrators.

‍⚖ ️Verdict: Bitconnect is as dead as a doornail.

NEM

I have to admit I don’t know what NEM is for. I’m not sure anyone does. It has been going for a remarkably long time. I thought it might die because it has virtually no usage (have a look at its data on coinmetrics.io). This is a chain worth $500m or so, which does $2–3m worth of transaction volume per day. Admittedly that’s a fairly weak reason, as total disuse is not a good reason to expect that a project will die off. As we all know, these things have a habit of lingering for years.

There is very little English-language discussion of NEM, so it’s hard to get information on the project. It appears to be the public counterpart to a private blockchain called Mijn, à la Ripple. It’s unclear how the token itself is expected to retain its value or acquire meaningful use.

What happened in 2018 for NEM?

I don’t know. It’s impossible to figure out what’s going on in NEMland. It’s still alive, I think.

📉 Price change: $1.04 ➡️ $0.06

❌ Drawdown: 93.8%

❌ Developer status: active (?)

⚠️ Notable event: massive exchange hack and subsequent blacklisting of addresses.

‍⚖ ️Verdict: Cryptocurrency’s most inscrutable project is still going, apparently.

Tether

Cryptocurrency’s most hated project did not die in 2018, despite an avalanche of criticism. It had a very busy year, in fact. It lost banking partners and found some new ones. It continued to lose ground to other stablecoins, especially the fully-collateralized ones like USDC, TUSD, and GUSD. It traded below its peg for an extended period. Arbitrageurs made a lot of money buying discounted USDT during periods of extreme fear about the lost peg.

Despite a recent period of strong redemptions, its outstanding supply increased in 2018.

Tether circulating supply (Coinmetrics)

Tether did not provide a full audit of its holdings, although it did release attestations purportedly demonstrating that it was fully collateralized.

I guessed that Tether’s owners might shutter the project, deeming it not to be worth the hassle. I also forecasted that they might feel pressure from regulators given the ferocity of the media storm over the stablecoin. However, it makes a few million dollars a year on interest from depositors, and facilitates trading on Bitfinex, so it must still be worth keeping to its administrators.

📉 Price change: $1.00 ➡️ $1.00

❌ Drawdown: 0%

❌ Developer status: active

⚠️ Notable event: Tether gains banking at Deltec bank and provides a partial attestation of its reserves.

‍⚖ ️Verdict: Cryptocurrency’s most hated project survived another year, despite reduced market share.

Hshare (rebranded as Hypercash)

Believe it or not, something called Hshare was the 31st ranked coin on CoinMarketCap on Jan. 1, 2018.

I included it on the list because it was a straightforward copy-paste of Decred, combined with some generic marketing. Interestingly, it exceeded Decred’s market cap for a while. Perhaps in an attempt to escape criticism, it rebranded to HyperCash. It now occupies the 88th spot on CMC, so it has suffered a decline in absolute and relative stature. Development is ongoing, if weakly so.

📉 Price change: $27 ➡️ $0.91

✅ Drawdown: 96.7%

❌ Developer status: semi-active

⚠️ Notable event: Rebranded and performed a coin swap.

‍⚖ ️Verdict: Hshare/HyperCash is one of hundreds of undifferentiated projects which is experiencing a slow death. It is at an advanced stage of morbidity, although not entirely dead yet.

Veritaseum

Veritaseum is a wacky, confusing project with no apparent goal or focus promoted by the blogger Reggie Middleton. It was an easy candidate for inclusion on this list—it is a nonsense token with no reason to exist. If you want to read an in-depth report documenting the many deceptions surrounding the token, see Lighthouse Crypto’s comprehensive 38-page takedown:

Development is absent. It’s a generic ERC20 with no technical work being done on it whatsoever. The only thing going on with VERI is half-hearted marketing videos from its chief (and sole) evangelist, Reggie.

As for what VERI is actually for, the dominant messaging previously was about a research portal, but now it seems to be shifting to physical asset tokenization. This is the latest in a long, long series of pivots by the VERI team (which again, seems to just be Reggie). If you want to dig in to this project, feel free to click around the incomprehensible website.

As far as the community, the subreddit has gone private. Even the bitcointalk forum is moribund. Not much to say about this one. In the words of Monty Python:

Its metabolic processes are now history! It’s off the twig! It’s kicked the bucket, it has shuffled off its mortal coil, run down the curtain and joined the bleedin’ choir invisible! This is an ex project!

📉 Price change: $346 ➡️ $15.96

✅ Drawdown: 95.4%

❌ Developer status: Near abandoned

⚠️ Notable event: What little community remaining appears to have deserted the project.

‍⚖ ️Verdict: VERI is long dead, although Reggie apparently hasn’t caught on yet. Since he continues to “develop” this project, I’ll give him the benefit of the doubt and only call this one half dead.

Augur

You may be surprised to see this on my list. My reasoning was that Augur would face significant legal difficulties due to the fact that it enabled not only obviously perverse use cases (assassination markets) but also unregulated derivatives, many of which exist on the platform. See the markets on the S&P500 or Apple stock price for instance.

In fact, the US derivatives regulator — the CFTC — was wide awake and paying attention. In October, a CFTC commissioner made his feelings very clear on prediction markets like Augur:

In the past, the CFTC has generally prohibited prediction markets as contrary to the public interest. For example, event contracts based upon war, terrorism, assassination, or other similar incidents may be contrary to the public interest — in which case, the CFTC can prohibit an exchange from offering the contract.

You might feel that I sound like a terrible statist droning on and on about the adverse regulatory events that I expected to happen in 2018. Keep in mind that this is a list of things I thought would happen, not necessarily things I wanted to happen.

Either way, the CFTC hasn’t actually acted on their warning (yet). However, they did make their criteria very clear, hinting at a ‘Coders-as-Fiduciaries’ framework. CFTC commissioner Brian Quintenz weighed in on the potential liability for developers writing a smart contract platform:

I think the appropriate question is whether these code developers could reasonably foresee, at the time they created the code, that it would likely be used by U.S. persons in a manner violative of CFTC regulations

As for the scope of their interest:

[The code would have to be] specifically designed to enable the precise type of activity regulated by the CFTC, and no effort was made to preclude its availability to U.S. persons.

This puts Augur pretty squarely in the crosshairs, although the betting system may be too broken to actually induce regulators to do anything. Users have been complaining about being misled by tricky contracts, markets resolving incorrectly, or poorly-worded contracts. Aside from amateurishly-drafted contracts (this is what we pay lawyers for, folks) borking in interesting ways, Augur faces the more general problem of might makes right on the platform. It’s possible by repeatedly appealing markets to get a favorable, albeit incorrect, outcome.

The poor UX, the curation issues that come with decentralization, excessive complexity, and large markets that resolve belatedly or in unexpected ways, all combine to make Augur a risky venue for punters. It may be the case that the decentralized oracle mechanism simply doesn’t provide sufficient guarantees for the platform to reach critical mass.

Augur stats from Dappradar

I felt that Augur was particularly exposed due to the fact that they were financed with an ICO. Had Augur been released as free open source tech with no profit motive, I would have imagined it would have greater resilience. But a crowdsale is another regulatory overhang that compounds risks, and raises the specter of potential enforcement actions. The question is therefore if a rescission occurs and the treasury is drained to pay back investors, would the core developers stay faithful to the project, absent a profit motive?

But 2018 was not really the year of regulatory actions, contrary to what I had expected. Some low hanging fruit was plucked here and there, but the major US agencies steered clear of the crypto and ICO markets, for the most part. So a lot of my predictions that were predicated on meaningful regulatory action, and likely targets, were wide of the mark.

To sum up — Augur deserves credit for being a functional and interesting dapp, although it’s unclear whether the decentralized reporting will prove robust enough to support liquid markets and induce large punters to join the platform. And I personally believe it would be less fragile as an open source launch with an anon/non US dev team, rather than an ICO-funded venture.

📉 Price change: $77 ➡️ $7.93

❌ Drawdown: 89.7%

❌ Developer status: Ongoing

⚠️ Notable event: After years of development, Augur launched and acquired meaningful liquidity in 2018.

‍⚖ ️Verdict: Augur is purring along, albeit with a smallish community of users.

Electroneum

Electroneum is a fork of Monero which raised $39m in an ICO in October 2017. Like most ICOs, it’s a priori nonsense, but it did enjoy a brief moment in the sun as the development team (whose main expertise is online marketing) managed to drum up substantial hype, leading the asset to peak at a $900m market cap. In fact, one of my abiding memories of the late 2017 mania was sitting on a plane next to an earnest young fellow who informed me that his favorite cryptocurrency was Electroneum because you could mine it on your phone. Of course, this wasn’t actually mining, but rather an empty proof of time concept whereby you were allocated units of ETN just for having the app open.

It doesn’t take much to realize that ETN is hollow. This post goes into some further detail. It’s a generic ICOed fork of Monero with no distinguishing features by a team with no technical expertise. Some minimal development is ongoing, albeit at a very slow pace. The official forum hosted an Electroneum-themed halloween costume contest though, so that’s fun.

As much as I’d like to claim victory on this one, it hasn’t quite drawn down 95% and there is some development, so I guess I’ll take the L.

📉 Price change: $0.08 ➡️ $0.0075

❌ Drawdown: 91.0%

❌ Developer status: Ongoing, if minimal

⚠️ Notable event: The highlight of 2018 was the ETN team forcing every ICO investor into a KYC process.

‍⚖ ️Verdict: Electroneum is in a purgatory where it’s obviously a failed project but still piddling along until the SEC makes their way down the list and makes the team give all the money back.

Storj

Storj is a distributed data storage token project which raised about $30m in an ICO in May 2017. It’s in a rough category of troubled data storage projects along with Filecoin, Sia, and Maidsafe. It has seen its fair share of drama and founder exits. When I’ve asked, technical experts with domain knowledge will concede that distributed file storage is a near-intractable challenge, and a mainstream application of the technology is still years away.

Looking back, I think I added Storj to this list because of the large number of founder and technical exits that took place in Summer 2017 shortly after the ICO. To Storj’s credit, it resumed development and appears to be functioning as a distributed data storage platform, at least in a beta state. The token itself suffered a massive drawdown, but not quite down to my specified 95% threshold.

📉 Price change: $2.37 ➡️ $0.14

❌ Drawdown: 93.9%

❌ Developer status: Ongoing

⚠️ Notable event: V3 whitepaper published and public alpha begins

‍⚖ ️Verdict: Storj surpassed my expectations by not only surviving 2018, but remaining communicative and transparent as well as making some key hires. It’s very much still alive.

I conomi

Iconomi is a tokenized asset management platform that was meant to give investors access to crypto index funds. In the heavily jargonized spirit of the industry, they called these Digital Asset Arrays. The ICN token was originally meant to serve as pseudo-equity, entitling investors who bought the 2016 ICO to cashflows deriving from the platform and startup. The team changed this to a buyback model (which, if you think about it, is functionally identical), wary of being treated as a security.

I felt that it was pretty likely that Iconomi wouldn’t last, as the token had obvious security-like characteristics. Even so, I didn’t expect the team to voluntarily withdraw the token and swap it for shares in an actual corporation. In September 2018, the Iconomi team announced a token swap and dissolution of the ICN token, whereby investors could get their money back (in ETH) or instead receive pro rata shares in a Liechtenstein holding company, ICONOMI AG.

This seems like a shrewd move — regulators were almost certainly breathing down their neck already — albeit an administratively challenging one. I am not sure how a global retail tokenholder base is meant to transition to private shareholders in a Liechtenstein company, but I applaud the team for their candor and initiative. This is about the best possible scenario for investors, and I expect some other token projects to follow suit.

Even though the project is still continuing, the token in this case is literally ceasing to exist, so I’ll chalk that up as a win. I finally got one right!

📉 Price change: $2.73 ➡️ $0.23

❌ Drawdown: 91.6%

❌ Developer status: Ongoing

⚠️ Notable event: The token was dissolved and investors were offered a buyout or pro rata equity in an actual corporation.

‍⚖ ️Verdict: Iconomi (ICN) is gone, replaced with ICONOMI AG. Iconomi is dead, long live Iconomi!

Final thoughts

So why did I pick these 15 in particular? Recall that I was limiting myself to the top 100 assets. There were a large number of ponzi coins I could have picked (there were dozens of Bitconnect clones operating at that time) which would undoubtedly have died. But they were for the most part small caps. And that wouldn’t have been a challenging exercise. The average rank on CoinMarketCap of the coins in my sample was 30. So I set myself the task of picking coins that were relatively popular and well-known at the time, rather than picking on some obviously worthless coins.

I think I did ok, although I’ll admit that I’m a bit disappointed. The premise itself was tricky — cryptocurrencies and tokens almost never die, so it was an ambitious effort to begin with. I’m gratified that I got Verge, Bitcoin Gold, and Iconomi in my sample: they were not obvious candidates for outright dissolution but they are all essentially defunct now.

My main takeaway from this little project is that it is massive exercise in futility. Guessing at which blockchains and token projects will not survive the year is fun, but actually diligencing the damn things to determine their developer status is a massive pain. A friend who has conducted long-form investigations into fraudulent tokens recently told me:

I realized I wasted a few weeks of my life researching something that was obviously a fraud and no one could care less

And that’s really the main problem with these projects. Investigating them and outing them as frauds takes an unreasonable amount of work, with no payoff (there’s no borrow for a short on anything outside the top 5 or so assets). Meanwhile, some enterprising team with experience in affiliate marketing and an ERC-20 generator can spin up a multi-million dollar ICO in a matter of days.

The Coinmetrics Bitcoin Private investigation comes to mind. The team spent weeks double-checking the data and consulting experts to make sure the supply irregularity was real (given the weight of the accusation). But at the end of the day, all that was exposed was either gross negligence or duplicity by the core team, for a project that was pretty much dead to begin with.

What we are left with now is thousands of tokens that have no future, no serious development, and small communities of individuals who delude themselves into believing that a recovery to ATHs is possible. How tokens actually die is a bit unclear. Most likely, adverse events at exchanges (either voluntary closures or enforcement actions) will kill off the long tail of tokens at some point.

If I had to make a prediction for 2019, it would be that the die-offs of marginal projects accelerate. Of these 15 (7 are basically dead already), I would expect that at most 3 of them make it to 2020 intact (same criteria). For 2018 I clearly had unrealistic expectations for our securities regulators, who have only now started to make serious inroads into the market. But a reckoning is inevitable. Whether it comes through class action lawsuits, teams voluntarily buying back tokens, a die-off due to poor exchange liquidity, activist short-sellers, or criminal enforcement actions, the market will purge these zombie projects. It is just taking longer than I expected.

Happy new year, I guess.