Crypto projects that didn't take off

"OneCoin is "the killer of bitcoin", said its creator, Ruja Ignatova, to convince the investors. "In two years, no one will even remember bitcoin," she said from the stadium stage. From August 2014 to March 2017, OneCoin attracted a total of four billion euros from several dozen countries. There were even investors from the Palestinian territories. In just a few years, OneCoin's creator became known as the "crypto queen".

However, all these people did not know the most important thing ...

OneCoin is "the killer of your investments".

OneCoin has never had a blockchain base. Their so-called "blockchain technology" consisted of a SQL server with a database. This is a fairly standard database that cannot serve as a basis for a real cryptocurrency, since its owner can make any changes to the script.

Therefore, all the millions made by investors on the OneCoin website did not matter. They were simply typed into a computer by the company's employee. Investors were unaware of this and, instead of becoming filthy rich, lost several billion euros.

At its core, OneCoin turned out to be not just a fake cryptocurrency, but a good old financial pyramid with fake currency as a "product".

The boom in cryptocurrency fraud did not end in 2017 (although it is worth noting that the number of such incidents has dropped significantly since then).

For example, in December 2020, a group of developers under a pseudonym stole Wrapped Bitcoin (WBTC), Ether, and a host of other cryptocurrencies worth 750 000 dollars from Compounder Finance, the DeFi platform.

The project promised investors a cumulative return for depositing their cryptocurrency into a time-based smart contract or a smart contract that would only be executed after a predetermined time. However, the investors claim that the developers built a backdoor into the system and had stolen the funds before smart contracts expired.

Here's another story that shows 2017 not in the best light. According to one report, the total number of fraudulent ICOs on the market during 2017 reached 80%. Although these numbers are much lower today, there is still a large number of fake ICOs at the international level.

Confido startup. In early November 2017, the company placed its tokens. The ICO startup developed a blockchain application for paying for and tracking the delivery of goods.

Confido had an official website, accounts in popular social media, a blog on Medium, and even a representation on Reddit. The company's capitalization exceeded 10 million dollars, and the cost of one coin was about 1.2 thousand dollars.

During the ICO, the company raised 374 thousand dollars, after which started to cover up its tracks. They deleted the website and social media accounts. The deceived investors haven't been able to find the project team members: their LinkedIn profiles turned out to be fake.

And the company Big Coin stole 6 million dollars from customers using one of these disguised campaigns. The platform tricked users into investing in fake cryptocurrency by advertising its capabilities and technological advancements at that time. However, once the funds reached the Big Coin wallet, they were immediately redirected to the owners' bank accounts.

In 2016, DeClouds intended to invest in precious metals and use them to provide their tokens. DeClouds, however, went beyond fake social media accounts.

Initially, the project team announced a cooperation with a large Swiss bank UBS and presented a group photo with representatives of the bank as evidence. Crypto community activists quickly discovered that the photo was created using Photoshop. What is more, the official documentation of the project, presented on the site, was a collection of meaningless information.

The scammers managed to collect 300 bitcoins (a significant amount for the 2017 exchange rate, and even more so for the current one).

Blockchain and cryptocurrencies are not the first or not the only emerging technological innovations that are trying to move from high expectations to robust commercial viability. Many researchers note that since 2019, the number of unsuccessful enterprise blockchain projects has decreased by 20%.

Many blockchain projects can indeed improve security and coordination both within and between enterprises. Nowadays, they are seen as an important path towards data digitalization.

In reality, the vast majority of blockchain projects do not go beyond the stage of concept check. Only 5% of them go into production, and according to the global research and consulting firm Gartner, 90% of them will need to be replaced within two years to remain competitive. This means that there is a huge amount of wasted resources.

The main reason why blockchain projects often don't take off is their cumbersome structure. As the number of users on the network increases, the conversion process takes longer. As a result, the cost of transactions is higher than usual, which also limits actions to increase the number of users on the network.

Nevertheless, more and more interesting blockchain projects appear in various industries. They bring broader changes in financial services, research, and science, logistics, etc. This interdependence can be the key to moving forward.

Over the past decade, there has been a growing desire to create and develop a digital currency that is not tied to the exchange rates of currencies issued by governments. For several years, no one trusted these initiatives because digital currencies were too easy to counterfeit.

Bitcoin, however, attracted many investors precisely because it had solved these problems. It is based on a trustworthy technology: each bitcoin owner has his own identical copy of the original blockchain technology. Every time bitcoins are exchanged, a record of the transaction appears in all copies. No one — not banks, not governments, not even the inventor of Bitcoin — controls the system and can change these records.

Bitcoin is based on nifty mathematical calculations that make it impossible to counterfeit, hack, or spend twice. That is why currencies such as Bitcoin and Ethereum remain the most popular — their technologies solve specific issues.