These Zombie Coins Just Won’t Die

about the spookiness of zombie coins. They're not quite dead yet. I mean, there are twelve thousand of them, but it is hard to label them as alive and well. In fact, a recent analysis from the crypto data company Nomics found that these coins have seized all trading activity in the last month and are simply dormants. So what does it mean when a market has so many inactive assets. Is the state of zombie coins an indication that the crypto

industry isn't quite what it once was. What we do know is that despite the fact that they're not new, the increase in their numbers this year has zombie coins making so much noise that Bloomberg reporter overcreef. We could see some miracles happen. We could see some of them come back to life. Will join Guest host Mike Reagan would take some real heavy promotion from some of the holders of these things to get them back out there in the public and trading again. To discuss the apocalypse

happening in the crypto universe. Hioga, thanks for doing the show. I'm glad to be here. My So, why don't we just start by talking about what exactly is a zombie coin? How do you define a zombie coin? Right, So it's scary. It's a coin that hasn't traded for a month. And so just this year long, we have over a twelve thousand coins that haven't traded for at least a month. So they are not quite dead, but they're not quite alive. Like you said, Yeah, well, I was gonna ask, is

it possible for a cryptocurrency to ever actually die? They always exist on the block chain as long as that blockchains running. I suppose, right, that's exactly right. Basically, as lone as there is somebody using your block chain, as lone, as there is somebody holding a coin, technically, you know, it could potentially still come to life again. And that has happened in the past, where all of a sudden, a project that everybody has thought, you know, pretty much

lost its momentum, all of a sudden got reignited. So that has happened before, but it tends to be pretty rare, and you know, algo, we often hear about what called liquidity pools or automated market makers, basically software that allows for there always to be a buyer for everyone looking to sell or a seller looking to buy. I'm guessing these zombie coins are projects that do not have that sort of infrastructure behind them. Is that is that a

safe bet? That's my bed as well. Namics didn't provide any data on that, but I agree with you, um, I think a lot of this sort of small projects that never got to the point to have sort of liquidity pools and so forth. So some of them just maybe worthwhile, you know, they might be creating cool games or social networks or something else interesting and they just happened to launch at a bad time. And Olga, I'm guessing many of these coins are not worth say the

twenty dollars that that bitcoin is worth. Are these some of those coins that are worth a fraction of a penny. Do you think most of them? This list of over twelve thousand coins doesn't even include those ones that trade for for a fraction of with any There are thousands more coins that are, like you said, trading for just minis skulls amounts, and there are some people still selling and buying those hoping that, you know, some sort of a market move would make them some money off of

these coins. So that does not that those coins are not even zombies yet, but potentially could be. So. If I own a zombie coin, the problem is that there's just no one to sell it to. I guess there's there's no one who wants to buy it. Is that

generally the idea? Yeah, So it could be that nobody wants to buy it, or maybe it's not even worth my time to try and sell it because most networks, you know, you have to pay transaction fees to sell your coin to somebody else, for example, And if your coin is worth so little that you might actually have to pay more for this transaction feed, then it would

make no sense to even try to sell it. Right. Oh, I was remembering a story from last year by our colleague Joe Wisenthal, and he was messing around on pancake Swap, which is one of those decentralized exchanges that people used to trade coins that aren't listed on the major exchanges, and he was amazed by how easy it was to

create a coin on that platform. Basically found some developers who could make a coin for him in a in a matter of minutes that basically copied the code from an existing coin, and they changed a few parameters, you know, the number of tokens in circulation and that sort of thing, and boom, he had a coin named after him created in a matter of minutes. Is that part of the story.

Do you think that it became so easy to create new crypto tokens that people created way too many, whether they were just messing around like Joe was or for other reasons. Is that part of the story. That's definitely part of the story, because essentially it's become very easy to create your tokens and to list them for trading, because they're all these decentralized exchanges like pincakes Swap, where

essentially anybody can list a token and start trading. Because previously there were gatekeepers like centralized exchanges that looked at different tokens and decided, okay, we're gonna list this one and not this one. But now anybody could list to anything, and so that definitely contributed to this explosion of tokens that we've seen. How serious of a problem is this for the crypto industry? Do you think we have twelve thousand zombie tokens that no one wants to buy? Is

this a Is this a problem for the industry? You know, I feel like any industry, you know, eighty percent of new businesses that are launched to fail. You know, it's it's the same with restaurants, except for with tokens. In a lot of cases, you know, they did not have physical offices. Maybe they had developers spread around the world working on this project, and uh, you know it's the costs much lower, the barriers to entry can be much lower for some of this token projects than for projects

in other industries. So I feel like it's all part of a natural process where you know, the week die, especially in the bear market that we are going through right now, where even you know, well known successful projects have a lot of trouble getting funding and so they have to close doors. And so we have essentially the zombie tokens. It's just it's just a symptom of this bear market, and I'm sure we'll have many more tokens appear,

you know, when when the market turns. And how are traders and users of cryptocurrencies reacting to this, this issue with the zombie coins. Have you heard anything? Is there any scuttle bud in the market about this this problem?

You know, I think people generally know that crypto and investing in crypto is very risky, and it's risky to invent invest in some of the kind of major coins like Bitcoin and ethereum, and it's especially risky to invest in little known coins with uh, you know, very few people trading them, And so I think people who made bets on those kind of talk tokens hopefully knew the

risks they were taking. And I feel like a lot of crypto is about speculation and people taking risks, and when the risk taking doesn't pan out, it's just that's just how it is. And I think that's the mindset before and it's still remains so today and probably going into the future as well. I wonder, orgay, is it harmful for a blockchain project to have a lot of zombie coins associated with it. You know, does it cost them anything if these coins aren't actually transacting? Is there

an issue there for the actual blockchain projects themselves? You know that that's a good question. I don't think there is any cost for anybody until the tokens are moved or sold, because essentially the cost would be the transaction fee that you pay for the blockchain to process essentially your transaction. And if this token is not changing hands, then I don't think there are any fees. And do you think there's anything that could revive some of these

twelve thousand zombie coins? You know what, I guess it would take some real heavy promotion from some of the holders of these things to get them back out there in the public and trading again. Absolutely, we could see some miracles happen. You could see some of them come back to life. Perhaps, you know, if the market revives, the overall crypto market revives, uh, some of these projects maybe are able to get some some uh you know,

investors come and invest some money in them. They would be able to perhaps have a marketing budget again, they would be able to pay developers and in tokens or with actual money or other cryptocurrencies. And if some of these projects do take off in the future, if say, some some game becomes successful, you know, their fortunes could be reversed. So, Oga, let's pretend I'm a crypto entrepreneur and I want to create a new coin. What do I need to do? Do you think to to prevent

this zombie coin fate for for my new coin? The biggest challenge for any project is to essentially get users and to to get holders of the tokens. So a lot of projects do so called air drops where they just distribute their coins to a variety of people for either doing some particular task or even just for free for registering, because they want to have a lot of this initial support, uh and continuing support. That's sort of the biggest challenge. You know, how do you get noticed

because there are thousands of coins out there? You know, it's it's a it's definitely challenged. Coming up more with Bloomberg reporter Oga Karif on how zombie coins are creeping their way through the crypto market. They are not being yeah yeah, um for all these people that bought one of these coins and now they're suddenly stuck with it.

They can't sell it. What kind of impact do you think that has on the crypto market itself, You know, I sort of I'd like to think that people who made the bets on this unknown coins they knew they were taking big risks that could not might not pay. And I think, uh, sort of speculators like that will will keep on making bets. But but I think there might have been some people who might not have thought that their investments were as risky as uncertain and they

would definitely get discouraged. I think we are seeing a lot of retail investors staying on the sidelines during bear markets because because of this very reason, but inevitably when when the bullmarket starts, they come back again and in greater numbers. So I think, you know, that's what I

would expect in the future as well well, Olga. I wonder what we know about the history of some of these zombie coins, where any of them actually once sort of high fires in the crypto market, where any of them have potential or coins that people had actually heard of, or were they mostly just obscure coins that never really

traded a lot to begin with. You know, they were mostly very obscure, so some of them might have had like a website and say a few hundred fullers and Twitter, and then they died and the website went down, and then they stopped posting on Twitter and that was the end of it. I would say the majority is sort of in this category, So even after their website goes down, there's there's life after Twitter and a website for that's right. And I was showing many of these were on the

Ethereum blockchain. Is that a safe bet? Do you think? Yes? Yeah, because that's exactly right. It's just so easy to launch a new coin on on the Ethereum network that uh, that's the that's where the zombies are most prevalent, you know, and all go. Obviously, the big story this year for Ethereum was what they call the merge, where it changed from proof of work to a proof of steak system where val validators have to put some crypto assets at stake to to be uh, part of the network. Does

that play into this at all? Does? Does that switch? Do you think make it more promising that some of these zombies will come back to life? You know? So the merge essentially reduced Ethereum's power consumption, but didn't do anything else in terms of the user experience, but it's a stepping stone to additional changes expected next year that could potentially make the Ethereum ecosystem sort of cheaper and

faster to post transactions into. That's very important in terms of attracting new projects to this ecosystem, and perhaps that means that will see more new coins launching here, you know, continuously launching here going forward, because essentially this is making ethereum Um increasingly more competitive for anything else out there, So we'll probably see more very good coins launching here, as well as more zombies coming up, so that the zombies could be with us for a while, I imagine,

is the bottom line, right. Well, Olga, that was fascinating. Thank you so much, and you can find more of AGA's reporting on the Bloomberg terminal, on Bloomberg dot com and on Twitter. She's at book Caarif. Olga, thank you so much. I really enjoyed it. Thank you. On the next episode of Bloomberg Crypto, we're now are year into a huge experiment in digital currencies. Nope, this isn't about

all Salvador and bitcoin. We're gonna be talking about one of the world's largest economies, Nigeria and its experiments with digital cash. This is Bloomberg Crypto, a daily podcast from Bloomberg and I Heart Radio. For more shows from I Heart Radio, visit the I Heart Radio app, Apple Podcasts, or wherever you get your podcasts. Send us your comments, questions or suggestions for the show to Crypto at Bloomberg dot net or find us on Twitter. We're at Crypto.

The supervising producer of Bloomberg Crypto is Vicky very Galina. Our senior producer is Janet Albin. Our producers are Mohammed Faruk and Sharon Barriro. Our associate producers are Ty Butler and Moses on Desta wonder At is our engineer. Original music by Leo Sidron. I'm Stacy Mariashmal. We'll be back tomorrow