The collapse of the Terra stablecoin and its token Luna is a massive deal for the crypto world. Not only was Luna a top 10 cryptocurrency by market value, but the UST stablecoin was also pitched as an important experiment in the world of digital money.
But it’s not the first time a massive coin has come crashing down to earth.
The history of cryptocurrencies is littered with examples of ‘important’ coins that have ridden off into the sunset of irrelevance after a brief moment in the spotlight. And while much is made of people who’ve netted millions from Bitcoin, Dogecoin and even $ASS coin, rarely do we hear much from the losers, or the ones who didn’t get to buy those Lambos.
In this way, the world of cryptocurrencies is full of survivorship bias. In fact, you could argue that crypto thrives on the concept, hyping up the people who have made money in the space (or believe that they will someday) while playing down the possibility of losing it all.
Many of these tokens derive their value from an influx of new money rather than an underlying cashflow, so incentivizing new users into the ecosystem is paramount, and that means you need to deflect attention from the many who have lost their shirts.
Do Kwon, Terra’s founder and CEO of Terraform Labs, was an expert in this, repeatedly hawking not only the importance and uniqueness of the project, but also emphasizing the possibility of early entrants ‘winning’ from its rise. Those who missed the boat were of course doomed to stay poor forever.
But many of the coins that were once lauded as the next big thing have since fallen into obscurity.
And a look at the top 15 cryptocurrencies by market value over time — courtesy of Brent Donnelly at Spectra Markets — shows just how often dominant coins fall out of favor.