In the ever-evolving world of cryptocurrency, market capitalization has often been a misleading indicator of a blockchain’s success and utility. Forbes recently published a list that has sparked widespread discussion in the crypto community. This list identifies 20 blockchains that, despite their high market caps, exhibit a startling lack of traction or adoption, earning them the moniker “Zombie Blockchains.”
The term “Zombie Blockchains” has been making rounds in the cryptocurrency community, particularly after a recent Forbes article highlighted a list of 12 such blockchains. These are digital assets that, despite having high market valuations, show minimal real-world utility or user adoption. They are essentially projects that are alive in the sense that they are being traded, but they lack the vitality of functional use or a substantial user base.
The term “zombie” is used to describe these blockchains because they are akin to the walking dead of the crypto world—present, yet devoid of the life that comes from active use and development. Among these are well-known names such as Ripple’s XRP, Cardano (ADA), Stacks (STX), Flow (FLOW), Stellar (XLM), Bitcoin Cash, and Tezos (XTZ) among others.
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Forbes’ scrutiny reveals a disconcerting trend: a significant number of these “zombie blockchains” are not fulfilling their intended purposes. Instead, they are primarily sustained by speculative trading, with little to no real-world application or user adoption. This raises critical questions about the valuation of cryptocurrencies and the long-term viability of projects that lack clear practical applications.
For instance, Ripple’s XRP, initially envisioned as a disruptor in global financial transfers, has struggled to move beyond its speculative image. Despite a daily trading volume of around $2 billion, its real-world utility remains questionable. Similarly, Ethereum Classic (ETC), with a market value of billions, generated a mere $41,000 in fees in 2023, highlighting a stark disparity between valuation and actual use.
Tezos and Cardano, once hailed as potential successors to Ethereum, face similar challenges. They boast advanced technology and high valuations but have yet to achieve widespread acceptance or demonstrate substantial real-world utility.
The Forbes report is a wake-up call to investors and users in the cryptocurrency space. It underscores the importance of due diligence and the need to look beyond market cap when evaluating the potential and progress of blockchain projects. The report also serves as a reminder that innovation and adoption are key drivers of value in the blockchain ecosystem.
It highlights the importance of due diligence and the need to look beyond market hype. The longevity and success of these platforms heavily rely on market sentiment rather than fundamental value, which is a precarious position for any financial asset.
As the crypto market continues to mature, it will be interesting to see how these “zombie blockchains” evolve. Will they find a way to breathe new life into their projects, or will they remain trapped in a state of undeath, sustained by nothing more than speculation? Only time will tell, but one thing is certain: the crypto world is watching closely.
Hong Kong debuts Asia’s first spot Ether, Bitcoin ETFs
In a landmark move for the Asian financial markets, Hong Kong has officially launched the first spot Bitcoin and Ether ETFs, marking a significant milestone in the integration of cryptocurrencies into mainstream financial instruments. This pioneering step not only positions Hong Kong as a leader in the cryptocurrency ETF space in Asia but also signals the region’s growing acceptance and institutionalization of digital assets.
The debut of these ETFs allows retail investors to trade cryptocurrencies at spot prices, a feature that was previously unavailable in the Asian markets. The introduction of six spot Bitcoin and Ether exchange-traded funds (ETFs) has been met with enthusiasm, reflecting the Asian investors’ appetite for cryptocurrencies. The three Bitcoin ETFs saw an early climb of more than 3% in their initial trading, showcasing the positive reception from the market.
This development comes just three months after the United States launched its first ETFs tracking spot Bitcoin prices, highlighting the rapid global evolution of cryptocurrency investment vehicles. However, the U.S. has yet to approve ETFs that track spot Ether prices, giving Hong Kong a competitive edge in this domain.
The ETFs in Hong Kong are unique in that they adopt an “in-kind” transaction mechanism, allowing investors to buy and sell ETF shares using the relevant crypto tokens instead of cash. This mechanism is particularly appealing to investors who own tokens and wish to hold them through the ETFs without incurring the cost of converting to fiat currency.
Despite the excitement, the Securities and Futures Commission (SFC) of Hong Kong has cautioned investors about the speculative and volatile nature of virtual assets. The SFC’s executive director, Christina Choi, reminded potential investors that such assets might not be suitable for everyone, underscoring the importance of risk awareness in these investments.
The management fees for these Hong Kong crypto spot ETFs range between 0.3% to 0.99%, which is higher than those listed in the U.S. This is attributed to the limited number of regulated service providers under Hong Kong’s strict legal framework. Currently, Hashkey and OSL are the only two approved trading platforms in the city.
The success of Hong Kong’s crypto ETFs will be closely monitored for indications of whether crypto flows could shift towards Asia from the U.S. Analysts anticipate that the initial inflow will primarily come from local retail investors due to cost considerations.
The launch of Asia’s first spot Bitcoin and Ether ETFs in Hong Kong is a testament to the city’s ambition to establish itself as a global digital asset hub. It also reflects the broader trend of cryptocurrency’s increasing legitimacy and adoption in the financial sector. As the market for these ETFs matures, it will be interesting to observe how they influence the dynamics of cryptocurrency investment on a global scale.