Speaker 1: This is Bloomberg Crypto Daily Bloomberg I heard podcast, and
Speaker 1: I'm Mike Reagan, a senior markets editor in Today for
Speaker 1: Stacy Marine. It's Monday oct one. Hey, it's Ty Butler
Speaker 1: from the Bloomberg Crypto podcast team. Happy Halloween. I posed
Speaker 1: it as a question because it's kind of an oxymoron.
Speaker 1: Are people actually happy on Halloween? Or are they scared?
Speaker 1: After all, it is trick or treat, right, Well, you
Speaker 1: can apply that to the crypto market when we talk
Speaker 1: about the spookiness of zombie coins. They're not quite dead yet.
Speaker 1: I mean, there are twelve thousand of them, but it
Speaker 1: is hard to label them as alive and well. In fact,
Speaker 1: a recent analysis from the crypto data company Nomics found
Speaker 1: that these coins have seized all trading activity in the
Speaker 1: last month and are simply dormants. So what does it
Speaker 1: mean when a market has so many inactive assets. Is
Speaker 1: the state of zombie coins an indication that the crypto
Speaker 1: industry isn't quite what it once was. What we do
Speaker 1: know is that despite the fact that they're not new,
Speaker 1: the increase in their numbers this year has zombie coins
Speaker 1: making so much noise that Bloomberg reporter overcreef. We could
Speaker 1: see some miracles happen. We could see some of them
Speaker 1: come back to life. Will join Guest host Mike Reagan
Speaker 1: would take some real heavy promotion from some of the
Speaker 1: holders of these things to get them back out there
Speaker 1: in the public and trading again. To discuss the apocalypse
Speaker 1: happening in the crypto universe. Hioga, thanks for doing the show.
Speaker 1: I'm glad to be here. My So, why don't we
Speaker 1: just start by talking about what exactly is a zombie coin?
Speaker 1: How do you define a zombie coin? Right, So it's scary.
Speaker 1: It's a coin that hasn't traded for a month. And
Speaker 1: so just this year long, we have over a twelve
Speaker 1: thousand coins that haven't traded for at least a month.
Speaker 1: So they are not quite dead, but they're not quite alive.
Speaker 1: Like you said, Yeah, well, I was gonna ask, is
Speaker 1: it possible for a cryptocurrency to ever actually die? They
Speaker 1: always exist on the block chain as long as that
Speaker 1: blockchains running. I suppose, right, that's exactly right. Basically, as
Speaker 1: lone as there is somebody using your block chain, as lone,
Speaker 1: as there is somebody holding a coin, technically, you know,
Speaker 1: it could potentially still come to life again. And that
Speaker 1: has happened in the past, where all of a sudden,
Speaker 1: a project that everybody has thought, you know, pretty much
Speaker 1: lost its momentum, all of a sudden got reignited. So
Speaker 1: that has happened before, but it tends to be pretty rare,
Speaker 1: and you know, algo, we often hear about what called
Speaker 1: liquidity pools or automated market makers, basically software that allows
Speaker 1: for there always to be a buyer for everyone looking
Speaker 1: to sell or a seller looking to buy. I'm guessing
Speaker 1: these zombie coins are projects that do not have that
Speaker 1: sort of infrastructure behind them. Is that is that a
Speaker 1: safe bet? That's my bed as well. Namics didn't provide
Speaker 1: any data on that, but I agree with you, um,
Speaker 1: I think a lot of this sort of small projects
Speaker 1: that never got to the point to have sort of
Speaker 1: liquidity pools and so forth. So some of them just
Speaker 1: maybe worthwhile, you know, they might be creating cool games
Speaker 1: or social networks or something else interesting and they just
Speaker 1: happened to launch at a bad time. And Olga, I'm
Speaker 1: guessing many of these coins are not worth say the
Speaker 1: twenty dollars that that bitcoin is worth. Are these some
Speaker 1: of those coins that are worth a fraction of a penny.
Speaker 1: Do you think most of them? This list of over
Speaker 1: twelve thousand coins doesn't even include those ones that trade
Speaker 1: for for a fraction of with any There are thousands
Speaker 1: more coins that are, like you said, trading for just
Speaker 1: minis skulls amounts, and there are some people still selling
Speaker 1: and buying those hoping that, you know, some sort of
Speaker 1: a market move would make them some money off of
Speaker 1: these coins. So that does not that those coins are
Speaker 1: not even zombies yet, but potentially could be. So. If
Speaker 1: I own a zombie coin, the problem is that there's
Speaker 1: just no one to sell it to. I guess there's
Speaker 1: there's no one who wants to buy it. Is that
Speaker 1: generally the idea? Yeah, So it could be that nobody
Speaker 1: wants to buy it, or maybe it's not even worth
Speaker 1: my time to try and sell it because most networks,
Speaker 1: you know, you have to pay transaction fees to sell
Speaker 1: your coin to somebody else, for example, And if your
Speaker 1: coin is worth so little that you might actually have
Speaker 1: to pay more for this transaction feed, then it would
Speaker 1: make no sense to even try to sell it. Right. Oh,
Speaker 1: I was remembering a story from last year by our
Speaker 1: colleague Joe Wisenthal, and he was messing around on pancake Swap,
Speaker 1: which is one of those decentralized exchanges that people used
Speaker 1: to trade coins that aren't listed on the major exchanges,
Speaker 1: and he was amazed by how easy it was to
Speaker 1: create a coin on that platform. Basically found some developers
Speaker 1: who could make a coin for him in a in
Speaker 1: a matter of minutes that basically copied the code from
Speaker 1: an existing coin, and they changed a few parameters, you know,
Speaker 1: the number of tokens in circulation and that sort of thing,
Speaker 1: and boom, he had a coin named after him created
Speaker 1: in a matter of minutes. Is that part of the story.
Speaker 1: Do you think that it became so easy to create
Speaker 1: new crypto tokens that people created way too many, whether
Speaker 1: they were just messing around like Joe was or for
Speaker 1: other reasons. Is that part of the story. That's definitely
Speaker 1: part of the story, because essentially it's become very easy
Speaker 1: to create your tokens and to list them for trading,
Speaker 1: because they're all these decentralized exchanges like pincakes Swap, where
Speaker 1: essentially anybody can list a token and start trading. Because
Speaker 1: previously there were gatekeepers like centralized exchanges that looked at
Speaker 1: different tokens and decided, okay, we're gonna list this one
Speaker 1: and not this one. But now anybody could list to anything,
Speaker 1: and so that definitely contributed to this explosion of tokens
Speaker 1: that we've seen. How serious of a problem is this
Speaker 1: for the crypto industry? Do you think we have twelve
Speaker 1: thousand zombie tokens that no one wants to buy? Is
Speaker 1: this a Is this a problem for the industry? You know,
Speaker 1: I feel like any industry, you know, eighty percent of
Speaker 1: new businesses that are launched to fail. You know, it's
Speaker 1: it's the same with restaurants, except for with tokens. In
Speaker 1: a lot of cases, you know, they did not have
Speaker 1: physical offices. Maybe they had developers spread around the world
Speaker 1: working on this project, and uh, you know it's the
Speaker 1: costs much lower, the barriers to entry can be much
Speaker 1: lower for some of this token projects than for projects
Speaker 1: in other industries. So I feel like it's all part
Speaker 1: of a natural process where you know, the week die,
Speaker 1: especially in the bear market that we are going through
Speaker 1: right now, where even you know, well known successful projects
Speaker 1: have a lot of trouble getting funding and so they
Speaker 1: have to close doors. And so we have essentially the
Speaker 1: zombie tokens. It's just it's just a symptom of this
Speaker 1: bear market, and I'm sure we'll have many more tokens appear,
Speaker 1: you know, when when the market turns. And how are
Speaker 1: traders and users of cryptocurrencies reacting to this, this issue
Speaker 1: with the zombie coins. Have you heard anything? Is there
Speaker 1: any scuttle bud in the market about this this problem?
Speaker 1: You know, I think people generally know that crypto and
Speaker 1: investing in crypto is very risky, and it's risky to
Speaker 1: invent invest in some of the kind of major coins
Speaker 1: like Bitcoin and ethereum, and it's especially risky to invest
Speaker 1: in little known coins with uh, you know, very few
Speaker 1: people trading them, And so I think people who made
Speaker 1: bets on those kind of talk tokens hopefully knew the
Speaker 1: risks they were taking. And I feel like a lot
Speaker 1: of crypto is about speculation and people taking risks, and
Speaker 1: when the risk taking doesn't pan out, it's just that's
Speaker 1: just how it is. And I think that's the mindset
Speaker 1: before and it's still remains so today and probably going
Speaker 1: into the future as well. I wonder, orgay, is it
Speaker 1: harmful for a blockchain project to have a lot of
Speaker 1: zombie coins associated with it. You know, does it cost
Speaker 1: them anything if these coins aren't actually transacting? Is there
Speaker 1: an issue there for the actual blockchain projects themselves? You
Speaker 1: know that that's a good question. I don't think there
Speaker 1: is any cost for anybody until the tokens are moved
Speaker 1: or sold, because essentially the cost would be the transaction
Speaker 1: fee that you pay for the blockchain to process essentially
Speaker 1: your transaction. And if this token is not changing hands,
Speaker 1: then I don't think there are any fees. And do
Speaker 1: you think there's anything that could revive some of these
Speaker 1: twelve thousand zombie coins? You know what, I guess it
Speaker 1: would take some real heavy promotion from some of the
Speaker 1: holders of these things to get them back out there
Speaker 1: in the public and trading again. Absolutely, we could see
Speaker 1: some miracles happen. You could see some of them come
Speaker 1: back to life. Perhaps, you know, if the market revives,
Speaker 1: the overall crypto market revives, uh, some of these projects
Speaker 1: maybe are able to get some some uh you know,
Speaker 1: investors come and invest some money in them. They would
Speaker 1: be able to perhaps have a marketing budget again, they
Speaker 1: would be able to pay developers and in tokens or
Speaker 1: with actual money or other cryptocurrencies. And if some of
Speaker 1: these projects do take off in the future, if say,
Speaker 1: some some game becomes successful, you know, their fortunes could
Speaker 1: be reversed. So, Oga, let's pretend I'm a crypto entrepreneur
Speaker 1: and I want to create a new coin. What do
Speaker 1: I need to do? Do you think to to prevent
Speaker 1: this zombie coin fate for for my new coin? The
Speaker 1: biggest challenge for any project is to essentially get users
Speaker 1: and to to get holders of the tokens. So a
Speaker 1: lot of projects do so called air drops where they
Speaker 1: just distribute their coins to a variety of people for
Speaker 1: either doing some particular task or even just for free
Speaker 1: for registering, because they want to have a lot of
Speaker 1: this initial support, uh and continuing support. That's sort of
Speaker 1: the biggest challenge. You know, how do you get noticed
Speaker 1: because there are thousands of coins out there? You know,
Speaker 1: it's it's a it's definitely challenged. Coming up more with
Speaker 1: Bloomberg reporter Oga Karif on how zombie coins are creeping
Speaker 1: their way through the crypto market. They are not being
Speaker 1: yeah yeah, um for all these people that bought one
Speaker 1: of these coins and now they're suddenly stuck with it.
Speaker 1: They can't sell it. What kind of impact do you
Speaker 1: think that has on the crypto market itself, You know,
Speaker 1: I sort of I'd like to think that people who
Speaker 1: made the bets on this unknown coins they knew they
Speaker 1: were taking big risks that could not might not pay.
Speaker 1: And I think, uh, sort of speculators like that will
Speaker 1: will keep on making bets. But but I think there
Speaker 1: might have been some people who might not have thought
Speaker 1: that their investments were as risky as uncertain and they
Speaker 1: would definitely get discouraged. I think we are seeing a
Speaker 1: lot of retail investors staying on the sidelines during bear
Speaker 1: markets because because of this very reason, but inevitably when
Speaker 1: when the bullmarket starts, they come back again and in
Speaker 1: greater numbers. So I think, you know, that's what I
Speaker 1: would expect in the future as well well, Olga. I
Speaker 1: wonder what we know about the history of some of
Speaker 1: these zombie coins, where any of them actually once sort
Speaker 1: of high fires in the crypto market, where any of
Speaker 1: them have potential or coins that people had actually heard of,
Speaker 1: or were they mostly just obscure coins that never really
Speaker 1: traded a lot to begin with. You know, they were
Speaker 1: mostly very obscure, so some of them might have had
Speaker 1: like a website and say a few hundred fullers and Twitter,
Speaker 1: and then they died and the website went down, and
Speaker 1: then they stopped posting on Twitter and that was the
Speaker 1: end of it. I would say the majority is sort
Speaker 1: of in this category, So even after their website goes down,
Speaker 1: there's there's life after Twitter and a website for that's right.
Speaker 1: And I was showing many of these were on the
Speaker 1: Ethereum blockchain. Is that a safe bet? Do you think? Yes? Yeah,
Speaker 1: because that's exactly right. It's just so easy to launch
Speaker 1: a new coin on on the Ethereum network that uh,
Speaker 1: that's the that's where the zombies are most prevalent, you know,
Speaker 1: and all go. Obviously, the big story this year for
Speaker 1: Ethereum was what they call the merge, where it changed
Speaker 1: from proof of work to a proof of steak system
Speaker 1: where val validators have to put some crypto assets at
Speaker 1: stake to to be uh, part of the network. Does
Speaker 1: that play into this at all? Does? Does that switch?
Speaker 1: Do you think make it more promising that some of
Speaker 1: these zombies will come back to life? You know? So
Speaker 1: the merge essentially reduced Ethereum's power consumption, but didn't do
Speaker 1: anything else in terms of the user experience, but it's
Speaker 1: a stepping stone to additional changes expected next year that
Speaker 1: could potentially make the Ethereum ecosystem sort of cheaper and
Speaker 1: faster to post transactions into. That's very important in terms
Speaker 1: of attracting new projects to this ecosystem, and perhaps that
Speaker 1: means that will see more new coins launching here, you know,
Speaker 1: continuously launching here going forward, because essentially this is making
Speaker 1: ethereum Um increasingly more competitive for anything else out there,
Speaker 1: So we'll probably see more very good coins launching here,
Speaker 1: as well as more zombies coming up, so that the
Speaker 1: zombies could be with us for a while, I imagine,
Speaker 1: is the bottom line, right. Well, Olga, that was fascinating.
Speaker 1: Thank you so much, and you can find more of
Speaker 1: AGA's reporting on the Bloomberg terminal, on Bloomberg dot com
Speaker 1: and on Twitter. She's at book Caarif. Olga, thank you
Speaker 1: so much. I really enjoyed it. Thank you. On the
Speaker 1: next episode of Bloomberg Crypto, we're now are year into
Speaker 1: a huge experiment in digital currencies. Nope, this isn't about
Speaker 1: all Salvador and bitcoin. We're gonna be talking about one
Speaker 1: of the world's largest economies, Nigeria and its experiments with
Speaker 1: digital cash. This is Bloomberg Crypto, a daily podcast from
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Speaker 1: The supervising producer of Bloomberg Crypto is Vicky very Galina.
Speaker 1: Our senior producer is Janet Albin. Our producers are Mohammed
Speaker 1: Faruk and Sharon Barriro. Our associate producers are Ty Butler
Speaker 1: and Moses on Desta wonder At is our engineer. Original
Speaker 1: music by Leo Sidron. I'm Stacy Mariashmal. We'll be back
Speaker 1: tomorrow