Crypto's 99% Failure Rate Is Its Biggest Advantage

99% of cryptocurrencies will go to zero.

That's exactly the point.

If you come from traditional markets, this sounds like an indictment. It's actually the thesis.

The stock market has gatekeepers. To list publicly, you need audited financials, regulatory filings, underwriters, and years of operational history. These barriers exist for good reason, they protect investors. But they also prevent most ideas from ever reaching capital markets at all.

Crypto has no such gates. Anyone can launch a token with nothing more than a name and a few lines of code. Today there are over 150 million cryptocurrencies. Half were created in the past year alone.

The natural reaction is to see this as chaos. And it is, partially. The low barrier to entry produces an enormous amount of noise: opportunistic cash grabs, memecoins, outright scams. But it also produces something traditional markets structurally cannot: rapid, permissionless experimentation at global scale.

Think of it less like the NYSE and more like the early internet. Most websites in 1999 were garbage. Most startups failed. But the absence of gatekeepers meant that anyone with a real idea could build, ship, and iterate in weeks rather than years. The few winners that emerged (Google, Amazon, PayPal) were only possible because the barrier to entry was so low that thousands of bad ideas could fail cheaply alongside them.

Crypto works the same way.

Take Hyperliquid.

A small team identified that on-chain derivatives exchanges were slow, clunky, and poorly designed. Within a few years of launching, they built a blockchain-native exchange now generating close to a billion dollars in annual revenue and distributing roughly 90% of that value back to token holders. They didn't need permission from a regulator or an investment bank to do it. They just built something better.

But Hyperliquid didn't emerge from nothing. It was built on the graveyard of dozens of failed blockchains, abandoned protocols, and dead tokens that each solved a small piece of the puzzle before running out of runway. That churn is the R&D.

This is the mental model shift that matters for traditional investors evaluating crypto as an asset class.

The failure rate isn't a sign of dysfunction. It's the mechanism by which the ecosystem evolves. Low barriers to entry create a brutally efficient selection process, far faster than what traditional venture capital or public markets can produce.

The investor's job hasn't changed. It's still about identifying durable value amid noise. The difference is that in crypto, the cycle from idea to product-market fit to revenue generation is compressed dramatically, and so is the cycle from launch to failure.

The 99% failure rate is the cost of a system with no barriers. The returns live in understanding what separates the 1%.

Cheers,

Louis Sykes
Senior Crypto Analyst, All Star Charts