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The Bitcoin community is a very dynamic place, especially when the USD/BTC exchange rates are high. Many Bitcoin-related projects have sprung up in the past, but a lot of them failed for various reasons.

What are the major reasons for such projects failing? What things should an aspiring developer keep in mind to avoid such mishaps with their project?

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    Which projects? This is too vague, as it stands. – o0'. Jan 3 '12 at 22:54
  • Notable Bitcoin-related projects, such as Bitomat.pl, alternative cryptocurrencies, etc. – ThePiachu Jan 3 '12 at 23:02
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One factor is that people's enthusiasm for Bitcoin drives them to step well outside their comfort zones and do projects they wouldn't otherwise. Bitcoin is a new startup economy and the plethora of opportunities is tempting. But the lack of experience or skill can lead them to mistakes which bring about the end of the project. Bitomat.pl is a great example - the owner tried to make use of AWS without having a clear idea how they work.

Another factor - especially with business ventures - is overestimation of the Bitcoin market size. The market is very small, and I have the feeling that people's general excitement about Bitcoin isn't matched by their willingness to actually use it. If it's a niche service the target market is the intersection of people in this niche with people who are using Bitcoin, which is tiny, and for more mainstream services, those that are founded just to offer the service in Bitcoin are often inferior to established mainstream offerings (see above point). It comes down to the revenue not justifying the overhead costs, so the project is abandoned.

Creating a successful alt currency is an immense undertaking, and so far has mostly been tried by people who seem to think that changing a few parameters is all it takes.

I don't have any specific suggestions how to avoid this, other than trying to be realistic about the viability of the project and the personal ability to carry it through. This shouldn't, of course, come at the expense of being a bit bold and daring.

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Bitcoin projects have been very experimental with little precedent in the business models they've used, and consequently only small investments of time and money backing many of them, so for both of these reasons, a high percentage of them have failed. This is inherent to Bitcoin-related projects at the moment, as they involve a new technology. The flip side is a greater potential of Bitcoin businesses seeing rapid growth, due to the novelty of bitcoin-related business models.

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You have already received good answers about businesses, I'd like to add something about alternate currencies.

Bitcoin alternate currencies are usually born because some kind of kid was upset he didn't join Bitcoin early enough, and wanted to be able to "play with it" with the instruments he had at home.

So abominations like "GPU-resistant / CPU-friendly" currencies were born. Think about it: they are completely and utterly wrong, i.e. they chose a specifically bad algorithm when there was a better one, just because they didn't want to be outclassed by people with better hardware. They didn't care at all about the health of the currency itself, they just wanted to be able to mine successfully themselves.

And that's why they obviously failed.

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  • What are some famous examples of «"GPU-resistant / CPU-friendly" currencies»? – Geremia Apr 2 '15 at 5:24
  • @Geremia Litecoin and its hundred silly clones. – o0'. Apr 2 '15 at 8:03
  • How is Litecoin is "GPU-resistant"? – Geremia Apr 2 '15 at 20:48
  • @Geremia litecoin fanatics thought it was many things… – o0'. Apr 2 '15 at 21:18

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