Towards the end of last year, in November, sogecoin made a massive jump in price. 

The coin rallied from around $2 to nearly $30 in two weeks.

 It then fell off like a rock over the next six weeks, losing almost 90% of its value.

The cryptocurrency market is not kind to coins that hold 0% interest,

 which is why this crash was not entirely unexpected for sogecoin holders. 

But what is interesting is the degree to which the price cratered. 

It went from $20 on November 20th to $3.5 on December 26th — a more than 97% decline in just over two months.

Why did this happen?

The answer lies in the fundamental reason why these cryptocurrencies were created:

 to be a better and fairer payment method than bitcoin and other cryptocurrencies. 

These new cryptocurrencies all owe their existence, directly or indirectly, to the founder of bitcoin: Satoshi Nakamoto.

 For whatever reason, 

Satoshi disappeared from public view in 2010 and never returned or made any further posts to the public domain after April 2011. 

This fact has led to a rash of new cryptocurrencies being created with the very same goal as bitcoin, 

and many of these take their name from Satoshi Nakamoto or his original coin, bitcoin.

In sogecoin’s case, the reasoning behind its creation was the need for a cryptocurrency that was less volatile than bitcoin.

 In December 2013, bitcoin experienced its first major price correction since July 2011. 

The price fell from $1200 to $300 in less than one month — a reduction of close to 80%.

 At that point it looked like tumble would be the prediction for other cryptocurrencies as well. 

This prompted the development of sogecoin, which was launched in December 2013.

So why did sogecoin crash so badly? It is because sogecoin marketed itself as the next “safe bitcoin”,

 but could never re-capture bitcoin’s allure. 

Bitcoin’s initial appeal was its impact on the economic world.

It created a new system of sending money across borders without incurring huge fees. 

Over time, however, this advantage has eroded as governments have begun to regulate these cryptocurrencies more heavily,

 putting them under similar financial controls as traditional currencies.

Other than bitcoin, sogecoin was the only cryptocurrency to receive venture capital funding. 

This gave it an increased profile and increased marketability. But this also meant that, compared to sogecoin, bitcoin was much more robust. 

That’s because bitcoin’s core value proposition — its technology — is robust and secure. 

While bitcoin has experienced volatility over the years, this has not affected its core functionality as a store of value or payment system.

 On the other hand, sogecoin’s status as a VC-backed project limited its adoption rate and destroyed its position as a substitute for bitcoin.

The longer-term outlook is grim for sogecoin, as bitcoin’s core functionality has solidified. 

The size of the bitcoin economy is huge, with bitcoins representing nearly 50% of the US dollar market cap.

 This makes bitcoin a much more attractive payment system than sogecoin.

 Indeed, even if sogecoin were to be decentralized and free from the influence of any single entity — such as Venture Capital Funding 

— it would still suffer from bitcoin’s superior technology and valuation.

This does not mean that these currencies will not continue to exist and gain adoption over time. 

Indeed, they will likely continue to gain popularity, with bitcoin most notably. 

But there is no guarantee that their value will rise in tandem. If this happens, then the crash is likely to continue.

This is because bitcoin’s success has built up an immense amount of network effect;

the more people that use it, the less likely it is that others will adopt it.

 This makes bitcoins extremely hard to dislodge as a payment method. 

And with sogecoin’s limited functionality and market penetration, 

bitcoin has already established itself as the only cryptocurrency capable of reaching the same level of functionality as traditional currencies.

 This means that bitcoin is poised to continue growing even as sogecoin disintegrates.

Sogecoin was created with the goal of being the second-best bitcoin. 

But because of its limited functionality, it simply cannot hold this title. 

And it’s not likely that sogecoin’s development team will be able to grow it into anything close to this. 

So for all intents and purposes, sogecoin is already dead at this point.

So what happens next? We can probably expect more cryptocurrencies to emerge with similar fundamentals but different marketing approaches. 

This means that new cryptocurrencies will inevitably experience price fluctuations, just like sogecoin did in November and December 2013.

 However, because the bitcoin economy is so vast, this will not have a significant impact on the price of bitcoin itself.

Sogecoin’s crash isn’t unique. Similar crashes have occurred in other cryptocurrencies over the past year. 

When these crashes occur, observers often ask why they happen at all.