Are there too many cryptocurrencies?

Are there too many cryptocurrencies?

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Are there too many cryptocurrencies? Selection is usually a good factor — however not all digital property are born equal.
HitBTC
The cryptocurrency trade has grown at a staggering tempo. There at the moment are virtually 21,000 totally different cash in existence, throughout quite a lot of subsectors. From metaverses to decentralized finance, buyers are spoiled for selection.
However a burning query, particularly amongst crypto skeptics, is that this: Are there too many cryptocurrencies? We have repeatedly seen how new altcoins could be created within the blink of an eye fixed. Tokens popped up hours after Will Smith slapped Chris Rock on the Oscars — pumping and dumping on low liquidity. And following the demise of Queen Elizabeth, the markets have been flooded by a flurry of “memecoins” bearing her identify. Some critics felt this was in poor style and argued it was “a nasty search for crypto.” 
Regardless of the proliferation of hundreds of cryptocurrencies — some with names impressed by main cash — Bitcoin and Ethereum proceed to dominate. Mixed, the valuations of those two digital property command a 58.2% share of all the market. All of this leaves altcoins battling for a a lot smaller piece of the pie.
Let’s start by discussing the arguments in favor of this overwhelming assortment of cryptocurrencies.
Whereas Bitcoin and Ether are universally acknowledged and accepted, it is truthful to say that many blockchains and crypto initiatives would favor to have their very own tokens. In some circumstances, it is a necessity too — soccer fan tokens would not make sense except the likes of Manchester Metropolis and Paris Saint-Germain have been in a position to provide their very own digital property.
Stablecoins are one other group of cryptocurrencies the place quite a lot of choices is necessary. Whereas property pegged to the U.S. greenback dominate the panorama, some buyers desire to make use of stablecoins denominated of their native fiat foreign money, similar to euro or pound. And given how some stablecoin issuers have confronted uncomfortable questions on whether or not the cash in circulation are correctly backed by arduous foreign money in reserve, the variability on provide empowers buyers with the power to carry out due diligence and discover an asset that matches their urge for food for threat.
The cryptocurrency market is considerably much like a superstore. Inside the largest retailers, you’ll be able to come throughout 10 sorts of the identical cereal — and numerous styles of ketchup. However every has a special value level and a worth proposition. Specialists inside these shops may have additionally carried out style assessments and security checks earlier than permitting the merchandise on cabinets.
You possibly can argue that it is a comparable story on the subject of crypto exchanges. Buying and selling platforms similar to HitBTC have a rigorous itemizing course of to make sure that all well-established cryptocurrencies are supplied to its prospects — in addition to new tokens that present potential. Given what number of digital property at the moment are in existence, this will typically really feel like discovering a needle in a haystack.
After all, there’s two sides to each coin. With hundreds of various altcoins on provide, the need to repeatedly create new cryptocurrencies arguably results in additional fragmentation within the trade. A mission’s insistence that solely its native token can be accepted can add prices for customers too, as a result of they’re going to must make conversions from better-known cryptos — and pay buying and selling charges alongside the way in which. 
It is unimaginable to think about a world the place Gmail customers may solely ship emails to others who’ve a Gmail account, with Yahoo and Outlook additionally working as walled gardens. However this appears to have change into the established order within the crypto trade — and though efforts are being made to spice up cross-chain communication and forge bridges between blockchains, there’s nonetheless loads of work to be achieved. These bridges also can endure unlucky safety vulnerabilities, as we noticed with the Ronin hack again in March.
And on the difficulty of whether or not there are too many cryptocurrencies, some critics argue this proves how ineffectual the market is. What is the level of getting Bitcoin, which has a hard and fast circulating provide of 21 million, when there’s a vast provide of different cash? 
Figures from 99 Bitcoins suggest that there are greater than 1,700 useless cash — a veritable graveyard of failed digital property that endure from inactive improvement, low buying and selling quantity, poor on-line presence, an absence of listings on main exchanges, or all 4. Given we’re presently in a bear market, it is virtually sure this determine will rise within the months forward.
It is value remembering that the crypto bull run of 2021 can draw parallels with the dotcom increase 20 years earlier. Again within the early 2000s, frenzied exercise noticed an explosion within the variety of web corporations buying and selling on the inventory market, and lots of of them boasted sky-high valuations. A lot of them ended up going bust, together with Pets.com and Boo.com.
In a current report, KPMG warned that cryptocurrencies missing “clear and powerful worth propositions” may additionally find yourself dying out within the subsequent few months, however added: “That would truly be fairly wholesome from an ecosystem perspective as a result of it will clear away a few of the mess that was created within the euphoria of a bull market. The perfect corporations would be the ones that survive.”
And that is the opposite lesson that may be drawn from the bull run — irrespective of how brutal or extended a bear market is, some cryptocurrencies will survive and thrive. This additionally stays a massively experimental expertise, and there are certain to be failures alongside the way in which. 
HitBTC argues that the crypto markets are nonetheless removed from maturity. It describes itself as one of many pioneers of the alternate market, given the way it launched in 2013. The corporate says safety, ease of use and reliability are prime priorities — alongside aggressive charges and a secure infrastructure. It now lists greater than 1,000 cryptocurrencies, and likewise affords staking and futures.
The crypto trade is modern, and thrilling use circumstances are frequently rising for digital property. Due to this, the variety of new cryptocurrencies in existence is unlikely to sluggish anytime quickly. This implies it is right down to buyers to carry out detailed due diligence on which cash to spend money on — and exchanges should play an instrumental position in guaranteeing that they solely listing credible cash that add worth to the ecosystem.
Disclaimer. Cointelegraph doesn’t endorse any content material or product on this web page. Whereas we goal at offering you with all necessary info that we may receive, readers ought to do their very own analysis earlier than taking any actions associated to the corporate and carry full duty for his or her choices, nor can this text be thought-about as funding recommendation.

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