Too many cryptocurrencies?

The cryptocurrency industry is growing at an astonishing pace. There are currently around 21,000 different coins across various subsectors. From the metaverse to decentralized finance, investors have no choice.

But a compelling question, especially among crypto skeptics, is: Are there too many cryptocurrencies? We have repeatedly seen how new altcoins are created in the blink of an eye. Hours after Will Smith slapped Chris Rock at the Oscars, the token popped out. And after Queen Elizabeth’s death, “meme coins” bearing her name flooded the market. Some critics felt this was in bad taste, claiming that “crypto looks bad”.

Despite the proliferation of thousands of cryptocurrencies (some named after major coins), Bitcoin and Ethereum continue to dominate. Combined valuations of these two digital assets account for his 58.2% share of the overall market. All of this makes altcoins competing for a much smaller piece of the pie.

Is choice a good thing?

Let’s start by discussing the arguments in favor of this overwhelming class of cryptocurrencies.

Bitcoin and Ether are widely recognized and accepted, but it’s fair to say that many blockchain and crypto projects prefer to have their own tokens. Football fan tokens are meaningless without Manchester City or Paris Saint-Germain offering their own digital assets.

Stablecoins are another group of cryptocurrencies where different options matter. Assets pegged to the U.S. dollar predominate, but some investors prefer to use stablecoins denominated in local fiat currencies such as euros and pounds sterling. Also, given that some stablecoin issuers face uncomfortable questions about whether their coins in circulation are properly backed with reserves, the diversity offered Investors can perform due diligence and find assets that match their appetite for risk.

The cryptocurrency market is somewhat like a superstore. In the largest retailers, you can come across 10 of the same cereals and countless varieties of ketchup. However, each has a different price point and value proposition.

It could be argued that it is a similar story when it comes to crypto exchanges. Trading platforms such as HitBTC are sure to offer their customers all the well-established cryptocurrencies as well as new tokens that show their potential. We have a rigorous listing process to ensure that Given the number of digital assets that exist today, it can sometimes feel like finding a needle in a haystack.

Disadvantage

Of course, every coin has two sides. With thousands of different altcoins on offer, the desire to continuously create new cryptocurrencies will undoubtedly lead to further fragmentation of the industry. It may also add costs to the person

It’s impossible to imagine a world where even Yahoo and Outlook act as walled gardens, where Gmail users can only send emails to other users with Gmail accounts. However, this seems to be the current state of the cryptocurrency industry. Efforts are being made to facilitate cross-chain communication and bridges between blockchains, but there is still a lot of work to be done.These bridges, as we saw in his Ronin hack in March, Unfortunately, it can also suffer from security vulnerabilities.

Also on the question of whether there are too many cryptocurrencies, some critics argue that this proves how powerless the market is. What is the point of having Bitcoin with a fixed circulating supply of 21 million when there is an unlimited supply of other coins?

what the future looks like

The 99 bitcoin figure suggests there are over 1,700 dead coins. This is a veritable graveyard for failed digital assets that suffer from sluggish development, low trading volume, low online presence, no listing on major exchanges, or all four. Given the current bear market, this number is almost certain to rise in the coming months.

It’s worth remembering that the 2021 cryptocurrency bull market may resemble the dotcom boom of 20 years ago. In the early 2000s, a fever pitch exploded in the number of internet companies trading on the stock market, many with very high valuations. Many sites went bankrupt, including Pets.com and Boo.com.

In a recent report, KPMG warned that even cryptocurrencies lacking a “clear and strong value proposition” could die in the coming months, but “from an ecosystem standpoint, the It could be healthy.Remove some of the turmoil created in the euphoria of the bull market.The best companies will survive.”

And that’s another lesson we can draw from the bull market. No matter how brutal and protracted the bear market is, some cryptocurrencies will survive and thrive. Again, this is a highly experimental technique and may fail along the way.

HitBTC claims that the cryptocurrency market is still far from mature. The company has touted itself as one of the pioneers in the exchange market since it launched in 2013. The company says security, ease of use and reliability are top priorities, as are competitive rates and a stable infrastructure. There are currently over 1,000 cryptocurrencies listed, and staking and futures are also offered.

The crypto industry is innovative and exciting use cases for digital assets are constantly emerging. For this reason, it is unlikely that the number of new cryptocurrencies in existence will decline anytime soon. Exchanges should play an important role in ensuring that they list only trusted coins that add value to the ecosystem.