The cryptocurrency market has seen incredible growth. There are nearly 21,000 coins available across many subsectors. Investors have a lot of options, from decentralized finance to metaverses.
A burning question among crypto skeptics is: Are there too many cryptocurrency? We have seen multiple times how quickly new altcoins can emerge. After Chris Rock slapped Will Smith at the Oscars, tokens appeared. They were pumping and dumped on low liquidity. After Queen Elizabeth’s death, the markets were overflowing with a flood of “memecoins” that bore her name. Some people thought this was in bad taste, and claimed it was “a bad image for crypto.”
Despite the appearance of many cryptocurrencies, some of which have names that are inspired by major coins, Bitcoin and Ethereum still dominate. These two digital assets together command a 58.2% market share. Altcoins are fighting for a smaller slice of the pie.
Is it a good thing to choose?
Let’s start by looking at the arguments for this vast array of cryptocurrencies.
Although Bitcoin and Ether have been universally accepted and recognized, many blockchains and crypto projects would rather have their own tokens. It’s not an option in all cases. For example, football fan tokens would not make sense if Paris Saint-Germain and Manchester City were able offer their own digital assets.
Stablecoins, another category of cryptocurrency, offer a wide range of options. Assets based on the U.S. Dollar dominate the market, but some investors prefer stablecoins that are denominated using their local fiat currency such as the euro or the pound. Given the fact that some stablecoin issuers have had to answer uncomfortable questions about whether coins in circulation were properly backed by hard currency, investors can do due diligence and choose an asset that suits their risk appetite.
The cryptocurrency market can be described as a superstore. You can find a variety of cereals in the largest retailers. There are also countless types of ketchup. Each one has a unique price point and value proposition. Before allowing products to be placed on shelves, specialists in these stores will also have performed safety and taste checks.
It could be argued that the story is similar when it comes crypto exchanges. HitBTC has gone through a strict listing process to ensure all cryptocurrencies are available to customers. They also allow for new tokens to be added as they become available. This can sometimes feel like searching for a needle in the haystack, given how many digital assets exist.
The down sides
There are two sides to every coin. There are thousands of altcoins available, which could lead to more fragmentation within the industry. The insistence of a project that its native token be accepted may lead to increased costs for consumers. They will need to convert from more well-known cryptos and pay trading fees.
Imagine a world in which Gmail users can only send emails to other Gmail accounts, and Yahoo and Outlook acting as gatekeepers. This seems to be the norm in crypto. Despite efforts to improve cross-chain communication and build bridges between blockchains, it’s difficult to imagine a world where Gmail users could only send emails to others who have a Gmail account. Yahoo and Outlook are also closed gardens. These bridges can be vulnerable to security issues, as was the case with the Ronin attack in March.
Some critics believe that there are too many cryptocurrency, which proves the market’s inefficiency. Why have Bitcoin when there is an unlimited supply?
According to 99 Bitcoins , there are over 1,700 dead coins. This is a graveyard of digital assets that have suffered from inactive development and low trading volume. This is almost certain to rise as we are currently in a bear-market.
It is worth noting that the 2021 crypto bull run can be compared to the dotcom boom of 20 years ago. In the early 2000s, there was a lot of activity on the internet. Many of these companies had high valuations and were trading on the stock exchange. Boo.com and Pets.com were just two of the many that went bust.
KPMG recently warned that cryptocurrency without “clear, strong value propositions” may also die out within the next few months. However, KPMG added that this could be quite beneficial for the ecosystem because it will clear away some of that mess that was created during the bull market. Only those companies that survive will be the best.
This is the second lesson to be learned from the bull market — some cryptocurrencies will thrive and survive, no matter how severe or long-lasting a bear markets are. This technology is still very experimental and there will be many failures.
HitBTC believes that crypto markets are still in their infancy. HitBTC is a pioneer in the cryptocurrency exchange market. It was founded in 2013 and has been around since then. It claims that security, reliability, and ease-of-use are its top priorities. The company now offers more than 1000 cryptocurrencies and also offers futures and staking.
Innovative use cases for digital assets are constantly emerging in the crypto industry. This is why the number of cryptocurrencies available will not slow down. Investors will need to do their due diligence when choosing which coins to invest in. Exchanges should play a key role in making sure that credible coins are listed that contribute to the ecosystem.
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