Crypto industry in a snapshot
The advent of Bitcoin marked the beginning of the cryptocurrency ecosystem, but it is no longer the only digital currency. With thousands of virtual assets available on cryptocurrency exchanges, not all of them are utilized as long-term stores of value or for peer-to-peer transactions, despite having a fiat value. The development of smart contract blockchains such as Ethereum has enabled the creation of numerous digital coins and tokens for various unique use cases.
There are currently over 19,000 cryptocurrencies, and it can be difficult to determine the exact number at any given time. CoinMarketCap and CoinGecko are reputable crypto price aggregator websites that continuously list thousands of digital coins and tokens on centralized and decentralized exchanges.
There are several reasons for the proliferation of cryptocurrencies. Firstly, it has become easier for developers to create various cryptos using smart contract blockchains, and individuals with no coding experience can also mint NFTs on platforms like OpenSea and Rarible. Additionally, the rapid growth in the global crypto market cap has spurred innovation, although it has also attracted many scammers.
Developers often introduce new cryptocurrencies that mimic or compete with successful projects, such as dog-themed meme coins that followed Dogecoin’s popularity in 2021. However, not every new cryptocurrency is valueless, as many developers and companies are genuinely interested in using blockchain for unique purposes. As more information on Web3 spreads and more individuals introduce products and services to enhance the crypto space, cryptocurrencies are likely to continue coexisting.
What are the most common types of cryptocurrency?
In general, the most popular digital assets can be categorized into four groups: digital coins, utility tokens, NFTs, and stablecoins.
Digital coins are cryptocurrencies that exist on their native blockchain and are often used as mediums of exchange or store-of-value purchases. Examples include Bitcoin, Litecoin, Dogecoin, and Ethereum.
Utility tokens serve a specific function within their respective Web3 ecosystems and are often released on smart contract blockchains like Ethereum. They can be used to increase engagement in dApps, unlock special in-game experiences in play-to-earn games like Axie Infinity, or have voting rights in DeFi dApps.
NFTs, or non-replicable virtual tokens, exist on smart contract blockchains and can represent any form of digital media. They are often associated with animated profile pics, metaverse land, art, and sports clips.
Stablecoins are cryptocurrencies that maintain a 1:1 ratio with another asset, mostly the U.S. dollar, and are meant to be non-volatile digital assets. Examples include Tether (USDT), USD Coin (USDC), and DAI.
In addition to these categories, there are several cryptocurrencies that have maintained market cap dominance for years, including Bitcoin (BTC) and Ethereum (ETH).
There are also several Ethereum competitors that are often in the headlines, including Binance Coin (BNB), Solana, Cardano (ADA), and Polkadot.
Is it possible for all cryptocurrencies to survive?
Although blockchain’s decentralized nature makes it challenging to “kill” a crypto, many failed projects still exist today as “zombie chains.” Not every project will be successful, even though most cryptos have the potential to persist indefinitely.
Some observers liken the current crypto sector to the Dot-Com Bubble of the '90s, when the stock prices of many speculative internet firms skyrocketed, only to plummet in the early 2000s. Many companies that surged during this era went bankrupt, but a few became successful tech giants like Amazon and Apple.
Similarly, crypto projects that possess solid fundamentals, committed developers, and strong communities are likely to flourish.
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