One of the most amazing things about altcoins is that no one knows exactly how many there are.
This is an incredible fact with all the firepower of the computer and the plethora of marketing and branding surrounding altcoins and crypto.
The miners and creators of these coins are clamoring for new coins to be released – some of which will change the world, while others will have no use.
Separating the wheat from the chaff is by far the most difficult aspect of investing in cryptocurrency.
Coinmarketcap.com lists 9,425 coins. More than all the fiat currencies in the world combined. It’s hard to believe that the only cryptocurrency available 13 years ago was Bitcoin. Every sector of the economy now has a cryptocurrency.
These cryptocurrencies are geared towards using blockchain technology to transform a wide range of industries, from finance and healthcare to energy, data storage, machine learning, payments on social media, sourcing and logistics to content ownership.
How can this happen when there are already so many cryptocurrencies?
There are a variety of cryptos, each with a unique set of features. We see so many cryptocurrencies because they all use existing underlying blockchain technology. As a result, you can generate different digital currencies for different purposes using the same platform as your base.
Cryptocurrencies are digital coins that you can exchange for real-world currencies. We can use them like traditional fiat – like a store of value.
Some serve this purpose – others are for people who need a utility to work with their altcoins. It is a collection of cryptocurrencies under development as a system. These can be used and built on top of an existing blockchain. For example, one network that has enabled the creation of token currency using its own protocols is Ethereum.
What we call application or platform cryptocurrencies are the other main source of cryptocurrency. The developers have also built them in addition to the currently used utility currencies. Many altcoins have been launched using Ethereum blockchain technology, for example.
The proliferation of altcoins is simply due to the fact that no one is in charge of this blockchain technology. However, you can create your own play money if you know enough about how it works.
Satoshi Nakamoto, the supposed creator of Bitcoin, was the first to use blockchain technology to create a coin. But it wasn’t long before other programmers understood and realized that they too could use the same technology to create a superior “version” of this new “Bitcoin”.
Ultimately, professionals like Charlie Lee, a former Google programmer, helped establish Litecoin, one of the first altcoins. He was not the only one. Others who were trying to create something comparable or better then followed suit.
Bitcoin and a few other altcoins have been hugely successful, which is why there are so many cryptocurrencies. But, remember, when Bitcoin was first introduced, not many people were interested. People ignored it or didn’t bother to look at it because it was thought to have no intrinsic value.
However, its value has increased over time. As recently as early 2017, Ethereum was considered virtually worthless. However, even those who bought the Ether cryptocurrency saw colossal gains.
In 2017 Bitcoin and other altcoins exploded in popularity. At its all-time high, Bitcoin reached around $20,000 per BTC. Everyone understood what was happening. Cryptocurrency was the new holy grail of investing. Everyone wanted to come in.
Another reason for the rise of new cryptocurrencies is “forking”. Although the fork is not the main cause of the wealth of various cryptocurrencies, it does play a role. For example, at least four known cryptocurrencies that “spun off” from Bitcoin – Bitcoin Cash, Bitcoin Gold, and Litecoin make up this group.
If you’re interested in Litecoin, you’ll want to check out Litecoin Cash (ETH). Even newer cryptocurrencies are forced to invent new ones. A good example is Zcash, which resulted in Zclassic (ZCL) and then a double fork between ZCL and Bitcoin, which led to Bitcoin Private (BTC).
The growing demand for cryptocurrencies is driven by the inherent nature of innovation and the human need to continually improve. Take the example of the 3.4 million applications available from providers like Apple or Google. There are many, but many of them do the same thing. Imagine a music streaming application, for example. There are hundreds of them, not just one. Then, of course, we have our favorites and our enemies. However, new ones are always being created, hoping to be the next best thing.
That’s what it’s like to use cryptocurrencies. More and more smart contracts are being developed, even though they all work the same way. All the coin developers do is change a few things about the protocol and then claim to have the next breakthrough platform for smart contracts.
Smart contracts will thrive on the Ethereum platform. There are now a multitude of media using the same type of token and network. Ethereum is being overtaken by competitors including NEO (the Chinese Ethereum), Cardano (the Japanese Ethereum), Stellar (the Stellar Blockchain), and EOS (the EOS Blockchain).
Another factor in the proliferation of cryptocurrencies is the boom in ICOs. Following the success of some of these token sales, cryptocurrency designers and developers hope to follow these releases.
The lack of regulatory oversight in the ICO ecosystem has made this process even simpler. They will market these initial coin offerings as cryptocurrency tokens on exchanges like Bittrex. Mastercoin was the first coin to be offered for sale in 2013. After the successful public sales of Ethereum, NXT, IOTA, and Stratis, among others, other cryptocurrencies soon followed in their wake.
There have been ICOs in the financial sector, in the supply and logistics, gambling and insurance sectors – to name a few. Inevitably, this use in a wide range of applications will lead to a massive increase in the number of cryptocurrencies.
While developers have built ICOs on Ethereum’s host platform, many more are creating their own blockchains and launching their own independent ICOs.
Network transactions are based on the native currency of each country. Accordingly, if a thousand ICOs are successful, there will be an equal number of cryptocurrencies. So there’s no need to worry as many more haven’t made it past the planning stage.
Having many cryptocurrencies is not necessarily a negative thing. However, the contribution of each altcoin to society is the most critical factor.
For some, speculation is the primary purpose of their existence. Most speculative coins will go bankrupt when the bubble collapses if that is the driving force behind them. The audience may adopt none or only a few ideas.
Back to the birth of the Internet, who could have predicted the success of Google, Apple, Amazon or Facebook?
This is where we are with altcoins right now.
So who will be the FANGs of the next Web 3 revolution?