One of the most surprising things about altcoins is that no one knows precisely how many exist.
This is an incredible fact with all the power of computers and the sheer amount of marketing and branding surrounding altcoins and cryptocurrencies.
The miners and creators of these coins are clamoring to release new coins, some of which will change the world, while others will have no utility use.
Separating the wheat from the chaff is easily the most challenging aspect of cryptocurrency investing.
Coinmarketcap.com lists 9,425 coins. More than all fiat currencies in the world combined. It is 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 to healthcare, energy, data storage, machine learning, social media payments, supply and logistics to content ownership.
How can this happen when so many cryptocurrencies already exist?
There are a variety of cryptocurrencies, 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 a base.
Cryptocurrencies are digital currencies that you can exchange for real-world currency. We can use them like a traditional fiat, like a store of value.
Some serve that purpose, others are for people who need a utility to work with their altcoins. These are a collection of cryptocurrencies that are being developed as a system. These can be used and built on top of an existing blockchain. For example, a network that has allowed the creation of token currency using its own protocols is Ethereum.
What we call app or platform cryptocurrencies are the other main source of cryptocurrencies. The developers also built them on top of the utility coins that are currently in use. There are many altcoins that have been launched using the Ethereum blockchain technology, for example.
The proliferation of altcoins is simply because no one is in charge of this blockchain technology. However, you can create your own virtual money if you know enough about how it works.
Satoshi Nakamoto, the alleged creator of Bitcoin, was the first to use blockchain technology to create a currency. But it wasn’t long before other programmers caught on and realized that they, too, could use the same technology to create a superior “version” of this new “Bitcoin.”
In the end, professionals like Charlie Lee, a former Google programmer, helped establish Litecoin, one of the first altcoins. He wasn’t the only one. Others who were trying to create something comparable or better followed suit.
Bitcoin and some other altcoins have seen tremendous success, which is why there are so many cryptocurrencies. But remember, when Bitcoin was first introduced, few people were interested. People ignored it or didn’t bother to look at it because it was thought to have no inherent value.
However, its value has grown over time. As recently as early 2017, Ethereum was seen as 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 hit around $20,000 per BTC. Everyone realized what was happening. Cryptocurrency was the new holy grail of investing. They all wanted to enter.
Another reason for the rise of new cryptocurrencies is the “fork”. Although forking is not the main cause of the wealth of various cryptocurrencies, it does play a role. For example, at least four well-known cryptocurrencies have “decoupled” from Bitcoin: bitcoin cashBitcoin Prayedand Litecoin form this group.
If you are interested in Litecoin, you will want to check out Litecoin Cash (ETH). Even the newest cryptocurrencies are forced to invent new ones. A great example is Zcash, which resulted in Zclassic (ZCL) and then a twin 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. Consider the 3.4 million apps available from providers like Apple or Google as an example. There are many of them, but many of them do the same thing. Imagine a streaming music app, for example. There are hundreds, not just one. Then of course we have our favorites and our haters. However, new ones are still continually being created, hoping to be the next best thing.
This is how cryptocurrencies are used. More and more smart contracts are being developed, although they all work in a similar way. All coin developers do is change a few things about the protocol and then claim to have the next innovative platform for smart contracts.
Smart contracts will thrive on the Ethereum platform. There are now a huge number of outlets using the same type of token and network. Ethereum is being outperformed 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 rise of 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 further simplified this process. They will market these initial coin offerings as crypto tokens on trading markets like Bittrex. Mastercoin was the first coin to be offered for sale in 2013. After the success of EtherealNXT, IOTA, and the Stratis crowdsale, among others, other cryptocurrencies quickly followed suit.
There have been ICOs in the financial sector, in the supply and logistics industries, betting and insurance, to name just a few. Inevitably, this use in a wide range of applications will lead to a massive increase in the number of cryptocurrencies.
While developers created some ICOs on the Ethereum host platform, many others are creating their own blockchains and launching their own standalone ICOs.
Network transactions are based on the native currency of each country. As a result, if a thousand ICOs are successful, there will be an equal number of cryptocurrencies. So there is no need to worry that many others did not make it past the planning stage.
Having numerous 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 main purpose of their existence. Most speculative currencies will go bust when the bubble finally collapses, if that is the motivating force behind them. The public may adopt none or only a few ideas.
Going 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 at the moment.
So who will be the FANGs of the next Web 3 revolution?