According to CoinMarketCap, there are over 2,000 cryptocurrencies. According to The Quartz Index, some 800 to 1,000 digital currencies already failed. According to Matt Hougan, global head of research at the world’s first cryptocurrency index fund provider, Bitwise Asset Management, 95% of cryptocurrencies will die a painful and deserved death.
Hold on. You’re telling me after that big bitcoin boom and all those scams and useless coins and whitepapers and vaporware and ICOs ripping billions of dollars from the hands of investors who bought coins expecting them to go way up in value…there are only 2,000 cryptocurrencies? And only half of them have failed? And only 95% will die?
Seems low to me.
Anybody can create a cryptocurrency from their laptop. How could the world produce only 2,000 cryptocurrencies?
In the U.S. alone, there are over 100,000 online retailers, over 15,000 ice cream stores, and over 3,400 bowling centers in the Bowling Proprietors Association of America alone. And that includes only the ones that are still in business!
Surely it’s harder to start a businesses than it is to create a cryptocurrency, right?
Ok, well, data is data. I’ll accept CoinMarketCap’s numbers. Here’s the screen cap from January 17, 2019:
Some people wonder why there are so many cryptocurrencies. After all, do you need more than one? Don’t they all do the same thing?
You need lots of cryptocurrencies trying to do the same thing (and different things, too). This competition is the only way you’ll figure out what works and what doesn’t, what’s best and what’s not, what people do and don’t like. This competition will create jobs, spur discoveries, build enthusiasm, and boost the likelihood that at least one cryptocurrency will succeed as an improvement over the status quo.
Over time, many cryptocurrencies will die. Each survivor will carve out a niche or build an ecosystem or offer some value, but we can’t know which ones will survive if we don’t give them all a chance to do so. There’s plenty of room to grow—one cryptocurrency’s success does not always mean another cryptocurrency’s failure. See below:
When you have a $100 billion worth of cryptocurrency chasing $200 trillion to $1 quadrillion worth of “things” that can be recorded on a blockchain and bought or sold at any time, you can have lots of competition without depriving anybody of their slice of the pie. In fact, without all that competition, it will be harder to grow that slice of pie.
If you only care about selling your cryptocurrency for more than you bought it for, you may feel bad about this. You don’t want to see your favorite crypto listed on Dead Coins. You have to accept this risk.
If you’re concerned cryptocurrency will disappear and you will lose all your money, relax. Any cryptocurrency that survives will be worth so much in ten years, you won’t be able to comprehend how it was ever possible. Better still, it will serve a true purpose, with supporters and advocates and businesses that depend on its use. It will give you purchasing power. Also, you will end up with a valuable asset that you can use or sell for profit.
Best of all, it will cover your losses from buying “dead” projects.
Also published on Medium.
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