However, a pressing concern, particularly among those who are sceptical of cryptocurrencies, is whether or not there are an excessive number of cryptocurrencies. We’ve witnessed multiple times how quickly brand-new cryptocurrencies can be formed in the blink of an eye. Tokens were being pumped and dumped on low liquidity just hours after Will Smith was seen on camera at the Oscars slapping Chris Rock. After the passing of Queen Elizabeth, there was a rush of “memecoins” with her name printed on them that flooded the market. Some detractors held the opinion that this was in poor taste and said that it presented “a negative appearance for crypto.”
Bitcoin and Ethereum continue to be the most prominent cryptocurrencies, despite the fact that thousands of new cryptocurrencies have emerged, many of which take their names from well-known coinage. When added together, the market cap of these two digital assets accounts for 58.2% of the total market capitalization. Because of this, altcoins are now competing for a significantly smaller share of the overall market.
Let’s start off by having a conversation about the benefits of using this dizzying array of different cryptocurrencies.
Despite the fact that Bitcoin and Ether are recognised and accepted everywhere, it’s safe to say that the majority of blockchains and cryptocurrency initiatives would rather have their own tokens. Tokens for football fans wouldn’t make any sense unless teams like Manchester City and Paris Saint-Germain were able to give their own digital assets, thus this is a requirement in some circumstances as well.
Another category of cryptocurrencies, stablecoins, recognise the value of having a selection of different possibilities. Even while assets that are pegged to the US dollar dominate the market, some investors find it more convenient to use stablecoins that are denominated in their national fiat currency, such as the euro or the pound. And given that some stablecoin issuers have been put in the awkward position of having to answer questions about whether the coins currently in circulation are adequately backed by hard currency in reserve, the fact that there is such a wide variety of stablecoins available gives investors the ability to perform their own research and find an asset that corresponds to the level of risk they are willing to take.
The market for cryptocurrencies can be compared to a large department store. You can find ten different varieties of the same cereal within the largest supermarkets, as well as an infinite number of ketchup flavours. However, each one comes at a different price range and offers a different value proposition. Aside from that, taste tests and safety inspections will have been carried out by experts working for these establishments before the products were put on the shelves.
When it comes to crypto exchanges, you could make the case that it’s the same narrative all over again. Trading platforms such as HitBTC have a stringent listing process to ensure that all reputable cryptocurrencies, in addition to new tokens that have the potential to be successful, are made available to its clients. Finding a specific digital asset in the present day, when there are so many digital assets already existing, can often feel like looking for a needle in a haystack.