Why Are There So Many Cryptocurrencies?
Updated: May 14
How many fiat currencies (legal tender) can you name? Dollar, Pound, Euro, Rupee? How about cryptocurrencies? If you can name 5 more Cryptocurrencies besides Bitcoin, it may seem impressive. What you probably didn't know is there are perhaps in excess of five-thousand cryptocurrencies out there...
The cryptocurrency market volume is well renowned for being top-heavy, with a handful of the most traded cryptos making up more than 90% of the entire cryptocurrency world.
Here's a rundown of what the big 6 are, and no, we're not including Bitcoin cash or Bitcoin 0.1, Bitcoin already takes the spotlight enough anyway!
(This list is not in order of market capitalization, however, is more a summary of the 6 most relevant cryptocurrencies out there at the moment.
Having started in 2009, Bitcoin was the birth of the blockchain, the crypto that inspired a generation, and has consistently been the highest value, and highest priced cryptocurrency over its 11-year life. There's no doubt that the market crash we've seen recently affected it, big time, as Bitcoin saw a price drop of around 50%.
Current Price as of March 28th 2020: 6,240 USD = 1 BTC
Market Cap: 21 million Bitcoin (There are already 17 million Bitcoins that have been mined, meaning only 4 million coins remain.
What's next for Bitcoin? - On the 27th May 2020, Bitcoin will have its third halving, reducing the reward rate from 12.5 to 6.25 Bitcoin per block mined.
A great alternative to Bitcoin, not only for its great reputation as a currency but also for its open-source software for companies. Ethereum is blockchain-powered and the cryptocurrency is traded via Ether, it works as a smart virtual machine, and executes scripts built by companies via the cloud, without any downtime or risk of fraud, or use from third parties.
Current Price as of March 28th 2020: $129 USD = 1 Ether
Market Cap: Ethereum was developed on the basis that there would be no market cap on the number of coins, and currently there is more than 110 million Ether in existence. The market value cap is set around 14.2 billion USD. So far, there have been more than 11 billion USD worth of Ether traded all-time.
What's next for Ethereum? -
Following a poor performance from the cryptocurrency in Q4 of 2020, stock forecasts point towards a pretty bleak 2-3 years ahead for Ethereum, some forecasters say it could reach as low as $50 USD = 1 Ether by the end of the year. For the short term, however, investors are seemingly confident Ethereum could climb back to its +$200 highs seen back in January and February of 2020.
3. Ripple (XRP)
Released in 2012 by Ripple Labs, Ripple is a currency exchange and remittance system that allows tokens to be represented as other forms of value or benefit. Ripple can be used in frequent flyer systems, mobile allowance minutes, fiat currency transactions, and the trading of commodities. Ripple was designed with the sole purpose of creating free and instant financial transactions, no matter how big the scale. By 2018, Ripple's XRP took the position of the second-largest crypto coin by the scale of its market size.
Current Price as of March 28th 2020: 0.17 USD
Market Cap: 7,439,909,124 USD, considerably large for a coin with such a small price, it will be essentially impossible for XRP to reach anything more than perhaps $10 in price, the market would not allow this as the cryptocurrency is so widely traded and used as a transaction method by hundreds of companies.
Ripple's founders believe the market cap for XRP within the market sits way below what researchers have estimated, it was thought to be in the region of 41 Billion XRP, however, possibly half of that amount may be illiquid or have restrictions on the sale of the coins, so this might be hard for investors to sell off, should there be a time where XRP becomes irrelevant or inefficient.
What's next for Ripple?
For 2020 and beyond, XRP and Ripple look likely to see huge expansions, with price predictions reaching up to 5 times the current market prices of 0.17 USD. A Ripple spokesperson states the crypto firm plans to hire an additional 150 staff over the next year, as well as expanding their overseas offices. Ripple's headquarters are based in San Francisco, they also have offices located in major cities across the world, such as New York, Sã Paulo and Mumbai.
4. EOS (EOS.IO)
Beginning in 2018, EOS.IO is a blockchain protocol that works by using its own currency of EOS. It is a smart contract platform where millions of transactions apparently happen, and where all transaction fees are eliminated completely. EOSIO operate in multiple locations over the world, expanding their services from software such as Block.one, which is a global leader in the high-performance blockchain industry. EOS and EOSIO have rapidly become one of the world's best blockchain software providers for global business and enterprise, so it is no surprise they have taken their place right behind the likes of Ripple (XRP) and Ethereum.
Current Price as of March 28th 2020: 2.18 USD = 1 EOS
Market Cap: For EOS, the cap is standing at roughly 2.01 billion USD, currently over 90% of all EOS cryptocurrency is in circulation, with over 920 million of their coins already available.
What's Next for EOS? - Block.one has invested large sums into its social media network - Voice, around $150 Million (USD), which falls in line with EOSIO's aim to become more "community-driven". EOS is fast becoming a go-to cryptocurrency to invest and trade with, it is very business-friendly, and it would seem hard to rule out a 10-fold increase on current market prices upwards of 20 USD = 1 EOS, from a more bearish perspective, it is more likely that we could see EOS hitting the $5 mark before the end of the year.
Commonly referred to as the spin-off to Bitcoin. Litecoin began in 2011 and continues to serve as a worldwide tradable cryptocurrency and software project. The transfer of coins is not directly managed by a central authority. It has a transaction time four times quicker than Bitcoin, this is similar to its total mining time, which stands at 2.5 minutes.
Bitcoin takes 10 minutes to mine, so miners will find Litecoin a much less time- consuming workload, however, a more complicated one for sure. Litecoin uses the scrypt algorithm, which is a password protected derivative function, making it much harder for hardware attacks to occur. Ideally, it means it is more costly and requires high-end customised equipment in order to profitably mine Litecoin.
Current Price as of March 28th 2020: 38 USD = 1 Litecoin
Market Cap: 2.5 billion USD, there are over 64 million Litecoin circulating over the crypto markets. Litecoin is approaching its market limit at the same pace Bitcoin is moving towards its 21 million coin limit. Litecoin is sat on 77% as of March 2020, which is probably 5-10% less than Bitcoin. Both cryptocurrencies, however, look set to have their last coins mined within 2 years of one another. Bitcoin is predicted to maximise its supply in 2140, while Litecoin sits on the year 2142 respectively.
What's Next For Litecoin?
The next few weeks/months could prove critical for the mainstream cryptocurrency, there are strong bullish predictions that show Litecoin is eyeing a comeback to a price of 50 USD = 1 Litecoin, this wouldn't be surprising considering this time two years ago it was hovering above 200 USD for more than enough time. It is predicted that Litecoin developers are set to implement the Mimblewimble privacy protocol by September 2020, in a bid to improve the scalability of Litecoin, as well as improving security which should, in turn, increase adoption for the already favourable cryptocurrency.
Born different to its cryptocurrency counterparts, Tether was released in July 2014 as a stablecoin. Tether's purpose is to follow the price of 1 USD, which is what gives it the stablecoin attachment. The idea behind its creation was that for each Tether issued, 1 USD would be maintained in the company's reserves, this makes the currency much less volatile than its cryptocurrency rivals. It is the closest "asset" that we can call as a bridge between cryptocurrencies and fiat currencies.
Current price as of March 28th 2020: (You guessed it!) 1 USD = 1 USDT (1 Tether), or 0.9994 to be precise...
Market Cap: Tether currently sits on a market cap of just over 4.6 billion USD, with slightly more USDT (Tether) circulating in supply, as the current price sits marginally below the value of 1 USD. As the nature of Tether is that it mirrors the price of the Dollar, there is no upper market cap, as it is a direct exchange of fiat currency into digital currency, specialised for speedy transactions and a hedge against volatility in the market, and to keep a strong level of liquidity. Tether will keep expanding in market size in the future as more and more businesses adopt it as a valid transaction method, proving more convenient than card payments or bank transfers.
What's Next for Tether?
The stablecoin has recently become only the second currency after Bitcoin to join the KuMEX futures blockchain platform. It will act as a highly beneficial exchange currency for crypto traders to move their cryptocurrencies between wallets quicker and more cheaply. Tether is not an investment as such, as it will only remain in line with the inflationary measures of the Dollar, however, it is constantly being adopted as a fantastic method of exchange between traders and businesses involved with cryptocurrencies.
Exploring the Depths of the Crypto Markets
So, if there is only a handful of big cryptocurrencies out there, why are there over 1 thousand other currencies circulating in supply? The answer is simple, because cryptocurrencies are generally very easy to create.
A cryptocurrency is a little bit like a business idea, instead of a buy and sell currency, the buying and selling will be implemented later in the cryptocurrency's life.
All of the crypto startups are looking to gain adoption in the technology business industry, from individuals and organisations who need to operate with secure ledgers for whatever their business needs are. The crypto developers will feel their technology is promising and is likely to be huge in the future, hence why so many exist, as there are many great creators who feel their product/service is worth the value. The more companies that adopt the creator's product, the higher the value of the connected cryptocurrency.
You may have read above, some of the top 6 cryptocurrencies had a different name for their cryptocurrency compared to the name of their actual service application e.g. EOS & EOS.IO.
The main reasons why only a few prevail is because of adoption, hype and demand, Bitcoin gained popularity as it was an efficient form of digital currency, so a lot of companies and individuals would buy into it, as Bitcoin is limited in supply. As demand grows and supply remains stagnant, the cryptocurrency increases in price due to its value being higher, more people will then hold Bitcoin t one time, meaning it is harder to get, and there are fewer coins left to mine.
Anyone could really start their own crypto business, as long as they have a good enough PC with the correct hardware required to mine the digital coins. All it takes is a fun and unique name, or a stand-out feature that could help a business, and before you know it you have a 4-figure cryptocurrency with thousands of people adopting it for investment, day-to-day use and for buying other products and services.
Thank you for reading 'Why Are There So Many Cryptocurrencies?' and have a beautiful day.