Why are there so many cryptocurrencies?

With so many new assets on the market, you may be wondering, why there are so many cryptocurrencies. The popularity of cryptocurrencies has exploded since the advent of the internet and e-banking services. One of the first currencies on the market, Bitcoin now commands the highest price.

Because Bitcoin is so popular, several alternative currencies have developed. Most cryptocurrencies aspire to create a decentralized concept of electronic cash that may act as a perfect substitute for conventional money. Now there is a question, how many different cryptocurrencies are there? In this article, you will find answers to this and many more questions.

How many different cryptocurrencies are there?

According to CoinMarketCap, there are presently 17,791 decentralized cryptocurrencies in circulation. That’s a rise of over 1,300 cryptos per year since Bitcoin’s inception nearly 14 years ago!

To put things into context, let’s compare these figures to fiat currencies. According to several sources, there are around 180 fiat currencies in circulation, a figure that has remained relatively steady for the larger part of the last sixty years.

Types of cryptocurrencies

As you can assume, with this amazing number of different cryptocurrencies, there are many different types of coins. So, how many types of cryptocurrency are there? The answer is not simple at all, so be prepared to learn something new. 

There are various kinds of cryptocurrencies. Sidharth Sogani, CEO of Crebaco, a crypto research company, says that cryptocurrency can be divided into various categories, including DeFi, NFT, utility tokens, store of value tokens like Bitcoin and Litecoin, and yield farming tokens like Aave.

In general, we can split currencies into two categories. 

• Coins can be Bitcoin and altcoins (non-Bitcoin cryptocurrencies).
• The blockchain of a particular platform houses programmable assets called tokens.

Coins and Altcoins 

A coin would be any cryptocurrency that has its own blockchain. Bitcoin, for instance, is classified as a “currency” since it operates on its own network. Ether, similar to  Bitcoin, is controlled by the Ethereum blockchain.

The phrase “altcoin” refers to any coin that is not Bitcoin. Many alternatives work in the same way as Bitcoin does. Others, though, such as Dogecoin, are quite different. Doge, for example, has an infinite number of currencies as opposed to Bitcoin’s restriction of 21 million units.

Tokens

Tokens, similar to coins, are digital currencies that can be purchased and traded. Tokens, on the other hand, are a non-native currency, which means they rely on the architecture of another blockchain. Tether, which is housed on the Ethereum blockchain, is one of them, as are TerraUSD, Chainlink, Uniswap, and Polygon.

Now that you know the difference between tokens and coins, we can move on to specific cryptocurrencies. In this article, we will talk about 10 different cryptocurrencies that are the most popular nowadays. 

10 most popular crypto 

We prepared a list of 10 most popular crypto nowadays, and how they work. So, let’s start.

• Bitcoin
• Ether
• Theter
• Solana
• Litecoin

Bitcoin

 As many of you are already aware, this cryptocurrency, which dates back to a white paper published in 2008, was the first in the world and continues to be the most well-known type. It runs on its own blockchain, with a force of decentralized miners verifying transactions (and creating new Bitcoins up to a certain limit). Bitcoin had the greatest market capitalization in January 2022, at US$896 billion.

Ether

So, this is crypto that prioritizes decentralized applications (dApps) over digital cash (Ether). It promises to give app developers greater power than Apple or Google. Only the app’s developers have the authority to make modifications to it.

Software developers and consumers utilize Ether as a token. It, too, can be generated, just like Bitcoin. The Ethereum network, like Bitcoin, is made up of nodes that replace the old server-client approach. As you can see, there is a good reason to ask why are there so many cryptocurrencies. 

Theter

Tether is a stablecoin that is connected to an outside asset to provide a less fluctuating price. In this situation, every coin is secured by an equivalent quantity of US dollars, preventing it from having the same market volatility as some other cryptocurrencies. However, there is significant controversy regarding whether it is genuinely backed by the dollar.

Solana

SOL is the native token of the Solana platform, which, like Bitcoin and Ethereum, operates on a blockchain architecture. Solana’s system can process 50,000 operations per second, making this service particularly appealing to investors wishing to trade swiftly.

Litecoin

Charlie Lee, a former Google programmer, invented Litecoin in 2011. It operates similarly to Bitcoin, with the goal of improving transaction speeds (every 2.5 minutes), lowering fees, and concentrating miners.

Litecoin miners demand more advanced hardware than standard ASICs built for Bitcoin mining due to the usage of code for the proof-of-work method.

As you can see, there are a great number of cryptocurrencies that are popular, but we all want to know whats the next big crypto. The answer to this question is not simple, but, there is a rumour on the internet that Logarithmic Finance could be the next big crypto. 

This crypto was recently created, but the amazing thing is that Logarithmic Finance has all the necessary features to become the next big crypto on the market. 

The enormous development in the number of cryptocurrencies demonstrates a feedback cycle effect: the more they gain public acceptability, the more they multiply. In principle, the rise in the number of crypto assets was triggered by the rise of DeFi, which fostered the development of other kinds of cryptos to solve pre-existing network issues such as security, accessibility, response time, and high gas costs.

Meta: Have you ever asked yourself why are there so many cryptocurrencies on the market nowadays? We are here for you. Read this article if you want to find out!