EXECUTIVE SUMMARY:
Key highlights:
- Over 19,000 cryptocurrencies are in existence, buoyed by dozens of blockchain platforms
- Several cryptocurrency industry players believe that thousands of digital tokens will collapse, while the number of blockchains in existence will also decline in coming years
- A far cry from the 19,000 number, experts predict that only “scores” of cryptocurrencies will remain
Thousands of digital tokens may collapse
Multiple cryptocurrency industry players assert that thousands of digital tokens may see collapse. The number of blockchains in existence may also steadily decline.
More than 19,000 cryptocurrencies currently exist, along with dozens of blockchain platforms. Blockchain platforms, such as Etherium, function as the underlying technology that many cryptocurrencies are built on.
The facts about the situation
Shockwaves rippled through the cryptocurrency market after the recent collapse of so-called algorithmic stablecoin terraUSD and its associated digital token, Luna. The event highlighted the precariousness and volatility of cryptocurrencies.
“One of the effects of what we’ve seen last week with the Terra issue is we’re at the stage where basically there are far too many blockchains out there, too many tokens,” which is a confusing user experience, says Bertrand Perez, CEO of the Web3 Foundation.
“…[it’s] also bringing some risks for the users.”
Perez compares the current state of cryptocurrencies to the beginning of the internet, right before the dotcom bubble. A lot of dotcoms were scams and did not bring value. Once the bubble burst, “all that got cleared,” paving the way for useful and legitimate companies to flourish.
19,000 existing currencies
Experts point out that in the fiat world, there are 180 fiat currencies. The crypto world will eventually need to evaluate the need for 19,000 different types of coins.
Guggenheim Chief Investment Officer Scott Minerd has stated that most crypto is “junk” but Bitcoin and Etherium could escape extinction.
CEO of cryptocurrency exchange FTX US Brett Harrison provides a similar assessment. He says that hundreds of cryptocurrencies will disappear in the future.
“When you think about the blockchains…there probably won’t be hundreds of different blockchains in 10 years. I think there’ll be a couple of clear winners for different kinds of applications,” Harrison stated. “And we’ll see the market…sort that out over time.”
Cryptocurrency industry pressure
These industry comments arrive as the cryptocurrency market continues to feel pressure. As compared to record highs in November, Bitcoin is off by more than 50%. Other digital tokens have also slipped in value.
A mélange of different blockchain platforms, from Etherium to Solana, are vying for a leadership position in the crypto space.
CyberTalk.org’s past cryptocurrency and blockchain coverage
Looking for more digital currency and blockchain insights that can keep you ahead of financial and cyber threats? Check out our past coverage, below.
- Mastercard’s game-changing cryptocurrency, NFT and open banking plans
- Google Ads used for stealing cryptocurrency
- DeFI cryptocurrency rug pulls
- Cryptocurrency and the coronavirus?
- Blockchain for Business: Approaches to Risk Management
For more on the collapse of cryptocurrencies, visit CNBC. Lastly, to receive cutting-edge cyber security news, exclusive interviews, expert analyses and security resources, please sign up for the CyberTalk.org newsletter.