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Why Are There so Many Cryptocurrencies? Why Do We Need Them?

7 Minute Read

The cryptocurrency ecosystem saw the light of day with the launch of Bitcoin (BTC), but it’s no longer the sole digital currency. Although BTC remains the flagship crypto, thousands of other digital assets are on cryptocurrency exchanges. All these virtual currencies have a fiat value, but they aren't all used as long-term stores of value or for peer-to-peer (P2P) transactions. Thanks to the rise of smart contract blockchains like Ethereum (ETH), developers are creating many unique use cases for digital coins and tokens. 

So why are there so many cryptocurrencies? Will they coexist forever? And what does the increase in cryptocurrencies mean for large coins like Bitcoin and Ethereum?

How many cryptocurrencies are there in existence?

It's challenging to tell how many cryptos there are at any moment. However, most mainstream estimates suggest there are more than 19,000 cryptocurrencies. Following the 2021 bull run, it was common for 1,000 digital tokens to hit the market each day. 

The best way to gauge the current number of cryptocurrencies in the world is to check reputable crypto price aggregator websites. CoinMarketCap and CoinGecko constantly list thousands of digital coins and tokens on both centralized crypto exchanges (CEXs) and decentralized exchanges (DEXs). 

Why are there multiple cryptocurrencies?

There are a few explanations behind the continued rise in cryptocurrencies. It's becoming easier for developers to create different cryptos. Smart contract blockchains like Ethereum, Solana (SOL), and the BNB Smart Chain allow users to build dApps (decentralized apps) with digital tokens. It's also easier for people with zero coding experience to mint NFTs (non-fungible tokens) on platforms like OpenSea and Rarible. 

The rapid growth in the global crypto market cap has helped spur innovation in this sector. Unfortunately, the increased prominence of cryptocurrencies has also attracted many scammers. Although many cryptos have legitimate use cases, hundreds of sham tokens are connected to Ponzi schemes and rug pulls. Even today, when stronger security systems are in place, many scammers take advantage of the relative lack of regulation in the crypto space. 

It's also common for developers to introduce cryptocurrencies that either mimic or compete with successful projects. For example, after Dogecoin rallied in 2021, dozens of developers introduced similar dog-themed meme coins to take advantage of DOGE's popularity (e.g., Baby Doge Coin and Dogelon Mars). In the NFT space, derivative projects often copy popular collections like the Bored Ape Yacht Club (BAYC) or CryptoPunks.

While there have been hundreds of sham cryptos and derivative projects in the past, it doesn't mean every new cryptocurrency is valueless. Many developers and companies are genuinely interested in using blockchain to achieve unique goals. As more quality information spreads on what Web3 is and how to use it, more purchasers and coders are introducing products and services that can enhance the crypto space.

What are the most common types of cryptocurrency?

Each cryptocurrency has a unique backstory, but in general the most popular digital assets fall into one of the following four groups: 

  1. Digital coins: A digital coin is a cryptocurrency that exists on its native blockchain. Bitcoin is a prime example of a crypto coin, but many others like Litecoin, Dogecoin, and Ethereum fit this definition. Most often, digital coins are used as mediums of exchange or store-of-value purchases. Developers can issue cryptocurrencies on top of a coin's native blockchain, but these new cryptos will be "tokens."
  2. Utility tokens: Often released on smart contract blockchains like Ethereum, utility tokens serve a specific function within their respective Web3 ecosystems. Typically, dApp developers launch utility tokens to increase engagement in their projects, like DeFi (decentralized finance) dApps often issue utility tokens that have voting rights. Many play-to-earn games like Axie Infinity also have utility tokens that can unlock special in-game experiences. 
  3. NFTs: NFTs are non-replicable virtual tokens that exist on smart contract blockchains. They can represent any form of digital media but are more often associated with animated profile pics, metaverse land, art, and sports clips. 

Cryptos to know

As there’s a wealth of cryptos to research and practically impossible to remember, here are a few of the most significant cryptos in three major categories: 

Highest market cap cryptos

Market capitalization, or market cap, refers to the total cash value of a crypto project. Like stocks, the higher a crypto's market cap, the more influential it is. In addition to stablecoins, the following two cryptos have maintained market cap dominance for years:

  1. Bitcoin (BTC): Developed by Satoshi Nakamoto in 2008, Bitcoin was the first successful decentralized cryptocurrency. Even at the time of writing, BTC is the dominant crypto by market cap and tends to influence price movements in the crypto market. Although Bitcoin was initially designed as a P2P payment network, many purchasers use it as an "inflation hedge" due to its fixed supply of 21 million coins. 
  2. Ethereum (ETH): Created in 2015, Ethereum introduced smart contracts into the blockchain space. This new technology allows developers to build dApps in fields like DeFi, NFT trading, and play-to-earn gaming. Ethereum ranks as the second-largest crypto by market cap.   


Often called non-Bitcoin cryptos, stablecoins are cryptocurrencies that maintain a 1:1 ratio with another asset, mostly the U.S. dollar. Since stablecoins are supposed to be non-volatile digital assets, they have gained a large share of the crypto market. Here are three dominant USD stablecoins: 

  1. Tether (USDT): Issued by the crypto exchange Bitfinex, USDT is the oldest stablecoin launched in 2014. Although USDT is now available on dozens of blockchains, it's most prominent in the Ethereum ecosystem. 
  2. USD Coin (USDC): Like Tether, USDC is a centrally issued USD-pegged stablecoin. Coinbase and Circle, U.S.-based companies, launched USDC in 2018, and it has since become the second-largest stablecoin. USDC is most actively traded on the Ethereum blockchain. 
  3. DAI: Created in 2017, DAI is the largest decentralized USD-pegged stablecoin. The DeFi project MakerDAO issues DAI stablecoins to users who deposit crypto collateral into the project’s Ethereum-based protocol. To increase decentralization, MakerDAO issues the MKR governance token to vote on proposed upgrades.   

Ethereum competitors

Despite Ethereum's 2022 upgrade to PoS, dozens of competing projects argue they're already better than Ethereum 2.0. Here are some of the top "Ethereum competitors" that often make headlines in today's crypto industry:

  1. Binance Coin (BNB): Initially, Binance Coin was used as an incentive token for users who used the CEX Binance. However, since the company released its smart contract-based BNB Smart Chain, BNB has greater utility on native dApps like PancakeSwap. 
  2. Solana: Launched in 2020, Solana is one of the newest smart contract blockchains. It's also one of the fastest, with a maximum confirmation speed of 65,000 transactions per second (TPS). Within a relatively short time, Solana has become one of the top 10 cryptos with many active DeFi and NFT dApps. 
  3. Cardano: Led by former Ethereum developer Charles Hoskinson, Cardano is a PoS chain created in 2017. Although the Cardano blockchain is still in development, its native cryptocurrency ADA is often in the top 10 cryptos by market cap.  
  4. Polkadot: Also created by a former Ethereum co-creator, Polkadot is a PoS cryptocurrency focused on blockchain interoperability. Using an advanced software architecture, Polkadot allows dApp developers to deploy projects on parachains connected to its main relay chain. 

Will all cryptos survive? 

Due to the decentralized nature of blockchain, it's difficult to "kill" a cryptocurrency. Even today, many failed crypto projects are still on the market (aka "zombie chains"). But just because most cryptos survive indefinitely doesn't mean all projects will succeed. 

Many purchasers like to compare today's crypto sector with the Dot-Com Bubble of the ‘90s. During this era, the stock value of many speculative internet companies rose parabolically only to fall in the early 2000s. Dozens of companies that soared during the Dot-Com Bubble went out of business, but a few became successful big tech companies like Amazon and Apple. 

Similarly, it's most likely crypto projects with solid fundamentals, dedicated developers, and strong communities will continue to thrive. 

Wrapping up

At Worldcoin, we aim to increase global crypto awareness and adoption. To do this, we've created a revolutionary eye-scanning device called the Orb. With this technology, we can verify crypto wallets without interfering with a user's privacy. We hope to significantly reduce scams in cryptocurrency while preserving Web3's decentralization and anonymity.