Since Bitcoin has come into existence, thousands of cryptocurrencies have been created, although not all of them have a community that values them for their usefulness. We are going to review the leading cryptocurrencies in this article.
How many cryptocurrencies are there today?
It is said that, as of February 2022, there were more than 20,000 cryptocurrencies in the world, and although it is likely that today that number has decreased or increased, indeed, it will never be known precisely how many there are. This is because anyone can create a new crypto asset on an existing blockchain without too much difficulty, technical expertise, or investment.
As they are so easy to create, new cryptocurrency projects are born every day, which requires discovering their usefulness because, based on this, they are more or less valued by users.
Launching a new cryptocurrency can be as easy as going to a website like Wallet Builders and following the step-by-step process to create another ecosystem proposal. However, maintaining and eventually growing a project of your own is often much more challenging.
Projects with a higher volume of users or are used the most usually have a development team and a proposal that adds utility. These cryptocurrencies are considered the most valuable, leading the lists of sites that rank them by market capitalization.
In the financial world, market capitalization is a benchmark used by investors to assess a company’s size. Parallelism is made with cryptocurrencies because the units represent actions in the network.
Many factors can influence when determining which is the best investment. Still, the truth is that market capitalization is an indicator that is used as a reference to determine how risky an investment can be.
So, according to the way of thinking, the higher the company’s market capitalization, the more stable it is to invest in it.
Even though bitcoin is not a company, it is considered such since it has surpassed significant companies such as Facebook and Tesla. The market capitalization of Bitcoin is in the area of 370,000 million dollars, with which it remains in the leadership of the classification of the ecosystem.
The first and, for many, the most valuable cryptocurrency is Bitcoin
CoinGecko data indicates that the global capitalization of the cryptocurrency market is currently (October 2022) in the order of USD 1,000 million, where bitcoin retains a dominance of 38.56%. Meanwhile, Ethereum remains in second place with a 16.28% share.
For their part, stable cryptocurrencies or stablecoins, whose market capitalization together is USD 149,000 million, have a 14.82% share in the cryptocurrency industry.
Bitcoin is not only the most widespread cryptocurrency in the ecosystem, according to the classification by market capitalization. It is also famous for being the first crypto asset that existed in the world.
Furthermore, Bitcoin is seen as a value proposition for a growing community of users who see it as the evolution of money. Currently, Bitcoin is the only genuinely decentralized cryptocurrency in the ecosystem. Once all these points are added up, we can consider, although some disagree, that Satoshi Nakamoto’s creation has special characteristics that make it a unique asset. Therefore, we will leave Bitcoin in a category of its own in the world of cryptocurrencies.
Altcoins: genetically modified cryptocurrencies for different uses
Today, more than a decade after the birth of the first altcoin, we have that among the 10 most critical alternative cryptocurrencies by market capitalization, Ethereum (ETH), Binance Coin (BNB), and Ripple (XRP) being the leaders.
Then there are Cardano (ADA), Solana (SOL), Dogecoin (DOGE), Polkadot (DOT), Polygon (MATIC), Shiba Inu (SHIB), and Tron (TRX). Of course, except for Bitcoin, the list has changed, and the positions of these cryptocurrencies have changed over time, depending on what users and investors believe.
But beyond classifying cryptocurrencies by their market capitalization, they can also be classified according to their usefulness. Ether, for example, the native cryptocurrency of the Ethereum network, has multiple use cases.
For example, on platforms like Compound or Aave, users can deposit their ETH, to obtain returns or request loans.
Another example is in the Decentraland metaverse, a decentralized application (DApp) based on the Ethereum network where users can purchase virtual land or non-fungible tokens (NFTs). To do this, they use the native cryptocurrency of their ecosystem, which is called MANA.
Similarly, other virtual worlds use their own cryptocurrencies to trade with each other, get rewards or experience various experiences.
Some cryptocurrencies are valued by a community that prioritizes user privacy, such as Monero (XMR), and Zcash (ZEC).
There are also stablecoins, tokens issued on the blockchain or accounting network such as Bitcoin or Ethereum, whose value is linked to an external asset, such as national currencies or precious minerals.
These stable cryptocurrencies are assets that function as digital representations of the dollar, the euro, and even gold. That is, they are collateralized products that can be bought or sold within the cryptocurrency market.
Stablecoins were born as a solution to the intrinsic volatility of native cryptocurrencies. As we mentioned before, they include Tether and USD Coin, as well as Binance USD (BUSD) and DAI.
Bitcoin and altcoins: How to differentiate them?
One of the main characteristics distinguishing bitcoin from altcoins is that while the pioneer cryptocurrency is scarce because there will only be 21 million units, alternative crypto assets are a replica of the national currencies issued by the States.
They all have a kind of unlimited “print” machine and depend on the decisions of a founding team that does not abide by any value preservation rules.
Shitcoins in the world of cryptocurrencies
Further down the ranking by market capitalization is a long list of crypto assets that are often referred to as “shitcoins” by the community.
The term “shitcoin” is a derogatory word to refer to an altcoin or alternative cryptocurrency that does not seem to have much of a future due to a weak proposal, disorganization, or poor code.
To identify this type of project, we can highlight four of their characteristics: they are generally highly illiquid, have no applicable technological value, are not reputable, and have typically lost more than 70% of their value since their inception.
It might not be so challenging to determine what happened in the world of cryptocurrencies if the altcoins or the shitcoins arrived first. Still, new cryptocurrency projects are born every day, which requires discovering their use.
Many cryptocurrencies exist to be promoted by groups of people who make false promises of high yield, just with the idea of getting money and running away before people discover that the hype does not match the substance. They promise something to get money now for a performance that will never come.
So how many cryptocurrencies exist today?
Data on many of these cryptocurrencies are available from sites like CoinGecko and CoinMarketCap. This monitor, permanently and in real-time, the prices of these crypto assets, their volume of operations, and market capitalization.
On CoinGecko, for example, there are more than 12,000 cryptocurrencies and tokens listed, while CoinMarketCap has a record of more than 20,000 crypto assets.
However, these data aggregators need to guarantee the information linked by each project, which means that the fact that they are listed does not make a cryptocurrency a reliable asset.
Among these listed projects is the SQUID token, inspired by the successful Netflix series The Squid Game, which reached US $2,856 shortly after its launch in October last year. The token’s price later fell 99.99% on November 1, along with the disappearance of its developers.
These events are everyday in the ecosystem because many of these projects are usually used to apply Pump and Dump schemes. This consists of inflating the price of a particular asset through concerted purchases and promotion techniques among small groups of investors (pump).
Once the asset’s value rises, the scammers sell everything they had previously bought (dump). They offer their coins precisely to those who will later end up harmed, allowing them to obtain significant profits. Later, the sell-off of the asset will cause its price to crash.
