How Many Cryptocurrencies Are There?

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How Many Cryptocurrencies Are There?

Bitcoin, the first decentralized cryptocurrency, was launched in 2009. It took several years before the world heard about it. However, it didn’t take long after that for the world to recognize its value – and for its value to soar to prices higher than $20,000.

Bitcoin demonstrated the potential of cryptocurrencies. It also inspired the development of thousands of other digital assets, some of which have been almost as successful. So how many cryptocurrencies are there, and how do they work? Here is an overview of everything you need to know.

How Many Cryptocurrencies are There?

Currency.com reports that there are currently more than 7,800 cryptocurrencies in circulation today. They range in aspects such as type, use, and value. Many of them are not popular on a large-scale, and the most popular cryptocurrencies account for more than 80% of the industry.

Many of these cryptos are new cryptocurrencies. It is also worth noting that close to 2,000 cryptocurrencies have become obsolete, and many of the existing ones are struggling to get a footing in the market. To this end, some of the existing cryptocurrencies may fail or stagnate over time.

Types of Cryptocurrencies

Cryptocurrencies vary in nature and purposes. This gives rise to different types of cryptos. Currently, there are four popular types of cryptocurrencies:

1. Proof of Work (PoW) Cryptocurrency

PoW cryptocurrencies are based on the concept that a unit of cryptocurrency must show proof of completing a predefined task to exist. This concept is based on Blockchain technology, which essentially is an incorruptible distributed ledger system. Popular examples of PoW cryptocurrencies are Bitcoin and Ethereum, which have a combined market capitalization of about $150 billion.

2. Proof of Stake (PoS) Cryptocurrency

PoS cryptocurrencies are also based on the concept of providing proof legitimizing a cryptocurrency unit. However, the PoS process is fundamentally different from the PoW. It is meant to overcome PoW’s challenge of scalability. Popular PoS cryptocurrencies include Dash, Eos, and Tron.

3. Tokens

Tokens are cryptocurrencies that are designed with specific, limited purposes and use. For example, some tokens are designed to buy digital gaming assets, such as weapons and extra lives. Tokens are also usually built on existing Blockchains, such as Ethereum.

Popular tokens include Tether and BAT. It is worth noting that tokens make up the majority of cryptocurrencies.

4. Stablecoins

Stablecoins are cryptocurrencies that function as assets storing value. Their value doesn’t fluctuate, as is the case with popular cryptocurrencies such as Bitcoin. Tether is the largest Stablecoin with more than 90% of the market’s share. Other popular Stablecoins include Gemini, Paxos, and TrueUSD. Alternative types of cryptocurrencies include:

  • Central bank digital currencies, which essentially are digital versions of fiat currencies such as the Euro and U.S. Dollar.
  • Governance tokens, which are designed to give users voting rights on governance and decision-making matters.
  • Privacy coins, which are designed to facilitate anonymity during transactions.

So, how many cryptocurrencies are there, and how do altcoins fit in? more importantly, what are altoins?

Altcoins are not a special type of cryptocurrency. Instead, this is a blanked term referring to any cryptocurrency that is not Bitcoin. Consequently, there are more than 7,000 altcoins, including popular names such as Ether.

How are Cryptocurrencies Created?

The primary process of acquiring cryptocurrencies is known as mining. Mining entails solving complex mathematical and cryptographic equations using powerful computers and mining software. The solved equations are then converted to data and added to the cryptocurrency’s Blockchain. This work is then rewarded with a number of units of the cryptocurrency being mined.

Cryptocurrency Mining

Which Cryptocurrencies Will Survive?

Thousands of cryptocurrencies crashed into oblivion, as mentioned. Sadly, thousands more risk facing the same fate. This is concerning for all stakeholders, especially investors. As such, the market cannot help but wonder which cryptocurrencies will survive the inevitable crashes that are projected for the future.

It is difficult to tell which cryptocurrencies will survive and which ones will fail. In fact, Bitcoin, the world’s largest cryptocurrency, has taken several hits and seen its value drop by more than 1,000% points. Interestingly, other cryptocurrencies also lose some value whenever Bitcoin experiences a significant downward trend.

However, some cryptocurrencies (such as Bitcoin) have a firm footing in the market and stand higher chances of surviving violent crashes. For example, Bitcoin has already amassed great value worth billions of dollars (not to mention millions of users worldwide), and it would take multiple crashes to wipe out this capital. Stablecoins also have a high chance of surviving crashes, as their values don’t fluctuate.

The Best Cryptocurrency to Buy

Different cryptocurrencies serve varying purposes. However, most people buy cryptocurrencies as a profit-making investment. In this case, it makes sense to invest in the top five cryptocurrencies that control 80% of the market’s share.

The most profitable cryptocurrencies include Bitcoin, Ethereum, XRP, Tether, and Litecoin. However, it is important that these cryptocurrencies’ values fluctuate even more than fiat currencies. As such, it is also sensible to buy Stablecoins as a precautionary measure against inflation.

The Fastest-Growing Cryptocurrency

Cryptocurrencies can be highly volatile and unpredictable. However, some cryptos perform better than the rest and show reliable signs of potential. To this end, some of the fastest-growing cryptocurrencies include:

  • Cardano (ADA) – 2,400% growth in 2020
  • Chainlink (LINK) – 600% growth in 2020
  • Polkadot (DOT) – 1,300% growth in 2020

These cryptocurrencies show great potential in the immediate and long-term future. However, smaller cryptocurrencies are also registering impressive growth over shorter periods, albeit they are more volatile.

Best Exchanges for Buying Cryptocurrencies

Cryptocurrencies are traded on platforms called cryptocurrency exchanges. There are hundreds of crypto exchange platforms around the world, and some are not safe or trustworthy, unfortunately. However, some platforms are exemplary because of their professionalism, transparency, and overall reliability. These include:

  • eToro – recommended for beginners.
  • BlockFi – recommended for investors seeking to earn profits on interests.
  • Binance – recommended for trading altcoins.
  • Prime XBT – recommended for margin trading.
  • CoinBase – recommended for all cryptocurrency transactions (and the best exchange in the world).

Final Thoughts

Thanks to their versatility, cryptocurrencies have been touted as the future currency. There are thousands of cryptocurrencies, and there will be thousands more next time you ask, “How many cryptocurrencies are there?” And, while many of these cryptocurrencies may fail or stagnate, some cryptocurrencies such as Bitcoin have proven that they are here to stay.

Cryptocurrencies are worth investing in, but they are more volatile than most other financial assets. As such, remember to consider the best cryptocurrencies and exchange platforms, as advised.

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