Why Are There So Many Cryptocurrencies? | And Bonus Questions

In recent few years, cryptocurrency has taken the world by storm; in barely a month, we start hearing about a new cryptocurrency booming in the market. Amongst this plethora of cryptocurrencies, one might wonder why are there so many cryptocurrencies?

crypto coins

Well, the easy answer is that different cryptocurrencies perform different functions. Blockchain Technology is one of the reasons why there are so many cryptocurrencies, and it allows developers to build various cryptocurrencies for other functionalities.

Do you want to invest in cryptocurrency but aren’t sure which currency to choose? Are you perplexed by all of these cryptocurrencies? Don’t worry because we’ll answer all of your questions about the existence of so many cryptocurrencies in today’s issue, so keep reading.

See Also: How to Recover Stolen Cryptocurrency | Are There Any Legit Ways?

Why Are There So Many Cryptocurrencies? | All Questions Answered. 

According to CoinMarketCap, there are currently 17,791 cryptocurrencies in circulation. That’s an increase of approximately 1,300 cryptos per year since Bitcoin’s inception of about thirteen years! 

growth of cryptocurrency

Considering that there are so many cryptocurrencies, it is valid for an investor to get confused while deciding which one to invest in. Here you will find concise answers to your queries regarding the presence of so many cryptocurrencies. Below mentioned are a few questions users usually ask about today’s topic. 

Why Are There So Many Cryptocurrencies (Layman Language, Please)?

Putting our main question of the day in simple terms- Cryptocurrencies function on the blockchain technology, and the most significant advantage of the blockchain tech is that no one controls it. 

So, anyone who has the caliber to understand it can create a cryptocurrency of their own. With the many functions that various cryptocurrencies perform, it becomes easy for the creator to choose one and base their virtual currency on that. 

bitcoin and ethereum crypto coins

The first person who took advantage of this blockchain technology was Satoshi Nakamoto. He was the first person to use blockchain tech to create the legendary cryptocurrency Bitcoin. Many others have followed the steps of Nakamoto and have made their fortunes. 

Another reason for the proliferation of cryptocurrencies is the enormous success of Bitcoin and even some of the altcoins. When Bitcoin was first developed, few people were aware of it, and it had no worth, and most people ignored it or didn’t bother finding out what it was. However, its value has continued to rise over time, and it is now worth millions of dollars. 

This pattern has been the same for Ethereum as well, No one paid attention to it till 2017, but then it boomed. 

See Also: How to Find New Crypto Coins | The Ultimate Guide for Hidden Gems!

Can Cryptocurrencies Be Used Like Fiat Money?

Well, it depends on the fact that which cryptocurrency we are considering. Suppose we take into account crypto such as Bitcoin.

fiat money and bitcoin

It is specifically useful as a store of value only by the users and is very similar to the use of Fiat currency. Although, many other cryptos use come in order to build networks and not as a store of money.

What Are The Broad Types Of Cryptocurrencies? 

  1. First off, we have cryptocurrencies that a person can use as a store of value.      
  2. Next up, we have those with a utility function. This is a collection of cryptocurrencies that they develop as an infrastructure. They enable the development of other cryptocurrencies on top of their networks. The best example is Ethereum, which enables the creation of several token coins on its network via its Ethereum Virtual Machine.cryptocurrencies
  3. Some other distinct kinds of cryptocurrency are apps or platform cryptocurrencies. The basis of this type of cryptocurrency is utility currencies. The Augur cryptocurrency, which debuted on the Ethereum network, is a good example.

What Is Blockchain Technology? 

A blockchain is a distributed database that is useful in communication among computer network nodes—a blockchain, like one dataset, stores data in digital form in digital format.

blockchain technology

Blockchains are best for their pivotal role in cryptocurrency systems like Bitcoin in maintaining a secure and distributed record of all transactions. The blockchain’s innovation ensures the fidelity and security of a data record and generates faith without the need for a third party.

See Also: Why Do All Cryptocurrencies Rise and Fall Together?

What Is The Meaning Of ICO Boom? 

The ICO boom may also be one of the reasons for the proliferation of cryptocurrencies. The success of some of these token sales has only fuelled more token sales, and the lack of regulatory oversight over the ICO ecosystem has made this even more accessible.

ico

Finally, these coin offerings are listed as crypto tokens on trading exchanges. Mastercoin was the first coin offering, and it took place in 2013. An initial coin offering (ICO) in the financial sector is followed by another in the supply and logistics sector, gaming, insurance, etc. Without a doubt, the result is an increase in the number of cryptocurrencies.

How To Learn Crypto Trading? 

The first stage in cryptocurrency trading is locating an appropriate cryptocurrency trading platform and opening an account. Fortunately, there are numerous trading platforms available on the internet.

Before selecting a platform, consider several factors, including security, ease of use, the number of assets supported, and many others. After deciding on a trustworthy platform, the next step is to set up an account.

bitcoin growth

Most platforms will ask you to fill out a registration form. Enter a valid email address, create a strong password, and click register. Users will then be required to verify their account: an email with a code will be sent to your address, which you will use to verify your account.

After successful verification, you will deposit your initial capital and begin your cryptocurrency trading journey. Although, there are many platforms on the internet like this trading bot that provide online trading services to help you furnish your trading skills. You can always give these websites a go before diving into the world of investing. 

See Also: How to Scalp Crypto | Explained In-Depth for Beginners

How Safe Are The Bitcoin Wallets? 

An individual uses wallets to store crypto coins. Every wallet comprises a collection of private keys that the bitcoin owner needs to access the currency. The most severe threat to bitcoin security is an individual user losing or having their private key stolen. The user will never see her bitcoins again if she does not have the private key.

bitcoin wallet

Aside from losing the private key, a user can also lose her bitcoin due to computer malfunctions (such as a hard drive crash), hacking, or physically losing the computer on which the digital wallet is stored. In short, the safety of crypto wallets lies in the hands of the users only!

What Is Crypto Mining? 

It refers to the competitive process for a virtual currency that utilizes the proof-of-work (PoW) method of verifying and adding new transactions to the blockchain.

crypto mining

The miner who wins the competition receives a portion of the currency and transaction fees.

Why Do Crypto Coins Need Mining? 

Crypto coins need mining as crypto coins are fully digital records; there is a possibility of copying, counterfeiting, or spending the same coin twice.

cryptocurrency mining

Mining solves these issues by making it extremely costly and resource-intensive to attempt to do these things or otherwise “hack” the network.

What Is The Prospective Future Of Cryptocurrency?

Investors, businesses, and brands can’t ignore the rising tide of cryptocurrency for long, whether they want to.

future of crypto

Analysts predict that the global cryptocurrency market will triple by 2030, reaching nearly $5 billion. But crypto doesn’t seem to be immune to paradoxes.

Conclusion

For a long time, cryptocurrencies have been in the news, and there is no stopping. Undoubtedly, more and more crypto coins will keep adding to the market. Answers arise as questions arise, too, and hopefully, in today’s article, we have busted the doubts regarding the most frequently asked questions about the existence of cryptocurrencies.  

See Also: Top 12 Privacy Focused Cryptocurrencies Popular Right Now

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