Cryptocurrency is a type of digital currency that uses cryptographic principles to ensure transaction security and control the creation of transactional units. Bitcoin became the first decentralized cryptocurrency in 2009, and since then, the term "cryptocurrency" has mostly referred to such designs. Now that we understand what cryptocurrency is, let’s explore how many cryptocurrencies exist today.
What Is the Total Number of Cryptocurrencies?
Currently, there are more than 1,900 different types of cryptocurrencies. To be precise, as of early 2021, the number was 1,910. However, it’s important to note that cryptocurrencies come in two main forms: coins and tokens. Both are included in the total count, but the distinction between them is crucial.
Coins operate on their own blockchain. Examples include Bitcoin and Ethereum. In contrast, tokens reside on pre-existing blockchain infrastructures, such as the Ethereum network.
Creating a coin—often referred to as an altcoin or alternative coin—requires significant effort and resources, although that hasn’t discouraged developers. Building a new blockchain or forking an existing one with modifications demands specialized expertise, which you either need to possess or pay for. On the other hand, creating a token is a relatively inexpensive and straightforward process. Tokens rely on established infrastructures like the Bitcoin or Ethereum blockchain.
Altcoins often adopt the core blockchain protocol of existing coins and modify it to create something new. Tokens, however, are built on top of already-existing infrastructures. Because the barrier to entry for creating tokens is lower, there are far more tokens than coins, which significantly expands the lower ranks of the cryptocurrency roster.
Why Are There So Many Cryptocurrencies?
People are naturally creative, but what motivates them to create new cryptocurrencies? Why are there so many different types? Sometimes, it’s simply because they can! Part of the appeal of blockchain and cryptocurrency technology lies in its unprecedented accessibility. The code is open-source, widely shared, and distributed. Decentralization means there is no central authority making all the decisions. When else have people been able to create their own forms of money?
In most cases, developers create new coins and tokens to modify, specialize, or improve upon existing technology. Take Ripple, for example. Its developers were dissatisfied with the time it took to verify transactions on the Bitcoin blockchain. By making adjustments to the code, they created a blockchain capable of processing cryptocurrency transactions in seconds at a fraction of the cost.
Moreover, cryptocurrencies can have different circulation limits—some have no cap at all. For instance, there will only ever be 21 million Bitcoins. Cryptocurrencies also serve a wide range of purposes. Some tokens function as commodities, smart contracts, or other digital assets. Whether it’s a playful project like Garlicoin or an innovation-driven endeavor like Ripple, there are various reasons for creating new cryptocurrencies.
People are still experimenting with the technology and testing its limits. Others take advantage of unchecked enthusiasm to run scams. Meanwhile, an increasing number of individuals and businesses are exploring new ways to trade goods and conduct transactions. This means the answer to how many cryptocurrencies exist will continue to change from month to month—or even week to week.
As the saying goes, you need to tap a watermelon to hear if it’s ripe before buying it. Similarly, investing real money—enough to buy thousands of watermelons—into cryptocurrencies requires careful examination. Therefore, beginners may start by understanding the top 20 cryptocurrencies by market capitalization before exploring others. Key aspects to focus on include each coin’s most prominent features, such as BCH and BSV’s scaling solutions, ETH’s smart contract capabilities, EOS’s graphene technology, or Cosmos’ cross-chain interoperability.
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Frequently Asked Questions
What is the difference between a cryptocurrency coin and a token?
Coins operate on their own independent blockchain, like Bitcoin or Ethereum. Tokens, on the other hand, are built on existing blockchains and often represent assets or utilities within a specific ecosystem.
How often are new cryptocurrencies created?
New cryptocurrencies are created frequently, sometimes daily. The barrier to entry for tokens is particularly low, leading to a rapidly expanding number of projects.
Are all cryptocurrencies valuable?
No, not all cryptocurrencies hold significant value. While some serve important technological or economic purposes, others may be experimental, redundant, or even fraudulent.
What should I consider before investing in a cryptocurrency?
Research the project’s use case, development team, market capitalization, and technological innovation. Also, consider market trends and risk tolerance.
Can anyone create a cryptocurrency?
Yes, thanks to open-source blockchain code and accessible development tools, technically skilled individuals can create their own coins or tokens.
Why do some cryptocurrencies fail?
Common reasons include lack of adoption, technological flaws, poor governance, regulatory challenges, or loss of community trust.