News Highlights: Is There Such a Thing as Too Many Cryptocurrencies?.
Most of us have enjoyed seeing the rise of a large number of cryptocurrencies.
It is an indication that people are genuinely interested in what digital currencies have to offer, and in an endless landscape of early employment and investment opportunities.
But is there such a thing as “too many” cryptocurrencies? And are we at that point?
The goals of cryptocurrency
What do we mean by “too many” cryptocurrencies? What would be the reason for calling an abundance of cryptocurrencies a problem?
Ultimately, there is a problem in the cryptocurrency world when it violates one of the main goals of the cryptocurrency community in general. Each cryptocurrency has its own set of individual goals, but in general we try to achieve the following:
- Public legitimacy. First, we want cryptocurrencies to be perceived as legitimate by as many people as possible. When digital coins are considered legitimate, they are more commonly accepted and traded. This, in turn, increases the price of digital coins, brings them into greater circulation, and ultimately increases the likelihood that they can compete with major world currencies as the dominant form of global exchange.
- Accessibility. Currently, almost anyone can trade currencies from different countries using Forex markets, but crypto trading is trickier. If you have any technical expertise, you should be able to set up a cryptocurrency wallet and start exchanging in an hour or two. However, the average person often feels lost or confused when it comes to cryptocurrency; they find it difficult to ignore how it works and are intimidated to try to find out.
- Low transaction costs. One of the greatest benefits of crypto is its ability to support lower transaction costs. We are still in the early stages of cryptocurrencies rollout and transaction fees can be complicated, but ultimately this system could support much cheaper forms of exchange.
- Anonymity and security. Many people are drawn to Bitcoin and other cryptocurrencies for their ability to support anonymity and verify secure transactions. This is not necessarily allowed by all forms of cryptocurrency.
In the long run, we may be interested in dismantling government monopolies over currency control or achieving other world-changing goals, but these priorities are a big focus on the short term.
So could an overabundance of cryptocurrencies jeopardize these goals?
The perception of failure
An important aspect of the “too many cryptocurrencies” problem is the perception of failure in the public eye – and how this may affect decisions to exchange cryptocurrencies in the future. Consider that more than 1,000 cryptocurrencies have failed. How do you think that sounds to an average person considering buying their first bit of Bitcoin? Does this inspire confidence that cryptocurrency is a long-term investment, or the way of the future? Or does it sound like an indication that cryptocurrency investing is a fad that is gradually dying out?
It should be clear to anyone with experience that a failed cryptocurrency is not an indication that cryptocurrency itself can ever be a total failure. The concern here, however, is the general public’s perception of legitimacy – and this could be affected by such measures.
Which cryptocurrency should I buy?
If you are new to the world of cryptocurrency, you may not know which coin to buy. Do you choose Bitcoin because it is the most popular option, or Monero because it is practically untraceable? For an experienced cryptocurrency user, there are valuable arguments on both sides.
However, for an average person, this question is confusing enough to stop investing in crypto at all. No one wants to invest in the wrong coin, especially when only a small handful has real stamina. This lowers the accessibility of crypto investments and can also negatively impact public perceptions of legitimacy.
Blurred lines and public confusion
For the average consumer, there isn’t much of a difference between Bitcoin, Litecoin, and even the tongue-in-cheek dogecoin. The news of one can affect the public perception of the other, and after hearing many different technical terms, users can only get more confusion and less interest in investment.
Advantages of many cryptocurrencies
It’s worth noting that while a plethora of cryptocurrencies can cause public perception and accessibility issues, there are also some benefits to having many different coins active.
This creates friendly competition and puts pressure on existing developers to innovate. It offers many different options with different strengths and weaknesses.
It also increases the likelihood that we’ll eventually get to the ‘perfect’ coin, as we’ll see thousands of different experiments playing in real time. Even the fact that so many cryptocurrencies exist could convince people that crypto is a topic worth exploring.
It comes down to
So what does it boil down to this? An inordinate number of cryptocurrencies and an endless rollout of ICOs can be problematic for the image of the crypto world.
However, it’s hard to say exactly what that number is, or if the negatives outweigh the positives. For now, we are in an experimental and fast-growing phase of cryptocurrency development, and we are all on it.
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