The crypto market has been in better shape at times, but new projects are still springing up like mushrooms. On June 26, the crypto exchange platform CoinMarketCap passed the magic mark of 20,000 cryptocurrencies. This brings the number of cryptocurrencies to 3,765 by 2022 alone increased.
Bitcoin still in control
Despite the number of cryptocurrencies on the market increasing by 23 percent by 2022, bitcoin remains the boss. Indeed, Bitcoin still holds 42.5 percent of the market despite its 20,010 competitors. Ethereum is also doing more than decently with 15.5 percent.
These data mainly teach us what most people have been shouting for years. That 99 percent of coins will not survive and that it is dangerous to just jump into all kinds of new projects.
That bitcoin manages to dominate almost half of the market in a sea of more than 20,000 cryptocurrencies is impressive.
Above all, it indicates that the market has the idea that bitcoin in particular and to a lesser extent ethereum matter. Indeed, if you also subtract the market caps of the large stablecoins, little is left for the smaller altcoins.
The digital wild west
The explosive rise in cryptocurrencies will set off alarm bells especially among lawmakers. There are bound to be a few good projects among the 3,765 coins launched in 2022, but the bulk are probably not worth touching. That’s undoubtedly going to cost a lot of people their hard-earned savings, and that’s something lawmakers are worried about.
In the process, it’s also not good for the reputation of the crypto market. Despite the fact that all these projects have nothing to do with bitcoin or ethereum, it’s hard for outsiders to tell. Of all the shadowy projects starting up today, a few are probably going to damage the rest of the market again. Consider, for example, the collapse of the Terra ecosystem.
Lack of regulation drives creation of new coins
The lack of clarity around regulation is the main driver of the creation of new cryptocurrencies. For example, if you want to make your company’s shares publicly tradable, you have to comply with all kinds of regulations.
Generally, this is a costly process that provides a layer of protection for individuals. Cryptocurrencies are in a gray area in this regard.
The Ripple lawsuit is a good example: the U.S. financial regulator believes that the public sale of Ripple tokens was a disguised share issue. The big issue in this case is whether XRP qualifies as a security (a type of stock).
If it does, then there is a good chance that the coin will lose its listing on the major exchanges. The tricky thing for regulators, however, is to control these kinds of issues within the vast proliferation of cryptocurrencies.
For some projects it is still doable, but to scrutinize 20,000 cryptocurrencies is practically impossible. In this respect, it would be desirable to have clear and good legislation in this area. That would at least take a lot of uncertainty out of the market and prevent many scams.
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