Cryptocurrency
Are there too many cryptocurrencies?
The cryptocurrency industry has grown at a staggering pace. There are now almost 21,000 different coins in existence, across a variety of subsectors. From metaverses to decentralized finance, investors are spoiled for choice.
But a burning question, especially among crypto skeptics, is this: Are there too many cryptocurrencies? We’ve repeatedly seen how new altcoins can be created in the blink of an eye. Tokens popped up hours after Will Smith slapped Chris Rock at the Oscars — pumping and dumping on low liquidity. And following the death of Queen Elizabeth, the markets were flooded by a flurry of “memecoins” bearing her name. Some critics felt this was in poor taste and argued it was “a bad look for crypto.”
Despite the proliferation of thousands of cryptocurrencies — some with names inspired by major coins — Bitcoin and Ethereum continue to dominate. Combined, the valuations of these two digital assets command a 58.2% share of the entire market. All of this leaves altcoins battling for a much smaller piece of the pie.
Is choice a good thing?
Let’s begin by discussing the arguments in favor of this overwhelming assortment of cryptocurrencies.
While Bitcoin and Ether are universally recognized and accepted, it’s fair to say that many blockchains and crypto projects would prefer to have their own tokens. In some cases, it’s a necessity too — football fan tokens wouldn’t make sense unless the likes of Manchester City and Paris Saint-Germain were able to offer their own digital assets.
Stablecoins are another group of cryptocurrencies where a variety of options is important. While assets pegged to the U.S. dollar dominate the landscape, some investors prefer to use stablecoins denominated in their local fiat currency, such as euro or pound. And given how some stablecoin issuers have faced uncomfortable questions about whether the coins in circulation are properly backed by hard currency in reserve, the variety on offer empowers investors with the ability to perform due diligence and find an asset that matches their appetite for risk.
The cryptocurrency market is somewhat similar to a superstore. Inside the biggest retailers, you can come across 10 types of the same cereal — and countless varieties of ketchup. But each has a different price point and a value proposition. Specialists within these stores will have also performed taste tests and safety checks before allowing the products on shelves.
You could argue that it’s a similar story when it comes to crypto exchanges. Trading platforms such as HitBTC have a rigorous listing process to ensure that all well-established cryptocurrencies are offered to its customers — as well as new tokens that show potential. Given how many digital assets are now in existence, this can sometimes feel like finding a needle in a haystack.
The downsides
Of course, there’s two sides to every coin. With thousands of different altcoins on offer, the desire to continually create new cryptocurrencies arguably leads to further fragmentation in the industry. A project’s insistence that only its native token will be accepted can add costs for consumers too, because they’ll need to make conversions from better-known cryptos — and pay trading fees along the way.
It’s impossible to imagine a world where Gmail users could only send emails to others who have a Gmail account, with Yahoo and Outlook also operating as walled gardens. But this seems to have become the status quo in the crypto industry — and although efforts are being made to boost cross-chain communication and forge bridges between blockchains, there’s still a lot of work to be done. These bridges can also suffer unfortunate security vulnerabilities, as we saw with the Ronin hack back in March.
And on the issue of whether there are too many cryptocurrencies, some critics argue this proves how ineffectual the market is. What’s the point of having Bitcoin, which has a fixed circulating supply of 21 million, when there’s an unlimited supply of other coins?
What the future looks like
Figures from 99 Bitcoins suggest that there are more than 1,700 dead coins — a veritable graveyard of failed digital assets that suffer from inactive development, low trading volume, poor online presence, a lack of listings on major exchanges, or all four. Given we’re currently in a bear market, it’s almost certain this figure will rise in the months ahead.
It’s worth remembering that the crypto bull run of 2021 can draw parallels with the dotcom boom 20 years earlier. Back in the early 2000s, frenzied activity saw an explosion in the number of internet companies trading on the stock market, and many of them boasted sky-high valuations. Many of them ended up going bust, including Pets.com and Boo.com.
In a recent report, KPMG warned that cryptocurrencies lacking “clear and strong value propositions” could also end up dying out in the next few months, but added: “That could actually be quite healthy from an ecosystem point of view because it’ll clear away some of the mess that was created in the euphoria of a bull market. The best companies will be the ones that survive.”
And that’s the other lesson that can be drawn from the bull run — no matter how brutal or prolonged a bear market is, some cryptocurrencies will survive and thrive. This also remains a hugely experimental technology, and there are bound to be failures along the way.
HitBTC argues that the crypto markets are still far from maturity. It describes itself as one of the pioneers of the exchange market, given how it launched in 2013. The company says security, ease of use and reliability are top priorities — alongside competitive fees and a stable infrastructure. It now lists more than 1,000 cryptocurrencies, and also offers staking and futures.
The crypto industry is innovative, and exciting use cases are continually emerging for digital assets. Because of this, the number of new cryptocurrencies in existence is unlikely to slow anytime soon. This means it’s down to investors to perform detailed due diligence on which coins to invest in — and exchanges must play an instrumental role in ensuring that they only list credible coins that add value to the ecosystem.
Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you with all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor can this article be considered as investment advice.
Cryptocurrency
Logan Paul NFT buyback shows celebs can’t ‘play around’ in Web3
Community members have reacted to YouTuber Logan Paul’s buyback announcement, delivering on his year-old promise to refund the disgruntled investors of his nonfungible token (NFT) project CryptoZoo.
The NFT project was supposed to be a play-to-earn (P2E) game that lets players buy, sell, breed and trade animals with crypto. The YouTuber announced the project in August 2021, but the game was never released. This sparked allegations of fraud and led to a class-action lawsuit against the celebrity.
Throughout the controversy, several commentators called out Paul to make the investors whole. They’ve also kept a watchful eye on the progress since Paul promised refunds almost a year ago.
On Jan. 4, Paul finally shared a website that lets the NFT holders participate in a $2.3-million buyback program, where Paul would repurchase the NFTs at their original price. According to the YouTuber, claims can be submitted on the website through Feb. 4.
Related: Logan Paul backflips on defamation lawsuit against Coffeezilla, apologizes
While the news looks positive for those who bought the NFTs, some believe there’s an ulterior motive behind Paul’s move. YouTube sleuth Stephen Findeisen, better known as “Coffeezilla,” posted on X (Twitter) to flag a disclaimer on the website saying that buyback program participants are “waiving any actual or anticipated claims” against Paul and CryptoZoo.
Making a video on the Logan Paul situation: i’m super happy some of the victims will get refunded 1 year later.
but let’s not pretend there isn’t ulterior motives. Logan is being crushed in a lawsuit right now. As usual he’s trying to save his own skin. pic.twitter.com/ESmeE8gP1x
— Coffeezilla (@coffeebreak_YT) January 5, 2024
Meanwhile, others celebrated the move as a win for the community. Crypto content creator Mason Versluis celebrated the fact that Paul is officially refunding CryptoZoo investors. The content creator added that mainstream celebrities “can’t just play around in the Web3 space with no accountability.”
YouTuber Erling Mengshoel Jr., more commonly known as “Atozy,” gave a shoutout to commentary channels that held Paul accountable. According to Mengshoel, who has almost 1.5 million subscribers on YouTube, this wouldn’t have happened without them.
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Cryptocurrency
BTC price bounces 5% as investor says Bitcoin ETF ‘99.9% done deal’
Bitcoin (BTC) returned above $43,000 into Dec. 19 amid fresh news over the United States’ would-be first spot price exchange-traded fund (ETF).
Bitcoin ETF excitement still simmering
Data from Cointelegraph Markets Pro and TradingView showed a BTC price recovery taking the market to local highs of $43,456 after the daily close.
After starting the week on an uncertain footing, BTC/USD swiftly gathered strength, with the Dec. 18 candle closing over 5% above the day’s low.
Later, news came that asset manager BlackRock, among the applicants to launch the first U.S. Bitcoin spot ETF, had changed the policy around redemptions for its product to include BTC as an option.
“An in-kind redemption of some or all of a Shareholder’s Shares in exchange for the underlying bitcoin represented by the Shares redeemed generally will not be a taxable event to the Shareholder,” the latest iteration of BlackRock’s S1 filing with the U.S. Securities and Exchange Commission (SEC) states.
The document also places new rules over exchange of baskets of shares for cash rather than BTC, the latter subject to regulatory approval.
The SEC is due to begin making final decisions on spot ETF in early January, and next month has become a make-or-break point in Bitcoiners’ diary.
As Cointelegraph reported, various BTC price predictions hinge on successful approval, this now thought to be overwhelmingly likely after years of delays and rejections.
“The level of SEC engagement and back/forth/changes on the bitcoin ETF tells us this is a 99.9% done deal,” trader and investor Bob Loukas reacted to the latest developments on X (formerly Twitter).
The SEC delayed a final decision on several Ether (ETH) ETFs to May this week.
Bitcoin trader: $50,000 possible before 2024
Between now and then, however, Bitcoin faces both the yearly candle close and various macroeconomic data releases which could add to holiday season volatility.
Related: ‘Inherently bearish’ below $41.5K — 5 things to know in Bitcoin this week
Traders continue to draw lines in the sand both above and below spot price, with a trip below $40,000 still on the cards.
In a video update on Dec. 18, Crypto Ed, creator of trading group CryptoTA, forecast that eventuality playing out before a final push higher potentially sending BTC/USD to $50,000 before the end of 2023.
“Let’s see later in the week how this develops,” he concluded, giving a low target of $38,000.
Popular trader and analyst Matthew Hyland is also optimistic about further upside thanks to a bullish divergence in Bitcoin’s relative strength index (RSI) versus price on daily timeframes.
#BTC confirmed this bullish divergence at the daily close earlier
Already above $43k currently pic.twitter.com/8qyCBYtMcV
— Matthew Hyland (@MatthewHyland_) December 19, 2023
Daily RSI was at 60.45 at the time of writing, having cooled from overheated levels as Bitcoin fell from its recent 19-month high above $44,000.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Cryptocurrency
Why a gold rush for inscriptions has broken half a dozen blockchains
The latest degen “gold rush” to inscribe everything from profile pictures to memecoins has led to at least half a dozen blockchain networks cracking under pressure over the past week.
The last few days have seen Arbirtrum, Avalanche, Cronos, zkSync, and TON all suffering partial or full outages recently due to inscriptions, with modular data availability network Celestia the latest to succumb, according to industry researchers who posted a screenshot of its block explorer on Dec. 18.
Videos have also been posted of mass minting on the Celestia network.
“The team is actively investigating, but we can confirm that a sustained surge of inscriptions triggered the sequencer to stop relaying transactions properly,” Arbitrum confirmed on Dec. 16 amid a 78-minute outage.
Meanwhile, Cronos developer Ken Timsit reported that the team implemented a network update to activate dynamic transaction fees that change with transaction volume.
“The chain can now more effectively withstand traffic spikes like the one that took place this week, which was caused by high demand for inscriptions,” he said.
What is driving the gold rush?
Like Bitcoin Ordinals, which allows data such as text, images, and videos to be inscribed directly on-chain — people have now realized they can do the same thing on Ethereum and other EVM-based chains by inscribing data on transaction calldata.
Crypto developer Shardul Mahadik explained:
“Bitcoin inscriptions are equivalent to writing on the smallest denomination of a currency bill (UTXO model). EVM inscriptions are the equivalent of the notes are remarks field on a payment app. Where you make a 0 transaction to yourself and write data in the notes field. (acc model)”
Over the last few days, most of these have been BRC-20-type tokens, themed after various collections such as Bitcoin Frogs and various new token tickers such as BMBI, BEEG, and GROK according to ordinals tracker Ord.io.
Crypto researcher “cygaar” postulated that users are sending token mint and transfer transactions to themselves with call data because operations are cheap.
They are being heavily used in an attempt to replicate ERC-20 successes on other chains, but much of the activity is the same users spamming small mints repeatedly due to the lower cost of minting compared to smart contract interactions.
Inscriptions have taken down multiple chains and caused huge gas spikes over the last couple of days.
However, very few people actually understand what’s going on.
Here’s a simple explanation of inscriptions – how they work and why they’re being spammed everywhere : pic.twitter.com/IjQ6wuypRX
— cygaar (@0xCygaar) December 18, 2023
Bitcoin developer Eric Wall theorized earlier this month that EVM inscriptions could be seen as a way for retail to access low-cap crypto assets.
ICOs have been regulated and restricted and many projects start with token sales limited to venture capital firms or accredited investors.
“Burning gas/wasting blockspace is one of the last distribution mechanisms that exists with open access to retail,” he said. He described inscriptions as “BRC-20 derivatives,” adding:
“Since *anyone* can participate in the issuance of a specific ticker (mining it by burning blockspace) from day one, it is one of the few last bastions where retail can get in at the ground floor in a not-yet-clearly-illegal fashion.”
However, Michael Rinko, an analyst at crypto research firm Delphi Digital, didn’t see the logic behind it. “I kinda just see it as the new hot thing,” he told Bloomberg before adding, “There is zero rationality behind it.”
Related: Daily gas spent on EVM inscriptions surges to record high of $8M
Meanwhile, blockchain sleuth ‘ZachXBT’ warned about crypto influencers shilling shitcoins in a Dec. 19 post on social media.
“The market was trending up for weeks yet they still have to resort to this to trade profitably,” he said before adding, “This is your warning so do not come crying to me if you get dumped on.”
Take note of influencers who are shilling coins with a lower market cap or liquidity than their entire follower count.
The market was trending up for weeks yet they still have to resort to this to trade profitably.
This is your warning so do not come crying to me if you get… pic.twitter.com/Z6n2wllM2w
— ZachXBT (@zachxbt) December 18, 2023
As reported by Cointelegraph on Dec. 18, inscriptions on EVM (Ethereum Virtual Machine) compatible chains have surged over the past few days.
According to Dune Analytics, more than $6 million was spent on gas on inscriptions on Dec. 18, and a record $8.3 million was spent on them on Dec. 16.
However, on Dec. 18, Polygon founder Sandeep Nailwal noted that minters were switching to Polygon due to its favorable gas fees.
Highest number of inscriptions on @0xPolygon POS, 161m.
More than 2X the amount of inscriptions on the second ranked chain for inscriptions.
Fun part, afaik the gas fees still stayed under 10 cents, i heard horror stories that on somechains it went to as high as $400. Peak… pic.twitter.com/RC91DaOGhx
— Sandeep Nailwal | sandeep. polygon (@sandeepnailwal) December 18, 2023
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