With more than 19,000 virtual currencies in existence, the cryptocurrency industry has compared the current state of the market with the early years of the internet. However, industry insiders said most of these coins would collapse.
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Several players in the cryptocurrency industry have told CNBC that thousands of digital tokens are likely to collapse while the number of blockchains that exist will also fall in the coming years.
There are more than 1[ads1]9,000 cryptocurrencies and dozens of blockchain platforms in existence. A blockchain platform, such as Ethereum, is the underlying technology on which many of these different cryptocurrencies are built.
The recent collapse of so-called algorithmic stackcoincoin terraUSD and its associated digital token luna, which sent shock waves through the market, has put the spotlight on the thousands of cryptocurrencies that exist and whether they will all survive.
“One of the effects of what we have seen last week with the Terra problem is that we are at the stage where there are basically too many blockchains out there, too many tokens. And that confuses users. And that also carries some risks for users, “Bertrand Perez, CEO of Web3 Foundation, told CNBC at the World Economic Forum in Davos, Switzerland, last week.
“Like in the beginning of the internet, you had a lot of dotcom companies, and a lot of them were scams, and gave no value and all that was cleaned up. And now we have very useful and legitimate companies.”
Brad Garlinghouse, CEO of cross-border blockchain payment company Ripple, said there would likely be “scores” of cryptocurrencies remaining in the future.
“I think it’s a question of whether we need 19,000 new currencies today or not. In the fiat world, there are maybe 180 currencies,” Garlinghouse said.
Guggenheim Chief Investment Officer Scott Minerd added further pessimism last week when he said most of the crypto is “junk”, but that bitcoin and ethereum would survive.
The comments from the industry come as the cryptocurrency market continues to feel pressure. Bitcoin is more than 50% lower than the record it reached in November, with many other digital tokens being sharply lower than their record highs.
Many different blockchain platforms from Ethereum to Solana are fighting for a leading position in the industry. But Brett Harrison, CEO of the cryptocurrency exchange FTX US, said that the hundreds that exist will not all survive.
“When you think about the blockchains … there probably won’t be hundreds of different blockchains in 10 years, I think there will be a couple of clear winners for different types of applications,” Harrison said.
“And we will see the market … sort out over time,” he added.
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