With so many different cryptocurrencies, ICOs, IEOs, scams, coins, tokens, blockchain companies, and forks, it can be hard to make sense of the cryptocurrency space. Read on to learn which projects are worth your time, and which are worthless.
How Many Cryptocurrencies Are There?
There are currently 2368 cryptocurrencies vying for your attention (at the time of writing). Due to this explosion of new projects, this number will be out of date by the time you read this. That translates to one new project every two days since Bitcoin’s creation. It’s not possible for anyone to study, analyze, and stay informed about every project, so let’s break this number down.
The Top 25 Cryptocurrencies
Cryptocurrencies residing in the top 25 by total market cap represent just 0.5 percent of the total market, yet these projects often attract the highest prices, the biggest speculation, and the sensationalist news pieces. Projects in this top 25 are almost household names.
Due to the volatile nature of cryptocurrency projects, the top 25 list often changes. Projects experiencing a huge rally rise nearer the top, and those projects facing a bear market plummet towards the bottom. That said, the big players such as Bitcoin, Ethereum, and Ripple rarely drop out of this list. Without further ado, here are the top 25 cryptocurrencies by market cap (at the time of writing), with a brief description:
- Bitcoin: the original cryptocurrency, designed to transfer money.
- Ethereum: a programmable blockchain that lets you code smart contracts.
- XRP: instant and cheap cross-border payments for financial institutions.
- Bitcoin Cash: split from Bitcoin with the aim of improving the blockchain.
- Tether: a stablecoin pegged to the USD.
- Litecoin: instant payments, the silver to Bitcoin’s gold.
- EOS: highly scalable DApp platform.
- Binance Coin: used to trade and pay fees on the Binance exchange.
- Bitcoin SV: split from Bitcoin Cash with the aim of improving the blockchain.
- Stellar: cross border transactions between fiat and crypto.
- TRON: entertainment network for content creators and consumers.
- Cardano: fast digital cash.
- Monero: privacy focused project.
- UNUS SED LEO: used to pay fees and trade on the Bitfinex exchange.
- Chainlink: used to connect blockchains (works as a blockchain oracle).
- Huobi Token: used to pay fees and trade on the Huobi exchange.
- Tezos: smart contracts where participants can alter the outcome.
- Cosmos: a blockchain of blockchains.
- NEO: manage smart assets with smart contracts.
- IOTA: designed for internet of things (IoT) devices.
- Maker: stablecoin with loans.
- Dash: privacy-focused finances.
- Ethereum Classic: Ethereum spin-off to reverse a controversial decision.
- Ontology: high-performance blockchain offering business tools.
- USD Coin: stablecoin pegged to the USD.
The Explosion of New Cryptocurrencies
The 2017 run-up and following boom (before bust) of the cryptocurrency market led to the creation of thousands of new projects. Many of these are blatant scams, or are little more than copies of other projects. A good number of these projects do provide a new or inventive use for blockchain.
The total number of cryptocurrencies was a mere 677 in January 2016. Moving to January 2017, and that number has barely increased to 717. By January 2018 it increased to 902. Between January 2018 and 2019, the total number of cryptocurrency projects exploded to 2077, which has slowly increased during 2019.
It’s not clear why the total number of projects exploded, but it corresponds with the explosion in the value of cryptocurrencies at the end of 2017. Thanks in part to an easy ICO culture, and increased media and public awareness of cryptocurrencies, and new and exciting projects, it’s easier than ever to create a cryptocurrency, and “get rich quick” as a founder or early investor.
How Many Cryptocurrency projects Have Failed?
#Blocksims FAKE ICO is still trying to rip people off with using fake TWEETS and BOGUS articles online. Don't fall victim to this LOW LIFE Shehar Yar scam.#icosim #scam #phishing pic.twitter.com/6afdhdHZS8
— Vinnie (@VinnyScudd) May 23, 2018
It’s hard to define “failure” for a project. Is it those projects that are no longer developed? What about projects which have lost significant numbers of users, or seen the price plummet?
Assuming that failed projects are no longer tradable, and using the CoinMarketCap metric data which tracks projects with no metrics, you end with 360 “dead” projects. This metric may include false positives for new or young projects, but it should be as accurate as possible without a central database through which projects must register.
Given that projects on this list such as Ethereum Lite have spam and/or virus filled websites endorsing random browser plugins, it’s fair to assume that number is accurate.
A total of 360 dead projects out of 2368 total cryptocurrencies represents almost 15% of all total cryptocurrency projects. That’s a lot. This number does not include projects which failed to even launch and get listed on an exchange or currency tracking website, or those which no longer exist and all trace of them gets removed from the internet. The real number could be far higher than this.
Which Cryptocurrency Projects Are Viable?
Just like failed projects, estimating the number of viable cryptocurrency projects is a pseudoscience at best. It’s impossible to read the whitepapers and study over 2000 projects in any reasonable timeframe. The best metric to consider is the 24-hour volume. A project may have a current price of $10,000, but if nobody is buying it at all, you get an altogether different story. As cryptocurrency prices only reflect the most recently paid price, it’s easy for a tiny project to inflate their numbers.
Assuming that viable projects are those with more than $1,000,000 24-hour trading volume, you get 309 projects (13% of all projects). If you want to be pickier than that, there are only 101 projects with a 24-hour trading volume greater than $10,000,000 (4% of all projects).
The best way to determine if a cryptocurrency is worth your money is through your own due diligence. Unless you’re day trading or looking to offload a coin almost immediately, you should read the whitepaper, research the brand, look at the community and sentiment, and make your own informed decision. Only then will you be comfortable spending any money on a cryptocurrency.
How Many Different Cryptocurrencies Should You Own?
A balanced cryptocurrency portfolio would contain a good mixture of projects. Perhaps 10-15 of big-name projects are a good place to start, expanding to 25-35 if you can afford to do so.
Getting in early with a project offers you the chance to stock up at a low price, at the risk of losing money should the project fail to gain any traction.
Or, you could sink all your cryptocurrency funds into one large project such as Bitcoin or Ethereum. Cryptocurrencies such as these are huge now and represent a less risky venture than a smaller project.
Whatever you do, make sure you read our fundamental market analysis indicators before investing any serious money.
Disclaimer: This is not investment advice. Bitcoin and other cryptocurrencies are highly speculative. Nothing is guaranteed in cryptocurrency. Always perform your own research before investing and never commit more money than you are comfortable losing.
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