Why Are There So Many Cryptocurrencies?
There are a few different ways I can answer this question. One way to answer is to say that everyone wants to make the next Bitcoin and catch lightning in a bottle twice. The other way to answer it is to point out that cryptocurrencies have a wide range of functions and most of them are not Bitcoin copy cats. Here is a brief and incomplete list of the types of cryptocurrencies that exist.
- Payment coins (a lot of Bitcoin clones are in this list)
- Smart contract platforms
- Utility tokens
- Exchange tokens
- Stable coins
- Privacy coins
- Governance coins
- Defi Tokens
- Video game platform tokens
- Second layer solution tokens
- Gold backed tokens
- And probably some other uses I have forgotten to include. However, the term utility token does tend cover a lot of miscellaneous things that this list has forgotten.
Some of these coins are very niche, others are competing to be the main smart contract platform, while others fulfill cryptocurrency needs in very unique ways. Many of these projects are failures (there are thousands of dead coins) or will be failures. But there are many others that are here to stay because they solve people’s problems and make life better.
What is the Best One to Buy?
It depends what you need; different cryptocurrencies fulfill different use cases. If you just want to speculate on the price of a cryptocurrency you need to understand the use cases before you start trying to make quick gains. Regardless, what do you need?
- Store of value
- A currency to make online purchases
- Rewards for doing online tasks
- Passive income
- Decentralized Finance
- Video game currency and NFT’s
- Utilizing smart contracts
- Privacy currency
The question is what do you need?
