Crypto Firms Say Thousands of Digital Currencies Will Collapse
With over 19,000 virtual currencies in existence, the cryptocurrency industry has
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Several cryptocurrency industry players have told CNBC that thousands of digital tokens are likely to crash while the number of existing blockchains will also decline over the next few years.
There are over 19,000 cryptocurrencies and dozens of blockchain platforms. A blockchain platform, such as Ethereum, is the underlying technology on which many of these different cryptocurrencies are built.
The recent collapse of the so-called algorithmic stablecoin terraUSD and its associated digital token luna, which sent shockwaves through the market, shed light on the thousands of cryptocurrencies in existence and their survival.
“One of the effects of what we saw last week with the Terra issue is that we’re at the stage where basically there’s way too many blockchains, too many tokens. And that’s confusing users. And that also carries risks for users,” Bertrand Perez, CEO of the Web3 Foundation, told CNBC at the World Economic Forum in Davos, Switzerland, last week.
“Like in the early days of the internet, you had a lot of dotcom companies and a lot of them were scams, and didn’t provide any value and it was all wiped out. And now we have some very useful and legit companies.”
Brad Garlinghouse, CEO of blockchain cross-border payments company Ripple, said there will likely be some cryptocurrency “scores” that remain in the future.
“I think there’s a question of whether or not we need 19,000 new currencies today. In the fiat world there are maybe 180 currencies,” Garlinghouse said.
Guggenheim chief investment officer Scott Minerd added a little more pessimism last week when he said most cryptos were “junk,” but bitcoin and ethereum would survive.
The industry comments come as the cryptocurrency market continues to feel pressure. Bitcoin is down more than 50% from its all-time high in November, with many other digital tokens well below their all-time highs.
Many different blockchain platforms, from Ethereum to Solana, are vying for a leading position in the industry. But Brett Harrison, CEO of cryptocurrency exchange FTX US, said not all of the hundreds that currently exist will survive.
“When you think about blockchains…there probably won’t be hundreds of different blockchains in 10 years, I think there will be a few clear winners for different types of applications,” Harrison said.
“And we’ll see the market… sort that out over time,” he added.