Crypto Firms Say Thousands of Digital Currencies Will Collapse

With over 19,000 virtual currencies, the cryptocurrency industry has compared the current state of the market to the early days of the internet. However, market players said that most of these coins will 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 existing blockchains will also decline in the coming years.

More than 19,000 cryptocurrencies exist and dozens of blockchain platforms exist. 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, has thrown the spotlight on the thousands of existing cryptocurrencies and whether they will all survive.

“One of the effects of what we saw with the Terra problem last week is that we’re at the stage where there’s actually way too many blockchains, too many tokens. And that’s confusing for users. And that also brings 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 they didn’t bring any value, and that was all cleaned up. And now we have very useful and legitimate companies.”

Brad Garlinghouse, CEO of Ripple, a company that makes cross-border blockchain payments, said there will likely be “scores” of cryptocurrencies in the future.

“I think there’s a question of whether we need 19,000 new currencies today. In the fiat world, there may be 180 currencies,” Garlinghouse said.

Guggenheim Chief Investment Officer Scott Minerd added even more pessimism last week when he said most cryptos are “junk” but bitcoin and ethereum would survive.

The industry comments come as the cryptocurrency market continues to be under pressure. Bitcoin is more than 50% off its all-time high it reached in November, with many other digital tokens sharply lower than their all-time highs.

Many different blockchain platforms, from Ethereum to Solana, are competing for industry leadership. But Brett Harrison, CEO of cryptocurrency exchange FTX US, said not all of the hundreds that currently exist will survive.

“If you think about the blockchains… there probably won’t be hundreds of different blockchains in 10 years. I think there will be some clear winners for different types of applications,” Harrison said.

“And we’ll see the market … resolve that over time,” he added.

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