Nearly 5,000 new tokens were created in the last twelve months during a period of high corporate and institutional interest. New data shows that this averaged over 10 coins per day.
The Cryptocurrency Boom in 2021
CoinMarketCap’s homepage shows that the number of cryptocurrencies in circulation has recently exceeded 12,000. This is a significant increase from the 7,100 coins that CoinMarketCap recorded in September last year. It also means that at least 4,900 digital assets have been created within the past 12 months.
This is the biggest YoY increase in the absolute number cryptocurrencies since Bitcoin’s creation. The digital asset industry reached a total market capitalization of more than $2 trillion during this period.
Bitcoin’s price rise over the past year and increasing institutional interest in the space are the main drivers of interest in crypto creation.
Both creative and financial interest continue to flow into the industry as household names such as Jack Dorsey and Elon Musk show their support for it and its potential. This boosts the market and encourages developers to create their own cryptocurrency to take advantage of potential gains.
Digital assets are also a popular asset class that can be used to hedge against inflation, especially during the financial crisis caused by the coronavirus pandemic. Although stock markets fell in September 2020, cryptocurrency prices remained stable. This could have motivated more creators to invest in and develop cryptocurrencies.
Is this a good thing for crypto?
An ever-growing amount of coins can be dangerous or counterproductive, depending on how technologically advanced the industry is.
Gary Gensler, the chair of the SEC, is skeptical about the space because of the sheer number of tokens. Recognizing the fact that there is not enough room to hold thousands of currencies, Gensler plans to regulate the industry further to protect investors from their inevitable collapse.
Many of these tokens can be dangerous investments, if not scams. In the first half 2021, more than $25 million was lost by Australians to crypto scams.
Marla Brooks – Financial Analysis
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