What will happen to 20,268 cryptocurrencies if Bitcoin replicates?

News apparatus What will happen to 20,268 cryptocurrencies if Bitcoin replicates?

The Ever-Expanding Crypto Sector

With these volatile price movements, Bitcoin has built a veritable empire within a few years. Through these different boom cycles, cryptocurrency has given many people ideas. Motivated by the amount of money invested, some individuals and organizations joined the adventure. Thus, as it rose, Bitcoin was joined in the rankings by thousands of cryptocurrencies.

Now it’s getting easier and easier to create your own cryptocurrency. While some tend to solve problems or even meet the needs of this young ecosystem, such as Ethereum, most other cryptocurrencies have almost no use except for speculative potential.

Thus, after 3 bullish periods since the emergence of Bitcoin, the crypto sector counts around 20,268 cryptocurrencies of all types in July 2022. Compared to the number of currencies in the physical world, which is 180, this number looks impressive.

So what can they be used for?

Bitcoin and Altcoins (Shitcoins, Tokens, Stablecoins…): not all cryptocurrencies are created equal

First, you need to understand that the cryptocurrency ecosystem is divided into two parts: Bitcoin and altcoins.

Altcoins are all other cryptocurrencies that share the market with Bitcoin. These various virtual currencies come in several forms.

Corners

These are independent cryptocurrencies that use their own networks to operate. They are more or less similar to how Bitcoin works.

stablecoins

Stablecoins are stable cryptocurrencies backed by real value. Generally backed by a currency unit (1 dollar, euro, yen, etc.), these allowed, among other things, to solve the problems of volatility prevailing in the world of crypto-currency. Thus, most other cryptocurrencies must be purchased through stablecoins.

Tokens

Tokens, called tokens, use networks that are not their own. Unlike cryptocurrency, a blockchain does not need a token to function. In this sense, it is easy to create, because it is enough to issue the token without worrying about the architecture of the network to be used for the token to work.

For this reason, tokens represent a significant majority among the 20,268 cryptocurrencies in existence.

DeFi, the same coins or Shitcoins, for the most dangerous: these cryptocurrencies that will not survive the winter

The development of the second-ranked cryptocurrency Ethereum has created a large number of tokens.

Decentralized Finance (DeFi) has brought many new cryptocurrencies.

The introduction of popular smart contracts, which allow for consensus when several conditions are met, has given the Internet access to a new form of financial services. In short, these services are usually backed by cryptoassets to keep the protocols running. They can be grouped into two subsections:

• Utility tokens used to access crypto protocol services
• Management icons that allow decisions to be made within a decentralized organization

Identical Coins or Shitcoins

Aside from the previously mentioned tokens, the biggest mystery of cryptocurrencies remains shitcoins. These cryptocurrencies generally have no utility and deal with a trend, meme or even current events. However, despite the lack of consistency, several of his shitcoins have risen to the top of the cryptocurrency rankings. We can refer to:

• the same 10th DOGE coin (billionaire Elon Musk’s favorite cryptocurrency)
• Shiba INU, ranked 13

These cryptocurrencies are mainly the subject of fantasy by investors. A few projects have brought huge sums without any justification except the law of supply and demand (and a good deal of speculation).

Only, if most shitcoins can exist during boom periods, during downturns, it’s more complicated…

Bitcoin leads the market

Among the plethora of tokens available, many will not recover if Bitcoin falls for the twelfth time. Indeed, in the sector, cryptocurrency dominates the entire market. Generally, when the price of Bitcoin falls, other cryptocurrencies follow. This concept has a name: Bitcoin dominance.

Although bitcoin’s influence has waned over the years with the exponential creation of various cryptocurrencies, bitcoin’s dominance still drives the direction of the market. To be precise, Bitcoin still accounts for 38% of the cryptocurrency market.

Based on this observation, it is certain that if Bitcoin falls again, several cryptocurrencies will disappear into limbo. The first victims will undoubtedly be cryptocurrencies that have no fundamental value and no added value. So if crypto winter is confirmed, pikachucoin and other Mooncoins will visit 0 €. It’s a safe bet that more than 90% of the 20,000+ cryptocurrencies won’t survive the winter. Additionally, many of these tokens were left out as Bitcoin fell from €54,000 to €20,000.