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The Data Scientist

cryptocurrency

The cryptocurrency landscape: How did this market evolve from having only one digital currency to today’s endless options?

The crypto landscape started with the cryptocurrency pioneer, Bitcoin, and for a couple of years, BTC was the only option for investors to put their money into cryptocurrencies. However, that is no longer the case, as nowadays, traders and investors alike have plenty of options to choose that suit their needs and preferences. These digital currencies also have different use cases, so it is good that the crypto market is diversified. And even if Bitcoin will always maintain its title as the pioneer crypto, nowadays you can find thousands of other digital coins with a quick search.

Cryptocurrencies are a very popular subject today, and people are more interested than ever in discovering news from this space and how to buy crypto currency. Digital coins attracted people’s attention, as citizens worldwide wanted something else from fiat money and to benefit from more decentralization, anonymity, and better security. Bitcoin was launched in 2009, and it was the only cryptocurrency that navigated the world for some time. However, soon after that Litecoin, Namecoin, and Peercoin appeared when the crypto space gained better momentum and kept Bitcoin company. And because the crypto success started to grow slowly, by the end of 2013, this sphere had around 50 different digital coins.

Can you guess how many cryptocurrencies are in circulation today? Nowadays, people can choose one of over 10,000 digital coins available, and the number will continue to grow in the future as more cryptocurrencies are developed daily. But how did the crypto landscape evolve so much over the years? Let’s take a closer look.

Image source: https://unsplash.com/photos/a-pile-of-gold-and-silver-bitcoins-kM6QNrgo0YE

Why have so many cryptocurrencies been developed?

The first crypto created was Bitcoin, which represented a very good way to replace fiat money. However, Bitcoin had some shortcomings, including high transaction fees and the fact that it consumed a lot of energy. This is especially problematic nowadays when people are more interested than ever in reducing environmental impact and diminishing their carbon footprint. But this can’t really happen when investing in Bitcoin, which has the same electricity consumption as big countries.

So, something was always needed to improve Bitcoin’s offerings, and this is how all the other altcoins were created. Ethereum is a good example of this: a smart contract blockchain that people can use to develop NFTs or dApps. As this wasn’t something Bitcoin offered, Ethereum grew in popularity rapidly and is now the second-largest cryptocurrency by market cap.

So, the main reason so many cryptocurrencies have been developed is to bring more innovation to the crypto sector, thus attracting more individuals interested in these blockchains and getting more use cases in the game.

What are the most known cryptocurrencies?

The cryptocurrencies with the highest market capitalization

Market capitalization is a term used to describe the total cash that a crypto project has gained over the years. You will see that if a cryptocurrency has a bigger crypto capitalization, that digital coin is also more popular and will be one of the preferred options for people to invest in. So, what is the biggest cryptocurrency by market cap?

Bitcoin

Bitcoin was the first cryptocurrency launched in 2009 by Satoshi Nakamoto. Since then, it has occupied the first position on the crypto podium, and it has always been the number one option when people want to get into crypto. Bitcoin was designed to provide people with decentralized options, which is why it functions without the involvement of banks or governments.

Bitcoin operates on blockchain technology, which contains blocks with information about transactions, buyers and sellers, and payment dates and times. Bitcoin is a scarce asset with a capped supply of 21 million coins, so miners cannot issue new digital coins when that amount is reached.

Ethereum

Ethereum is a blockchain that powers the native token on the platform, Ether. Ethereum has brought plenty of innovations into the game, as it led to the creation of dApps, NFTs, and the list can continue. Vitalik Buterin is the one who came up with the idea of Ethereum, as he saw that blockchain had a lot more potential than Bitcoin used it for. So, to enable the world to take advantage of all the benefits of blockchain, Vitalik Buterin and the other collaborators brought Ethereum to life.

Ethereum also wanted to solve Bitcoin’s shortcomings regarding electricity consumption, so it switched to a PoS consensus mechanism to respond to its customers’ concerns. Ethereum is the largest altcoin by market capitalization, second only to Bitcoin.

Altcoins and stablecoins

Altcoins and stablecoins are all the other digital coins in the crypto landscape. Altcoin is a term that refers to all cryptocurrencies that were created after Bitcoin, all of them represent an alternative to the crypto king. The most important altcoins are Ethereum, Binance Coin, XRP, and Cardano, and the list can continue. Stablecoins are digital coins with value pegged to other assets, such as the U.S. dollar. Some view stablecoins as better options because they are less volatile than other cryptocurrencies. Popular stablecoins include Tether, USDC, and Dai.

What will the future bring to the crypto landscape?

More cryptocurrencies are emerging every day, and this will probably continue in the future. However, even though people can launch cryptocurrencies daily, not all of them can survive the market, especially because the crypto ecosystem is huge, and you need to bring something special to the table to make people want to invest in a new digital coin.

The crypto sphere is evolving at a fast speed, and it is ready to integrate more innovations and technologies to revolutionize this environment even more. What do you think the future can bring to crypto?