The array of available cryptocurrencies has erupted over the past year, motivated partly by institutional involvement in the space.
During a period of major corporate and institutional interest in the crypto industry, nearly 5,000 new tokens have emerged in the last 12 months, averaging over 10 new coins per day, new data shows.
Cryptocurrency Boom of 2021
The number of existing cryptocurrencies has recently surpassed 12,000. This is well over the approximately 7,100 coins recorded by the site in September of last year, meaning that at least 4,900 new digital assets have been created in the last 12 months alone.
This represents the largest YoY surge in the absolute number of cryptocurrencies since Bitcoin’s inception. During this time, the digital asset industry achieved a total market cap of over $2 trillion.
Interest in crypto creation is largely driven by Bitcoin’s price gains in the past year, as well as increasing institutional involvement in the space.
As household names like Elon Musk and Jack Dorsey show support for the industry and its possibilities, both creative and financial interest continues to be drawn into the space. This further bolsters the markets, inspiring developers to work on their own cryptocurrencies to avoid missing out on potential gains and demand.
Furthermore, digital assets have garnered high interest as an asset class for hedging against inflation – especially during the economic crisis created by the coronavirus pandemic. While September of 2020 saw stock markets plunge, cryptocurrencies mostly held their value. This may have inspired even more creators to start investing and developing in the emerging asset class.
Is This a Good Thing for Crypto?
Through increased interest and technological development is crucial to the crypto industry’s growth, an ever-growing number of coins may be counterproductive or even dangerous.
For example, SEC chair Gary Gensler is only more skeptical of the space due to the vast number of tokens in existence. Recognizing that there is no room for thousands of different currencies, he plans to further regulate the industry to protect investors before some of them inevitably collapse.
Indeed, many of these tokens seem like dangerous investments – if not outright scams. Over $25 million were lost to crypto scams among Australians only in the first half of 2021