Cryptocurrencies have boomed in recent years, as new promoters have followed the trail blazed by
Not even close. Earlier this year, financial information service investing.com reported an astonishing 1,658 cryptocurrencies in existence around the world.
True, most of them will lack the weight and acceptability as a payment medium enjoyed by Bitcoin and the other major players, but it remains an extraordinarily high figure. A bizarre science-fiction scenario seems to beckon in which everyone issues their own currency, all trading against each other at fluctuating exchange rates.
“Real-world” cash in return for cyber-money
That seems unlikely, and, as we shall see, there are signs that the cyber-money industry is starting to experience a bout of consolidation.
First, how did we get to the stage that there are more than nine times as many cryptocurrencies than there are “real” ones (180 at the last count)? The simple answer is that the blockchain technology that underpins cryptocurrency is relatively accessible, making the prospect for many people of launching their own version distinctly inviting.
But most cryptocurrencies are not backed by anything. The promoters are getting “real-world” cash in return for a denomination they themselves have created.
In March, the investment advice service The Motley Fool put the apparently overwhelming number of cryptocurrencies into perspective. “The total cryptocurrency market capitalisation is just under $369 billion as of this writing, which implies that the average cryptocurrency is worth about $222 million.”
Outright acquisitions may be next
In other words, the median market capitalisation is only $925,000, “meaning half are worth more and half are worth less”.