With more than 19,000 existing virtual currencies, the cryptocurrency industry has likened the current state of the market to the early years of the Internet. However, industrial players said most of these coins would collapse.
Nurfoto | Getty Images
Several players in the cryptocurrency industry told CNBC that thousands of digital tokens are likely to collapse, while the number of existing blockchains will also decline in the coming years.
There are more than 19,000 cryptocurrencies and there are dozens of blockchain platforms. A blockchain platform, such as Ethereum, is the core technology on which many of these different cryptocurrencies are built.
The recent collapse of the so-called algorithmic stablecoin terraUSD and the associated digital token luna, which sent shockwaves through the market, has drawn attention to thousands of existing cryptocurrencies and whether they will all survive.
“One of the effects of what we saw last week with the Terra problem is that we are at a stage where there are essentially too many blockchains, too many tokens. And this confuses consumers. And that also carries some risks for consumers, “Bertrand Pérez, CEO of Web3 Foundation, told CNBC at the World Economic Forum in Davos, Switzerland, last week.
“As in the beginning of the Internet, you had a lot of dotcom companies and a lot of them were scams and they were of no value and it was all cleared up. And now we have a lot of useful and legitimate companies.”
Brad Garlinghouse, CEO of cross-border blockchain payments company Ripple, said there are likely to be “dozens” of cryptocurrencies that will remain in the future.
“I think there is a question whether or not we need 19,000 new currencies today. There are perhaps 180 currencies in the world of fiat currencies, “said Garlinghouse.
Guggenheim CEO Scott Minerd added further pessimism last week when he said most cryptocurrencies were rubbish, but that bitcoin and etherium would survive.
Comments from the industry are coming as the cryptocurrency market continues to feel pressure. Bitcoin has more than 50% of its record high since November, with many other digital tokens falling sharply below its record high.
Many different blockchain platforms from Ethereum to Solana are vying for industry leadership. But Brett Harrison, chief executive of the FTX US cryptocurrency exchange, said the hundreds that currently exist will not survive.
“When you think of blockchains … there probably won’t be hundreds of different blockchains in 10 years, I think there will be some clear winners for different types of applications,” Harrison said.
“And we’ll see the market … decide that over time,” he added.
Follow CNBC International’s Twitter and Facebook.