I explain you why the CEO of Ripple is absolutely right on this point.
During his last appearance on Bloomberg, Ripple CEO Brad Garlinghouse reiterated once again his prediction that 99 percent of all cryptocurrencies will probably go to zero in the future.
Here is his full statement:
“I have said publicly before that I think 99 percent of all crypto probably goes to zero, but there is that one percent that I think is focused on solving a real problem for real customers and is able to do that at scale.”
— Brad Garlinghouse
From my point of view, Brad Garlinghouse is absolutely right and I will explain why in what follows.
It is November 9, 2019. Looking at the reference site CoinMarketCap, I can see that 4782 cryptocurrencies are currently listed with a market capitalization of $240.3 billion. All this with Bitcoin dominating the market by 66.4%.
This rather phenomenal figure is due to the fact that it is very easy for anyone to create their own cryptocurrency, launch it and try to convince a few users to invest money in their adventure.
The other side of the coin regarding the ease of creating a cryptocurrency is that many of them launch themselves as copies of other cryptocurrencies.
This is even more true from a use case perspective behind these new cryptocurrencies. For the most part, they bring nothing more than the cryptocurrencies from which they come.
For their founders, we have the impression that it is simply an opportunity to earn as much money as possible in a minimum of time.
The ever-increasing interest in the world of cryptocurrencies allows the latest launches to last for a few months or even longer. Indeed, investors still dream of finding the new Altcoin that will allow them to make x100 with their investment.
Cryptocurrencies that do not solve real problems have no long-term value for their users.
The main strength of a cryptocurrency is its utility. Generally, the more useful a cryptocurrency is, the more likely it is to convince as many users as possible on a lasting way.
Once the trend has passed, users will continue to use a cryptocurrency only if it meets some of their real needs.
Cryptocurrencies that do not meet any of these needs will naturally tend to disappear because it does not seem viable that the market is full of nearly 5000 cryptocurrencies. This is way too much!
To be convinced, just look carefully at the Top 150 of the most capitalized cryptocurrencies. After a thorough analysis, it is clear that Ripple’s CEO is absolutely right.
Very few cryptocurrencies really address real user problems. I can give you twelve in the following, but not much more in an instant:
- Bitcoin, which aims to be the medium of digital exchange and the digital store of value. The Bitcoin benefits fully from the first-mover advantage.
- Ethereum, which provides a complete platform of Smart Contracts and dApps already used by a large number of projects and users.
- Monero, aiming to address privacy concern leading the field of anonymous, private and fungible digital money.
- Ripple, which aims to replace the SWIFT interbank payment system with instant transactions and reduced fees per transactions.
- Stellar, pursuing a few of the same goals as Ripple while targeting individuals with the goal of banking unbanked customers around the world.
- Factom, wanting to offer a decentralized platform for notaries.
- Golem, whose stated goal is to become a kind of Airbnb of computing power. The platform lets users sharing some computing power and is based on the Ethereum platform.
- Basic Attention Token, which aims to revolutionize the world of digital advertising with an innovative model that benefits advertisers, publishers and users.
- Siacoin, offering a fully decentralized cloud storage platform.
- IOTA, which comes with its Tangle, a technology more scalable than the Blockchain, and which targets the Internet of Things (IoT).
- Civic, whose mission is to create a digital identity in a decentralized way for all people.
- TRON, proposing a Blockchain aimed at decentralizing the Web through the construction of a free and global digital ecosystem.
This list is of course not exhaustive but it cannot be extended beyond fifty or so cryptocurrencies. So, we are well within the 1 percent of cryptocurrencies really useful.
Among the Top 100 of cryptocurrencies, many projects also aim to solve the same problems. Thus, EOS, NEO, Cardano, Ethereum Classic, or Tezos are positioning themselves as a platform for Smart Contracts and dApps competing from the leader Ethereum.
Bitcoin Cash, Bitcoin SV or Dash are among the many forks of Bitcoin and simply aim to take its place as a medium of exchange and store of value.
There are many examples of this type and they clearly show that a real battle has begun. Bitcoin or Ethereum naturally leaving with a significant advantage over their ambitious competitors due to their long history and a much larger user base.
Of the 4700 cryptocurrencies on the cryptocurrency market today, only about 50 real world problems can be identified and addressed. In fact, most cryptocurrencies on the market are in head-on competition to become the leader in their sector.
Users do not need to have 5 Smart Contracts and dApps different platforms at their disposal or a dozen choices of cryptocurrencies as a medium of exchange, so it goes without saying that many of them will disappear in the future.
Ripple’s CEO puts forward the figure of 99 percent and I must say that after having examined the cryptocurrency market, I fully agree with him. All this should remind us that we must be extremely careful when buying a cryptocurrency since many will have disappeared in the future and for some even in the coming months.