How Many Cryptocurrencies Are There?

The crypto market is huge, and developer teams are launching new projects on a daily basis. In 2009, Bitcoin (BTC) was the first cryptocurrency on the market, and during the first couple of years, there were very few altcoin projects.

The market started rapidly expanding after the launch of Ethereum (ETH) in 2015 when users and developers realized that cryptocurrencies could be so much more besides digital cash.

In this guide, we’ll take a dive into the rapidly expanding world of crypto to find out how many cryptocurrencies are there on the market.

The Number of Cryptocurrencies on the Market

In early 2021, there were a little less than 8,000 cryptocurrencies on the market, while as of November 2022, there were more than 21,000 digital currencies, according to CoinMarketCap.

These figures show an astonishing growth in the crypto market in terms of the number of active projects. If we consider that 10 years ago, there was only Bitcoin and a few altcoins on the market, these figures are especially high and indicate how fast the crypto market is growing.

The increased number of cryptocurrencies is a result of the larger number of use cases that these crypto projects now perform. Some coins merely serve as digital money, some power decentralized applications (dApps), some are used to pay transaction fees on exchange platforms, while others are used to purchase in-game equipment in blockchain games. 

So, let’s have a detailed look at the key types of cryptocurrencies on the market and what they are used for, along with some examples of each type of coin.

Digital Cash Cryptocurrencies

Bitcoin is the first and most famous digital cash crypto. The original idea behind Bitcoin was to provide users with decentralized, virtual money powered by blockchain technology.

While early altcoins simply copied key aspects of Bitcoin, later ones tried to improve some of its shortcomings, like the transaction speed or block capacity, to compete with BTC. Still, none of these coins managed to really challenge Bitcoin in terms of value and popularity. 

Thousands of businesses worldwide have already introduced the possibility of crypto payments. Apart from Bitcoin, the most popular digital cash cryptocurrencies among retailers are Litecoin (LTC) and Bitcoin Cash (BCH).

Some digital cash cryptocurrencies like Ripple (XRP) and Stellar Lumens (XLM) are more focused on business transactions and integrations with banking systems. 

Digital cash cryptocurrencies are paving the way for massive crypto adoption among businesses and financial institutions, which are beginning to slowly include crypto services as a result of rising user demand. 

Stablecoins

Cryptocurrencies are generally very volatile financial assets. It’s nothing unusual for the price of BTC or ETH to jump or fall a few percent within a single hour. Less popular altcoins have even bigger price fluctuations because they have a smaller market cap and are more prone to price manipulation by large-scale holders.

A sudden market dump of several million USD can significantly impact the price of an altcoin whose total market cap is just 100 million dollars or less. This volatility makes crypto a high-risk investment.

Because of this, developer teams created stablecoins to combat volatility. Stablecoins are a type of cryptocurrency whose price is tied to the value of a specific fiat currency. These days, you can also find stablecoins pegged to other cryptocurrencies. 

The most popular stablecoins are pegged to the US dollar. Stablecoin issuers guarantee that the price of each coin will always stay tied to the price of the underlying fiat currency thanks to the collateral stored by the issuer.

Fiat-collateralized stablecoins like USD Coin (USDC), Binance USD (BUSD), and Tether (USDT) are backed by USD in the issuer’s bank accounts as collateral. Algorithmic stablecoins like Dai (DAI) are backed by various cryptocurrencies and a trading algorithm that conducts trades on the market to maintain the value of the stablecoin.

For example, when the price of an algorithmic stablecoin starts falling due to market volatility, the algorithm sells some of the cryptos from the treasury to compensate for the price fluctuation. 

To protect themselves from losses, traders can simply exchange their volatile crypto for stablecoins and reinvest in other cryptocurrencies when the market conditions are more favorable. 

Meme Coins

Memecoins are a very special class of cryptocurrencies because they basically start out as joke cryptocurrencies focused on fun, entertainment, or even charitable causes.

The most famous meme coins are Dogecoin (DOGE) and Shiba Inu (SHIB), which both started out as crypto community joke currencies but gained tremendous popularity due to their names, community, or even the endorsement by celebrities like Elon Musk, who supported DOGE publicly.

Both DOGE and SHIB evolved into high-utility cryptocurrencies and have been adopted by various platforms. However, most meme coins remain irrelevant because they lack utility. Cryptocurrencies without any real utility can hardly compete on the market, which is why meme coins like SHIB and DOGE strive for broader adoption among dApps and platforms to show users how useful they are and grow their market value.

The Binance Chain is especially popular for launching meme coin projects because the BEP-20 token standard allows users to launch their own crypto projects in just a few steps.

dApp Development Ecosystems

Ethereum was the first blockchain to introduce programming resources for developers to launch decentralized apps (dApps) on the Ethereum network, thanks to its smart contract functionalities.

This resulted in thousands of decentralized applications in a matter of years, ranging from DeFi protocols, decentralized exchanges, and yield farming and staking platforms to blockchain games, metaverse projects, NFT marketplaces, and more.

However, Ethereum is known to have high transaction fees, and transfers usually take around five minutes. That’s why numerous developer teams started launching their own dApp ecosystems with high scalability and cheaper transactions. 

Blockchains like Avalanche (AVAX), Fantom (FTM), Cardano (ADA), Polygon (MATIC), Solana (SOL), and various other networks offer similar services and have vibrant dApp development communities. 

These cryptocurrencies provide a robust programming framework for developers and allow them to build all kinds of apps. Programmers can launch their cryptocurrencies using the infrastructure of these ecosystems and benefit from their network features, such as transaction fees, speed, and development toolkits. 

DeFi Cryptocurrencies

Decentralized finance is one of the key sectors of the crypto market because of the innovations it offers to users. DeFi protocols enable users to easily conduct various services usually associated with banks and accompanied by a lot of paperwork. DeFi protocols provide users with services like crypto lending, asset exchange features, and staking. 

With a bank, taking out a loan requires a lot of bureaucracy, while DeFi platforms can lend you crypto with just a few clicks based on crypto collateral deposits. As for staking, banks usually pay less than 1% in interest rates annually, while crypto staking can easily earn you between 5-10% APY, depending on the crypto in question. Also, DeFi protocols don’t require users to provide any sensitive data or personal details. 

Finally, various DeFi platforms work as decentralized exchanges that conduct quick swaps of numerous cryptocurrencies. These platforms are much easier to use than centralized exchanges because you can just connect your crypto wallet and exchange assets. There’s no need to create a platform account. 

Additionally, many DeFi platforms provide users with access to liquidity pools, where they can earn a portion of the platform’s transaction fees if they decide to provide liquidity. Liquidity pools are one of the most popular services provided by DeFi platforms because they let users participate in the platform’s ecosystem and earn rewards.

Most of these platforms have their own crypto tokens that are used to pay for transactions, facilitate different operations, and vote on the governance of the platforms. Popular DeFi tokens include Aave (AAVE), Maker (MKR), PancakeSwap (CAKE), UniSwap (UNI), Curve DAO Token (CRV), Lido DAO (LDO), Convex Finance (CVX), and Yearn.finance (YFI).

Privacy-Focused Cryptocurrencies

Cryptocurrencies provide users with a certain degree of anonymity by default because they don’t need to provide any personal data when opening a crypto wallet account and depositing crypto in a public address.

However, malicious individuals may track a user through the blockchain by monitoring their transactions on a blockchain explorer and possibly tying the transactions to someone’s identity. 

To avoid such privacy risks, various developer teams created privacy coins that use different encryption methods, stealth transactions, and other methods to obscure sender and receiver addresses, as well as the number of transferred cryptocurrencies.

These coins are ideal for users who wish to preserve their privacy while conducting financial transactions, however, some users might also use these cryptocurrencies for illegal purposes. Regulatory bodies such as central banks and governments usually have an explicitly negative stance toward privacy coins.

The most popular privacy-focused cryptocurrencies on the market include Zcash (ZEC), Monero (XMR), Decred (DCR), and Secret (SCR). 

Exchange Platform Tokens

There are more than 500 cryptocurrency exchange platforms on the market. Most crypto exchanges offer various services besides simple swapping or spot trading these days, and many decide to launch their own crypto tokens. 

Decentralized exchange platforms (DEX) use their native tokens to allow users to pay fees, participate in liquidity pools, and vote on governance proposals. DEX platforms are usually built as decentralized apps and need a native token to power transactions.

The native tokens of some DEX platforms like PancakeSwap (CAKE) and UniSwap (UNI) managed to become top trending digital currencies. These tokens aren’t centrally controlled and are basically traded on the market like any other crypto.

Large centralized crypto exchanges also tend to launch their own tokens and provide platform users with special perks if they hold a certain amount of those tokens in their exchange platform accounts.

For example, platforms like Binance (BNB), Gate.io (GT), and Huobi Global (HT) all have their native tokens and provide trading fee discounts to holders. Users can stake these tokens and earn an annual percentage yield or get further discounts for paying trading fees with them. 

Metaverse Cryptocurrencies

In the last few years, numerous companies have been experimenting with virtual environments called metaverses.

These environments serve as virtual hubs where users can engage in social activities with each other, work, play, go to events or just cruise around and explore the environment. Also, users can display their NFT collections, buy virtual land, or build virtual real estate in some metaverses. 

The aim of metaverse projects is to provide users with virtual environments where they can enhance different experiences with the help of digital technology. You might not be able to fly in the real world, but you can fly in the metaverse with your friends or go to a virtual concert of a popular performer without traveling to another country. 

Companies have already recognized the potential of the metaverse, and various retailers and luxury brands have already opened virtual stores in some metaverse environments. 

Metaverses use blockchain technology and cryptocurrency to facilitate interactions between users. That’s why different metaverse projects have their own cryptocurrencies and use them to pay out rewards or buy NFTs. Every unique piece of equipment, land, virtual real estate, and other objects traded in the metaverse is in the form of NFTs.

The leading metaverse cryptocurrencies on the market are Decentraland (LAND) and The Sandbox (SAND), which are the official currencies of two major virtual environments with thousands of participants. 

Gaming Cryptocurrencies

Blockchain gaming is steadily growing because crypto games are evolving and becoming increasingly popular. Crypto games use blockchain networks to operate in a decentralized manner and allow users to earn crypto while playing games.

Blockchain games are somewhat similar to metaverse projects, except that the latter allows users to engage in many more activities besides gaming.

The leading gaming cryptos are Axie Infinity (AXS), Battle Infinity (IBAT), and Thetan Arena (THG). These games all have some type of gaming interface where users compete with each other in fulfilling certain goals.

Players get rewarded with the game’s native tokens, which they can then spend on buying new avatars and gaming equipment or transfer them to a crypto exchange and sell them for another cryptocurrency. This concept is commonly called Play To Earn because it allows users to earn money while having fun. 

Decentralized Storage Cryptocurrencies

Before crypto, the only way to store data online was by using cloud storage solutions from big tech companies like Google that provide storage services on their physical servers. These storage solutions have high quality but are highly centralized.

This means that if someone hacks a centralized data storage service, all of the data on the servers will be compromised because it’s only protected by a closed, centralized security system.

Decentralized storage solutions, on the other hand, use blockchain technology to store data across thousands of network nodes in a decentralized manner.

No one can simply hack a decentralized storage protocol and steal or erase the data because it’s split into fractions among the network nodes. This makes decentralized storage far more secure compared to centralized solutions. Furthermore, decentralized storage is cheaper compared to big tech services. 

The most popular data storage cryptocurrencies are Filecoin (FILE), BitTorent (BTT), Arweave (AR), Holo (HOT), and Flux (FLUX). These projects use cryptocurrencies to facilitate data transactions and store information on the blockchain. 

Conclusion

As you can see, there are numerous categories of cryptocurrencies, so it isn’t surprising that there are more than 20,000 active projects on the market. The categories described in this guide are essential crypto categories, which will help you understand the complexity of the crypto world and the various use cases of digital currencies.