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Cryptocurrency Exchanges Are Drowning in Tokens

Altcoins

It’s arduous to place a finger on the exact level at which token overload kicked in. Token fatigue has been brewing for a while, because the spate of latest cash, largely launched by ICOs, has changed into an unstoppable torrent. Each day, cryptocurrency exchanges are barraged with itemizing purposes by ICOs, they usually do their greatest to maintain up, for the tasks’ sake, and for the group’s, and since itemizing tokens is a profitable enterprise. However at its present fee, the pattern is definitely unsustainable.

Additionally learn: IMF Says Bitcoin Might Create Much less Demand for Common Debt-based Fiat Cash

We’ve Previous the Level of Peak Token

There comes a degree at which the crypto group is entitled to ponder how a lot is an excessive amount of? What number of tokens does there should be earlier than everyone seems to be sated? From a technical perspective, that time would possibly arrive when all of the obtainable three-letter token abbreviations have been used up, which can arrive across the time that the crypto area births its 17,000th altcoin. Then once more, there are already a number of tokens sharing the identical three-letter ticker, inflicting no finish of confusion on websites like Coinmarketcap. There are additionally tokens claiming four- and five-letter abbreviations, suggesting scarcity of fascinating tickers received’t be sufficient to curtail the insanity.

Cryptocurrency Exchanges Are Drowning in Tokens

In addition to, merchants don’t need an finish to new tokens altogether; new additions that add real utility and which create demand will at all times be welcomed. It’s the opposite 90% added to exchanges that go away rather a lot to be desired. These shitcoins, for need of a greater identify, have little if any actual world utilization, and do little greater than drain liquidity from exchanges, as merchants’ portfolios grow to be more and more stretched. Even on Binance, one of many world’s most liquid crypto exchanges, the near-daily addition of latest property is beginning to take its toll. 50 cash listed on its platform at present have quantity of below 100 BTC, versus 10,000 BTC or extra for the likes of ETH and EOS.

Token Saturation Results in Token Confusion

The side-effects of token overload embrace decrease liquidity and confusion attributable to tokens sharing the identical or comparable identify. There have been a lot of situations of merchants shopping for the flawed asset, resembling Matryx as an alternative of Matrix. This week it occurred once more. After Binance and Kucoin introduced the itemizing of Quarkchain, some merchants went and acquired Quark by mistake – a completely unrelated asset, which skilled its very personal pump and dump. Even for merchants who attempt to keep in the loop, retaining observe of all these tokens is getting unattainable.

Cryptocurrency Exchanges Are Drowning in Tokens
Quark was not listed on Binance this week however that didn’t cease it from pumping in value

The speed of latest additions to Crypto Change Itemizing, a Telegram channel that goals to foretell new alternate listings earlier than they’ve been introduced, has mushroomed. Lots of the account’s predictions are flawed (which is why they arrive with a outstanding disclaimer), however the look of hitherto unprecedented tokens in this channel illustrates the issue of retaining observe of all these new property and of differentiating the wheat from the chaff.

There Is No Finish Sport, Simply Countless Tokens

Not everybody is worried by the proliferation of latest tokens. “Tokenize the world!” is the oft-quoted mantra of Anthony Pompliano, and there’s no scarcity of crypto tasks keen to heed his rallying name. Each day, a median of two ICOs completes their token sale, and that’s simply the mainstream ones; the variety of smaller crowdsales finishing every day, whose tokens won’t ever make it to a serious alternate, runs into double figures.

There are actually 1,644 tokens listed on Coinmarketcap and that’s certainly not all of them – the positioning really takes a reasonably conservative coverage to including property, in any other case the overall can be two or 3 times as a lot. Cointracking lists 5,670 cryptos, though a few of these have since died.

Cryptocurrency Exchanges Are Drowning in Tokens
Charles Ponzi

Most tokenized tasks aren’t scams in the Bitconnect sense. However collectively, they bear lots of the hallmarks of a traditional Ponzi, outlined as a scheme which depends “on a continuing stream of latest investments to proceed to offer returns to older buyers. When this stream runs out, the scheme falls aside”. To assist all these new tokens, cryptocurrency exchanges should be onboarding new customers at an alarming fee. The second curiosity in cryptocurrency wanes most of those new tokens will probably be left excessive and dry, like ships grounded at excessive tide, mementos of the insanity that made folks imagine, for a short time, that it will be a good suggestion to tokenize the world.

Do you suppose the spate of latest tokens has gotten uncontrolled? Tell us in the feedback part beneath.


Photographs courtesy of Shutterstock, Coincodex, and Wikipedia.


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About Tom Greenly

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