Cryptocurrency Exchanges Are Drowning in Tokens


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  became an unstoppable torrent. Day-after-day, cryptocurrency exchanges are barraged with itemizing purposes by ICOs, they usually do their greatest to maintain up, for the initiatives’ sake, and for the group’s, and since itemizing tokens is a profitable enterprise. However at its present price, 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 some extent 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 may 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 gained’t be sufficient to curtail the insanity.

Cryptocurrency Exchanges Are Drowning in Tokens

Apart from, 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 depart lots to be desired. These shitcoins, for need of a greater title, 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 belongings is beginning to take its toll. 50 cash listed on its platform at present have quantity of beneath 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 embody decrease liquidity and confusion attributable to tokens sharing the identical or comparable title. There have been various cases of merchants shopping for the unsuitable asset, equivalent to Matryx as a substitute 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, preserving monitor of all these tokens is getting unimaginable.

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

The speed of latest additions to Crypto Trade Itemizing, a Telegram channel that goals to foretell new change listings earlier than they’ve been introduced, has mushroomed. Most of the account’s predictions are unsuitable (which is why they arrive with a distinguished disclaimer), however the look of hitherto unprecedented tokens in this channel illustrates the issue of preserving monitor of all these new belongings and of differentiating the wheat from the chaff.

There Is No Finish Recreation, Simply Countless Tokens

Not everybody is anxious by the proliferation of latest tokens. “Tokenize the world!” is the oft-quoted mantra of Anthony Pompliano, and there’s no scarcity of crypto initiatives keen to heed his rallying name. Day-after-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 significant change, runs into double figures.

There are actually 1,644 tokens listed on Coinmarketcap and that’s not at all all of them – the positioning really takes a reasonably conservative coverage to including belongings, in any other case the whole could be two or thrice 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 initiatives usually are not 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 circulation of latest investments to proceed to offer returns to older buyers. When this circulation runs out, the scheme falls aside”. To help all these new tokens, cryptocurrency exchanges should be onboarding new customers at an alarming price. The second curiosity in cryptocurrency wanes most of those new tokens will likely be left excessive and dry, like ships grounded at excessive tide, mementos of the insanity that made individuals imagine, for a short time, that it could be a good suggestion to tokenize the world.

Do you assume 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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