In the beginning, there was Bitcoin. The world’s first viable decentralized cryptocurrency was released in 2009, and now it’s part of the daily conversation, with a market cap of over US$2 trillion as we go to press. That’s bigger than the entire stock market cap of the Seychelles and the Cayman Islands put together.
Then, the flood. Litecoin hit the crypto market scene in 2011, then Dogecoin and Ripple in 2013, and Ethereum in 2015; by the time 2023 had rolled around, there were over 20,000 different digital coins on the interwebs, according to the United Kingdom’s Financial Conduct Authority.
Alas, most of these cryptocurrencies are already kaput, left to wither and die on the digital vine. Bitcoin is both head and shoulders above the rest when it comes to viability and market cap, and Ethereum is useful as well, but the further down the list you go, the sketchier these alt-coins become. How did we get so many of these in the first place? Let’s investigate.
Why Cryptocurrency?
Most of our financial institutions have gone digital to some extent with the tools they use – online banking, for example. Money is a tool; why not make that digital as well? Bitcoin and other proper cryptocurrencies are designed to move back and forth seamlessly over the internet, without interference/fees from third parties like governments and central banks.
The demand for such a currency is self-evident. As for the motivation of the people supplying these coins, sometimes it’s out of scientific curiosity, tinkering about as an academic exercise in learning how these things work. Sometimes it’s meant as something of a joke, like Dogecoin. And sometimes people just want to get rich quick. All three can be true at the same time.
Who Creates Cryptocurrencies?
Cryptographers. These digital coins all rely on cryptography, the study and practice of ensuring secure communication in the face of outside threats. Bitcoin’s creator, the pseudonymous Satoshi Nakamoto, has been rumored to be any of several leading “cypherpunk” figures, including the late Hal Finney.
As with many industries, what began as a cause celebre within a niche community has expanded as the pile of money to be made has grown. It still helps to be a math whiz like Vitalik Buterin (Ethereum) if you’re going to launch a cryptocurrency, but you can also hire someone to do it for you.
How Easy Is It?
Hiring someone else is easy enough once you have the means; there are websites that will churn one out for you automatically. But if you’re hoping to launch your own cryptocurrency, there are three ways to do it according to Investopedia, and they all require some level of computer programming expertise:
- Create your own blockchain and currency
- Modify an existing blockchain (a “hard fork” like Bitcoin Cash and Bitcoin SV)
- Start a new currency on an existing blockchain
Option No. 1 requires so much skill and talent, it’s usually only done by teams – which is why many believe Nakamoto is actually a group of people rather than a single programmer. The other two options are much easier, since a lot of the work has already been done for you; even a moderately skilled programmer can handle Option No. 3.
Now that all you really need to get the job done is money, it’s no wonder there are so many digital coins floating around on the market. But just like that band Bryan Adams sang about, most of them never get far. Their creators didn’t take them all that seriously, outside interest wasn’t drummed up, and trading quickly dried up, if it ever began at all. Choose your digital coins wisely when you do your crypto betting and investing.
