Why are there so many cryptocurrencies?

With Donald Trump just ten days away from regaining the presidency, the world is finally recognizing the legitimate (and even central) role that Bitcoin plays in the future digital economy.

However, the wider world of ‘crypto’ remains mired in uncertainty for many. Gary Gensler — the head of the Securities and Exchange Commission (SEC) who will soon leave his position — is not a fan of Bitcoin, but he still believes the distinction between Bitcoin and “the rest” is appropriate.

“The public knows a lot about bitcoin… and then there’s everything else,” he said in an interview. A recent interview with Bloomberg. “I’ve never seen a field so wrapped up in emotions, rather than fundamentals. These 10,000 to 15,000 projects, a lot of them won’t survive.”

Although Gensler’s assessment is justified, the idea that cryptocurrencies are merely a speculative playground without any fundamental value is neglected and outdated. There are many reasons why Bitcoin and tokens exist alongside each other and hold lasting value.

The public deserves to know the nature of these assets. Here are a few of them:

Bitcoin: digital gold

Bitcoin, launched in 2009, introduced the world to blockchain technology and created the first truly decentralized digital cash system.

With its constant supply of 21 million coins and strong security through proof-of-work mining, Bitcoin has established itself as “digital gold” – a permanent, predictable store of value and hedge against inflation.

This remains the primary use case for Bitcoin, with institutional investors and even countries now adding it to their balance sheets.

With President-elect Donald Trump’s promise to create “Strategic National Bitcoin StockTo help address the country’s debt, the United States may soon be among these countries.

Stablecoins: digital dollars

Stablecoins such as USDC and USDT maintain a 1:1 peg to the US dollar, combining the stability of fiat currency with the efficiency of blockchain technology. These applications have become very popular for international transfers, cryptocurrency trading, cross-border business transactions, and DeFi (decentralized finance) applications.

Stablecoins are seeing some of their strongest adoption in developing countries like Nigeria, where access to traditional banking services is limited, yet demand for the US dollar is high to escape the depreciation of the local currency for citizens. A a report Last year, Castle Island Ventures found that more than 77% of Nigerians hold more than 10% of their assets in stablecoins.

Digital securities

Security tokens represent ownership in real assets, from real estate to company shares. These are digital versions of traditional securities, which are regulated under existing securities laws but benefit from the efficiency and transparency of blockchain.

One example includes BlackRock’s first tokenized fund launched last year, giving institutional investors access to US dollar returns.

Utility codes

Many cryptocurrencies function as utility tokens, which serve specific purposes within their ecosystems.

For example, gas tokens are used to pay computation costs and process transactions on blockchain networks. Ethereum’s ETH is the most famous and required instance of all transactions on the Ethereum network.

These tokens often also function as tokens. Examples include ADA (Cardano) and SOL (Solana), where token holders can “own” their assets to validate transactions and maintain network consensus.

Meanwhile, “governance tokens” give their holders the power to vote on a particular blockchain protocol, with the community of holders collectively known as “decentralized autonomous organizations.” Uniswap, the world’s largest decentralized exchange, uses UNI as its governance token.

Memecoins: The speculative aspect

In an online investing community where members often call themselves “degens,” it would be disingenuous not to acknowledge the extent of speculation in the cryptocurrency market.

Although Memecoins like Dogecoin (DOGE) and Shiba Inu (SHIB) started as a joke, they have attracted significant investments and created entire communities. Although these may seem trivial, they have demonstrated the power of social coordination and societal value creation in the digital age. For many, it is a fun, community-oriented form of gambling.

To the surprise of many, DOGE is one of the only assets in the cryptocurrency space that has kept pace with Bitcoin’s performance over several years. Cryptocurrency market cycles for four years.

The revolution beyond symbols

Focusing solely on cryptocurrencies as tokens misses the bigger picture. Their underlying blockchain technology represents a fundamental shift in how digital ownership is structured, whether that relates to financial assets, data, or your identity.

True innovation is the ability to maintain a single, shared source of truth across a distributed network without having to trust any central authority. This has implications for supply chain management, healthcare records, intellectual property rights, voting systems, and much more.

Many cryptocurrencies today will likely fade away, just as many early Internet companies did not survive the dot-com bubble. However, digital assets and their core use cases — from digital store of value to programmable money to decentralized computing platforms — are here to stay.

We are witnessing large-scale experiments in new technological frontiers. The rise, fall and development of cryptocurrencies at this time will lay the foundation for the next generation of finance.