Almost 5,000 new cryptocurrencies launched in the last 12 months

As the cryptocurrency industry continues to mature with mainstream adoption, investors are pumping more money into the sector contributing to the sector’s popularity. At the same time, new cryptocurrencies joining the market to capitalize on the interest is also on the rise. 

According to data provided by cryptocurrency trading simulator Crypto Parrot, between September 2020 and September 2021, new 4,908 cryptocurrencies have launched bringing the cumulative number of coins to 12,046. Therefore, over the last 12 months, the number of new cryptocurrencies has grown 68.75% from September 2020's figure of 7,138.

Elsewhere, the highest growth rate was recorded between September 2019 and September 2020 at 146.98%, from 2,890 to 7,138. The number of cryptocurrencies is provided by CoinMarketCap.com database with historical figures retrieved using the web.archive.org tool. 

Drivers for the emergence of new cryptocurrencies 

The number of new cryptocurrencies created over the last 12 months is remarkable, considering that a decade ago, only Bitcoin was available. Overall, the emerging cryptocurrencies seek to leverage blockchain technology to revolutionize various sectors like finance, payments, machine learning, art, among others. 

The sector has surged in value at one point, hitting a cumulative market capitalization of about $2 trillion. The popularity spiked as digital currencies entered into the mainstream, backed by institutional investors. Notably, the entry of institutions is partly contributing to the sector's maturity, and creators of new coins don't want to miss out on the opportunity for more returns. 

Significant growth was recorded in September last year amid the coronavirus pandemic. During the crisis, the economy plunged, with the stock market dropping to a historical low at some point, but cryptocurrencies largely remained resilient. Notably, digital currencies emerged as a possible cushion against the economic crisis, potentially inspiring new coins that joined the market. 

Additionally, the emergence of utility cryptocurrencies like Ethereum also plays a factor in increasing digital currencies. Utility coins develop as infrastructure, allowing other cryptocurrencies to be built on top of their networks. 

The emergence of new coins accelerated in 2017 amid the Initial Coin Offering frenzy. However, the same environment has been replicated in the last 12 months amid the Decentralized Finance boom. 

With DeFi projects aiming to bridge the gap between cryptocurrencies and traditional finance, emerging platforms come with a native token. In this case, most DeFi projects have utilized utility cryptocurrencies like Ethereum to launch their coins. 

The emergence of crypto scams 

Worth pointing out is that some of the captured new cryptocurrencies don't intend to contribute positively to the sector. With an unclear regulatory landscape globally, some of the emerging projects have become scams aiming to benefit from the crypto rally. 

Interestingly, most cryptocurrencies usually launch with a lot of fanfare but later fail as the public and investors shun them. Notably, as of May this year, over 2,000 cryptocurrencies had failed. 

Overall, the emergence of new cryptocurrencies does not translate to success. Only a few coins will survive, especially for those focusing on mainstream adoption and notable use cases.