Why Are There So Many Cryptocurrencies?

The other day I came across a statistic that made my jaw drop: over 1.2 million tokens were created on the Solana blockchain — all within the past month! That’s an absurd number. Why would anyone need so many?

Money was invented to serve as a universal medium of exchange. Universal implies shared by all. Ideally — singular.

Because what is money, really? It’s an asset you should be able to confidently exchange for anything on the market. And as long as cryptocurrencies remain fragmented into thousands of types, none of them can truly fulfill that role. For maximum convenience, we’d all want a single unit of account and a single method of payment — right?

About six months ago, I published a Medium article titled “Why So Many Blockchains”. In it, I explained how even the most reliable blockchains have limited space — not nearly enough to handle every transaction on Earth. But that still doesn’t answer why there are so many different cryptocurrencies. After all, every new blockchain could just adopt a token backed by the most secure asset — like Bitcoin.

Some chains actually do this:

• Liquid, with its Liquid Bitcoin (L-BTC),
• and Rootstock, with Smart Bitcoin (RBTC).

The Bitcoin itself is locked on the main chain, and the transactions happen elsewhere — on blockchains where space is cheaper.

At first glance, the answer to why there are so many cryptocurrencies may seem obvious:

• Early blockchain founders saw Bitcoin’s success and thought: “Why not me? If people are willing to pay for digital coins, maybe they’ll pay for mine too.” After all, creating value out of thin air is a tempting proposition.
• And once token templates became widely available, it got even easier. You didn’t even need your own blockchain — just deploy a smart contract and start selling. I’d guess that most of those 1.2 million new tokens on Solana were launched by people hoping at least a few would find buyers.

If that’s the whole story, then maybe crypto really is just a giant bubble — or worse, an elaborate scam where naive investors lose money for nothing.

But there’s another side to this. And that’s the part I want to explore today.

Even Fiat Money Isn’t Truly Universal

Sure, it would be convenient if there were a single asset you could use to buy anything, anywhere in the world. But that’s not how the world works.

You can use US dollars to buy goods and services — in dollar-based economies. Euros work within the eurozone. Swiss francs — in Switzerland. Yen — in Japan. Yuan — in China.

But try paying for groceries in a Chinese store with dollars. Or using yuan in a Swiss shop. You’ll be politely turned away — because in China, dollars aren’t money. And in Switzerland, neither are yuan.

Every government demands that local businesses accept the national currency it designates as legal tender. And really, that’s not so different from a token creator hoping someone will trade something valuable for the token they just issued. Just like issuing a token costs almost nothing, issuing fiat currency costs a government next to nothing — especially in a digital age.

You might argue that fiat currency isn’t issued by governments, but by central banks. Fair enough. But to me, governments and central banks are simply two arms of the same body. What matters is that for them, printing money is virtually free — and they have the power to force people to accept it in exchange for real goods, services, and labor.

But that power only extends as far as their borders. Beyond those borders lie other governments — and they also want everyone within their reach to accept their currency. That’s why the world has no universal money. No matter how many times we’ve tried to create one, none has ever lasted.

Take gold, for example. Historically, it served as international money for centuries and was seen as a universal settlement asset. But that changed when derivative markets started to distort its price. Volatility became too high for gold to be used as a stable medium of exchange.

How did that happen? Simple: instead of trading physical gold, markets began trading gold contracts — settled in fiat currency. This allowed for massive leveraged long and short positions, driving the price up or down almost at will. And since fiat can be printed in unlimited quantities to back those positions, the manipulation potential is endless.

Then there was Bancor — a proposed world currency from economist John Maynard Keynes in 1944. Bancor was meant to be backed by a basket of key commodities and national currencies, helping to balance global trade and align countries’ interests.

But Keynes’s plan conflicted with the geopolitical goals of the United States, which wanted the US dollar to become the dominant global currency. And at the time, the U.S. had all the leverage — it was the only major economy left intact after World War II. So it used that advantage to push through its vision for the postwar financial order.

The euro, introduced in 1999, marked the boldest attempt in history to unify multiple countries under a single currency. More than a dozen countries voluntarily gave up their national currencies to join the eurozone. But it’s hard to imagine countries like China, India, Russia, or the U.S. ever surrendering their monetary sovereignty to something like the euro.

Then came Libra — Facebook’s 2019 plan for a global digital stablecoin, backed by a basket of major fiat currencies and government bonds. But regulators around the world weren’t thrilled at the idea of a private company creating a global money system outside their control. The project was rebranded to Diem, severely watered down, and eventually shut down entirely.

So why do we still have so many different fiat currencies, despite all these attempts at unification? Because the acceptability of each one is enforced by the state — within its own territory. That’s the real reason.

There’s No Forced Acceptance in Crypto

No one can make you accept a cryptocurrency in exchange for your goods or services. At least — not through legal means.

Sure, there have been rare cases where governments tried to mandate it. El Salvador did this between 2021 and early 2025. The Central African Republic followed suit for a while in 2022–2023. But in both cases, the cryptocurrency in question — Bitcoin — effectively became fiat: its acceptance was enforced by law.

In most situations, though, accepting crypto is entirely voluntary.

• Some people trust Bitcoin’s reliability, censorship-resistance, and immutability. They’ll ask you to pay in BTC.
• Others see that there’s huge global demand for USDT on TRON (TRC-20). That’s what they’ll want to receive.
• Some still believe in gold — just not in physical form. They’ll prefer PAXG.
• And some find all of these options too transparent. They won’t accept any of them — and that freedom is what crypto allows.

If someone doesn’t like what one cryptocurrency offers, they can choose another. And if they don’t like any of the existing ones — they can try to launch a new one that fixes what they see as flaws.

That’s why the sheer number of cryptocurrencies isn’t a bug. It’s a feature.

In fiat economies, each state holds monetary sovereignty. It can issue its own currency — as most do — or adopt someone else’s, like we’ve seen in Panama, Ecuador, El Salvador, East Timor, Montenegro, Zimbabwe, and partially recognized territories like Kosovo, Northern Cyprus, South Ossetia, and Abkhazia.

But in the crypto economy, monetary sovereignty belongs to each individual. Which means you — yes, you personally — get to decide whether to accept cryptocurrency, and if so, which one.

Pretty empowering, isn’t it?

But Is It Convenient?

I started this piece by pointing out that the very idea of money is built around absolute liquidity — the confidence that you can exchange it for goods and services anytime, anywhere.

So does that mean cryptocurrencies can’t offer that confidence — and never will? And if so, does that make storing crypto unbearably risky and using it incredibly inconvenient?

Well, first of all — fiat money doesn’t offer that kind of certainty either.

• There have been plenty of cases where governments declared certain banknotes invalid overnight: the Soviet Union in 1991, North Korea in 2009, India in 2016, Nigeria in 2022.
• Coups and revolutions have also led to the sudden cancellation of national currencies – like in Iran (1979), Afghanistan (1992, 1996, 2001), and Libya (2011).
• Even in more mundane cases — like when one country annexes part of another — the old currency stops being accepted, or gets exchanged under unfavorable terms. Just look at what happened in Crimea in 2014.

Secondly — there’s such a thing as conversion. Let’s say you’re a Hyperliquid maxi and all your funds are tied up in this fancy new token… but your counterparty insists on being paid in Bitcoin (or Tether, or Monero, or whatever else). No problem — just go to rabbit.io, send in your token, specify the recipient’s address, and they’ll get the crypto they asked for.

Thanks to this, you don’t have to hold a currency you don’t trust — but you can always pay in whatever your seller prefers.

No, rabbit.io doesn’t list the millions of meme tokens minted on Solana over the past few months. But it does support over 9,000 cryptocurrencies with at least some real demand — and those, you can swap with ease.