What You Need to Know About the New Cryptocurrencies of 2023
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New Cryptocurrencies of 2023
Cryptocurrency has become a mainstream phenomenon after a decade of rapid growth. Besides the well-known names, there are new cryptocurrencies emerging almost every day. Let’s explore some of these coins and how they are created.
What Is the Process of Creating New Cryptocurrencies?
One of the features that make cryptocurrencies unique is that they use open-source technology.
Cryptocurrencies can be easily created by copying the code of an existing blockchain, instead of starting from scratch. The code can be modified according to the preferences of the creator, or it can be copied without any changes. In that case, a new cryptocurrency is born, with the same technical specifications as the original, but on a separate blockchain.
Another way cryptocurrencies can come into existence is through a controversial “fork”. A fork is simply a change in the protocol of the blockchain.
Sometimes, there can be disagreements within the community about the direction of the blockchain. If these disagreements are not resolved, they can sometimes result in a fork. This is when the code is altered, creating a new blockchain.
This happened with Bitcoin (BTC) between 2015 and 2017, due to debates over scalability issues related to Bitcoin’s design. This led to a hard fork, creating Bitcoin Cash, a cryptocurrency that is different from Bitcoin.
Vitalik Buterin, the founder of Ethereum (ETH), said in a tweet in January 2022, “I would call BCH mostly a failure. My main takeaway: Communities formed around a rebellion, even if they have a good cause, often have a hard time long term because they value bravery over competence and are united around resistance rather than a coherent way forward.”
9. I was optimistic about Bitcoin Cash specifically, because I agreed with the big-blocker arguments in the scaling war more than the small-blocker arguments.https://t.co/PgVHuFGadM
Creating a new blockchain from scratch is also an option, but it is much more difficult.
Aptos (APT) is a recent example of a new blockchain that was created from scratch. It is a Layer 1 crypto that was launched a few weeks ago by former Meta Platforms employees.
Layer 1 means that the crypto has its own blockchain that can be used as a foundation for other applications. Some of the well-known Layer 1 cryptos are Ethereum, Cardano (ADA) and Solana (SOL).
Aptos did not perform well in its first trading day. It also faced criticism over how its tokens were distributed. Half of the tokens were given to Aptos Labs foundation, investors and core contributors. This distribution of tokens is called tokenomics, and it is a key factor when evaluating a new cryptocurrency.
The Future of Crypto: New Coins on Old Chains
Another way to create a new cryptocurrency is to use an existing blockchain that can host other cryptocurrencies.
Developers can launch new cryptocurrencies on top of these blockchains, and these new currencies are called “tokens”. A token can act as digital money and not be native to the blockchain it runs on.
Some tokens are highly customized and take time and expertise to launch, while others are very easy and quick to create. Anyone can launch a token on top of another blockchain without much technical knowledge. There are even online services that help you create a new token in minutes.
In August 2022, the number of cryptocurrencies listed on CoinMarketCap exceeded 20,000. Many of these were just copies of existing tokens.
Cryptos Based on Ethereum
Ethereum (ETH) is the second-largest cryptocurrency by market cap and it was launched in 2015.
Ethereum is the most popular blockchain to launch cryptocurrencies. It has become a playground for developers, who use it to create decentralized applications and tokens.
Some of the popular tokens launched on Ethereum are Shiba Inu (SHIB), a meme token that rivals Dogecoin (DOGE); The Sandbox (SAND), a metaverse game; and DAI, a stablecoin.
Cryptos Based on Binance
It is the largest cryptocurrency exchange in the world, and it has its own blockchain called BNB.
BNB stands for “build and build” and it is part of the Binance Smart Chain ecosystem.
BNB offers lower fees and higher speed than Ethereum. Ethereum’s transaction fees, known as “gas”, can be very high and make it hard for average users to access it.
But BNB’s lower fees and high speed come with a cost. Binance is a centralized company, so users of BNB sacrifice some decentralization.
This has led some cryptocurrency “purists” to criticize that it goes against some of the core principles of cryptocurrency.
The ease, low fees and high speed of launching cryptos on BNB have resulted in some very speculative assets trading on BNB during the pandemic crash.
One example is Safemoon, which was launched in March 2021. It soared to a market cap of $10.9 billion in May 2021.
But, as with many of these copy-paste tokens, the fall has been just as dramatic. Safemoon has lost 99.9% of its value, trading close to zero, with a market cap of $3.3 million, at the time of writing. Safemoon has also migrated to a new version: SafeMoon V2.
Safemoon has also faced accusations of being a Ponzi scam, with its founders controlling large amounts of the token. It has also been sued for fraud, and celebrities like Jake Paul and Soulja Boy have been involved in an alleged pump-and-dump scheme.
This is a reminder that these new cryptocurrencies can be very risky and it is important to be careful.
With new cryptocurrencies, the code can be vulnerable to attacks from hackers and scammers who can exploit bugs in the code to cheat investors and steal funds, according to Chris Zaknun, CEO of blockchain project launchpad DAO Maker.
He says that investors should check if the code has been audited by a reliable third-party company before investing.
Cryptos Based on Solana
Solana is another blockchain that allows developers to create tokens.
It is also an option that has faster and cheaper transactions than Ethereum. But it also has some drawbacks, as Solana has faced some issues with its stability, with several major disruptions happening.
Despite the challenges, Solana has gained popularity over the last year, with more non-fungible tokens (NFTs), apps and tokens being launched on the blockchain.
Should I Invest in a New Cryptocurrency?
Putting money into new currencies soon after they launch is very risky.
Many cryptocurrencies that are backed by venture capital (VCs) firms use the public launch as an opportunity to sell their tokens and get their money back.
This, along with the weak regulation of crypto and the often unknown identity of the founders, has led to some cases where retail investors are exploited as a source of liquidity. Retailers can end up buying new tokens and then seeing the token price drop sharply as insiders and VCs dump their tokens.
On top of that, the sad truth is that some cryptos are just scams, created in minutes using the methods described above. The founders want to make a quick profit while hiding behind the blockchain’s anonymity.
Watch Out for Crypto Scams
Retail investors can face crypto scams as well.
This is called a “rug pull” in slang, because it happens so often. This is when developers hype up a new cryptocurrency and then “pull the rug” from under the investors and run away with the money.
But sometimes, the opposite can also happen. Even if new cryptos are scams, they can sometimes increase in value before they crash. These are the gains that often make the news and create a “fear of missing out”, even if they are rare.
It should be noted that out of the more than 20,000 cryptocurrencies that exist today, some of them have potential and longevity, even if they are few.
But be warned, this is a risky game to play.
Conclusion:
New cryptocurrencies are constantly being created and launched on various blockchains. Some of these new cryptocurrencies are innovative and promising, while others are risky and scammy. Investors should be careful and do their research before putting their money into any new cryptocurrency. They should also be aware of the trade-offs between different blockchains, such as speed, fees, decentralization and reliability. New cryptocurrencies can offer exciting opportunities, but they also come with high volatility and uncertainty.
FAQs:
Q: How are new cryptocurrencies created?
A: New cryptocurrencies can be created by copying the code of an existing blockchain, by forking an existing blockchain, or by creating a new blockchain from scratch. Some blockchains, such as Ethereum, Binance and Solana, can also host other cryptocurrencies as tokens.
Q: What are some of the popular new cryptocurrencies for 2023?
A: Some of the popular new cryptocurrencies for 2023 are Aptos (APT), a Layer 1 crypto launched by former Meta Platforms employees; Shiba Inu (SHIB), a meme token that rivals Dogecoin (DOGE); The Sandbox (SAND), a metaverse game; and DAI, a stablecoin.
Q: What are some of the risks of investing in new cryptocurrencies?
A: Some of the risks of investing in new cryptocurrencies are hacking, scamming, rug pulling, dumping, regulation, competition and technical issues. Investors should check the credibility, security and audit of the new cryptocurrencies before investing. They should also be prepared for high volatility and price fluctuations.
