There are now four times as many cryptocurrencies in circulation as fiat currencies.

That's amazing. And encouraging.

According to the Swiss Association for Standardization, which maintains the International Standards Organization database, there are 177national currencies currently in use. That list generously includes four precious-metals and four bond-market units (codes XBA to XBD, for the curious).

Number of digital currencies

753

TheCoinMarketCapwebsite lists 753 cryptocurrencies, all the way from Bitcoin and Ethereum down to StrongHands and Paccoin (current value: $0.00000014).

With a retired basketball star promoting one such incarnation -- tied to marijuana -- on a recent trip to a repressive Asian nation lying to the north of South Korea, I'm tempted to call Peak Crypto.

But let's not kid ourselves: The madness is far from over. Bitcoin skeptics have been eating their words ever since the leading digital currency reached $1,000. January seems like such a long time ago now that Bitcoin is trading above $2,700.

Bruised Bears

Betting against Bitcoin when it reached $1,000 would have been a costly mistake

Source: Bloomberg

Although Bitcoin has climbed 300 percent in the past 12 months,giving its "coins" in circulation a value of $45 billion, Satoshi Nakamoto's brainchild is actually declining in relative importance. From more than 95 percent in late 2013, Bitcoin now accounts for 39 percent of the value of all cryptocurrency in circulation. Ethereum has caught up fast, from 3.9 percent at the start of the year to 31 percent of the total now, according to CoinMarketCap. Ripple is inthird place at around 8.8 percent after briefly overtaking Ethereum last month.

Virtual Value

Bitcoins in circulation are now worth more than $45 billion with Ethereum close behind

Source: CoinMarketCap

The other 20 percent of cryptocurrency value is unevenly distributed among the 750 wannabes alonga very long tail. It's possible some will rise to a level of legitimacy that will make them viable in the long term. Many are betting not on mass uptakebut on niche acceptance -- one pitches itself as thepayments platform for online games;another limits the amount of coinsto the number of kilometers between Earth and its moon; one seeks to be the official currency of a fictitious nation.

Market Force

Bitcoin remains the world's biggest cryptocurrency, but its dominance has waned

Source: CoinMarketCap

Yet Bitcoin itself remains so nichethat the WannaCry hackers reaped a minuscule harvestafter infecting more than 200,000 computers, because they insisted on being paid in the cryptocurrency.

Just because the boom is ridiculous doesn't mean it lacksmomentum -- it just tells you that consolidation also is inevitable. Not in the traditional M&A sense, but in the way that messenger apps like AIM,ICQ, Yahoo and MSN quietly gave way to WhatsApp and WeChat, which then led to the ubiquity of instant-messagingtechnology.

Morgan Stanley posited last week that government acceptance will be key to Bitcoin's continued rise, with the flipside being some kind of regulation of the currency. That's probably right, and if proponents of cryptocurrencies think they'll achieve widespread uptake without a nod from the authorities, they're probably smoking something.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story: Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story: Paul Sillitoe at psillitoe@bloomberg.net

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Getting High on Cryptocurrencies - Bloomberg Gadfly - Bloomberg