The best way to estimate how many cryptocurrencies will survive the infancy period is to look at other markets.
For example, how many social networks survived the infancy period?
Facebook has 63% market share:
If you use a stricter definition of “social network” to mean “feed-based platforms based around personal profiles” Facebook has over 99.8% market share. Google+ and Diaspora are well under 1%.
What about Search Engines? Google has 87% market share.
What about Desktop Operating Systems? Windows has 82%.
What emerges from looking at these and other markets is that network effects lead to a dominant player, a secondary minor player, and about three competitors with marginal market share.
However, if you expand the definition of the market, the picture can change dramatically. For example, if you include mobile device in the “operating systems” market, Android is #1 at 41. Likewise, Facebook’s dominance varies from 60% to 99.8% based on how strictly you define “social network.”
Let’s apply these insights to cryptocurrencies:
A single dominant cryptocurrency is likely to emerge with 90%+ market share. Given the strong network effect of money and the probable lack of nation-state restrictions on adoption (unlike the USD), the dominance may be over 99%.
However, if we expand the market definition to “cryptographic assets” or “digital assets” then we need to include tokens and securities such as Ethereum and ERC20 tokens. This expanded definition may see the leader’s share drop to 60–70%.