Digital currencies are a classical winner-takes-it-all market. There is not much room for alternatives besides Bitcoin. Also, Bitcoin has a huge lead - an altcoin would have to be fundamentally better than Bitcoin in order to take over. Similarily, TCP and SMTP have both never been replaced by newer protocols. I suspect the same to be the case for Bitcoin.
Also, revising the core of Bitcoin in any significant way will be prove at least as hard as replacing IPv4 with IPv6.
I've been considering buying a Litecoin or two just for the fun of it. I have greater faith in Bitcoin for sure, but unless a technical flaw destroys it, I don't see exactly why Litecoin should disappear.
The whole point of a currency is that it's a universal medium of exchange. On the other hand, most real world payment systems can handle FX between currencies already, so Bitcoin-to-Litecoin shouldn't be too hard.
The point of a currency is that it's an agreed upon medium of exchange, not necessarily a universal one. We're accustomed to dealing with multiple currencies, as you correctly note. None of our currencies have the trait of universal.
It sounds like a proud Bitcoin owner pitching his coin. I think that Litecoin and a few others are already in a good position: http://coinmarketcap.com/.
For one I would think the market cap has to be enormous, to avoid any large entity being able to move the market. Even now with bitcoin at, what, 15 billion dollars? Price can still be swayed 5-10% by a million dollar purchase. Which is what leads people to criticise it for price swings.
Not enough money in the world to support too many networks of the necessary size.
How does that same critique not apply to many of the worlds currencies?
You're talking as if multiple new currencies are not possible when it clear that they are. People who use currencies don't care about the market, they care that products are priced in that currency and are relatively stable.
The market will eventually level out as usage grows, anything new is going to be volatile but there's clearly room for more than one player as long as they're not identical and offer different value propositions then they'll be taken up if only to hedge against the weaknesses of their competitors.
Bitcoin has flaws, it's terrible wasteful of energy as if proof of work were the only possible solution to creating coins. Other coins offer different less wasteful ways of minting new coins, that's going to have a market regardless of bitcoin's success.
I completely disagree. A digital currency is a game design in the clothes of a communication protocol. That is to say, digital currencies are poised to enter an indefinite period of competition and specialization based on the economic properties(rules of the game) that they offer and society's preferences for them; bitcoin is a tiny suggestion of what is possible. We are about to customize capitalism.
Fantastic point, and it's a real shame that there don't appear to be any anthropologists, sociologists, game theorists, psychologists or political scientists advising in the models of any of these coins. The algorithms that underly these currencies are going to have massive impacts on the shape of our society going forward, without proportionate deliberation about their design.
Absolutely this. Gold bugs and Austrians like bitcoin. Keynesians call it deflationary they'll like peercoin better. The math community may prefer primecoin. Namecoin could be the base of the new DNS system as well as many others attracting the tech community. Each will attract people who prefer their rules. Customize capitalism, I like that; totally stealing that.
There will always be a market for altcoins alongside Bitcoin because (a) they can remain completely anonymous and (b) pure cryptocurrency exchanges that do not engage in trades for fiat currency provide an indirect avenue for trading in and out of official fiat currencies, via Bitcoin. With KYC and AML attaching themselves heavily to most Bitcoin exchange services, people will trade into or out of Bitcoin non-anonymously, and they'll trade their Bitcoins anonymously for another cryptocurrency. Those cryptocurrencies will then by used for illegal purposes and it'll be very difficult to prevent that value from being laundered back into legitimate currency because the exchange between different cryptocurrencies can't be effectively policed, especially once distributed exchanges get off the ground. In my mind, because of this, the whole field of KYC/AML restrictions being forced onto Bitcoin will ultimately fail or at least be extremely easy to circumvent, as long as altcoins exist.
Comparing a cryptocurrency to the network stack doesn't make any sense. You are cherry picking out of one layer of the network stack to make a weak ad hominem argument to support a bandwagon effect bias. Regardless, your argument is flawed by the fact TCP and UDP traffic are about equal on the Internet. That's two protocols at your chosen network layer, each doing what they are good at.
Note: SHA-256 and scrypt are the building blocks of most cryptocurrencies. SHA-256 is to UDP as scrypt is to TCP? Dunno.
Interesting. If it's true Bitcoin will be replaced by another algorithm, then Bitcoin does not make much sense to hold. It would then be true that Bitcoin is a tool to facilitate real currency transactions.
Since all of these are fluid and electronic, it wouldn't take very much for someone like bitpay to write a coin-agnostic API that interfaces with multiple cryptocurrencies.
That's not what he said. Fixed supply means deflation, regardless of how many units exist as long as population and economies grow. Economists generally consider deflation a very bad thing that kills economic growth and creates artificial recessions.
Also, revising the core of Bitcoin in any significant way will be prove at least as hard as replacing IPv4 with IPv6.