Bitcoin Forum

Would it be better for Bitcoin if the alt coin world were saturated with thousands of alt coins or would it hurt it?

Does that solidify Bitcoin more as the main coin or does it dillute it?

It would seem to me that having one or two competing coins would create some competition, but with thousands, alt coins would become something nobody would want to invest in.

Not enough mining power for thousands. They'd be 51%'d in a day.

hierarchical merged mining

A proliferation of altcoins - like we're experiencing now - would just make people actually look at the fundamental value proposition of each altcoin (dev team, soundness of concept, uniqueness of utility, network effects, hashing power, and track record), causing most of them to die as they are sorely deficient in most or all of these. We're in an altcoin bubble right now, where even some random piece of code dropped into the forum anonymously gets investment. That doesn't mean all altcoins will fall, but the vast majority will.

Bitcoin will be unaffected, or maybe helped by the influx of new ideas. Looking at the fundamentals, it is simply undeniable that almost all the altcoins are a joke compared to Bitcoin.

Just like "Million Dollar Homepage", bitcoin is the cat the got the cream.

Yeah sort of. Except MD Homepage is pointless. Bitcoin isn't.

Altcoins that are not 51%ed will definitely be good for Bitcoin.

The network effect would determine if it survives or not. Basically if the free-market decides they are worth securing then it will last and live on.

Does it detract from bitcoin, yes somewhat. But those who are hardcore supporters of bitcoin will just stick with bitcoin.

So ultimately no. Temporarily maybe.

Having a couple of strong alt-coins might have taken some market share from Bitcoin.

But when there is a new alt-coin coming out every week, where someone has just forked bitcoin-qt, tweaked a couple of settings, changed the name, added a different logo; it shows how foolish most of the alt-coin market is.  And only serves to show why Bitcoin is much more valuable than any "alt-coin".

Pretty much, this. The market will decide. Not much we can do anyways, right?

I agree with the poster who said that it will make people begin to actually look at the merits of each altcoin.

I have a position in a few alts and have made some SERIOUS profit off of them but I'm waiting for the coin that actually isn't a copy-pasta of the Satoshi client except replace SHA256 with scrypt. That was a great idea, and there have been a few other decent ideas, but now the market is just flooded with coins that are ALL copy-pastas of bitcoin-qt with a few minor changes. For added amateur impression, they even forget to do a simple search-replace "bitcoin" with "copypastacoin" in the TXT files included in the download package and in the dialogue boxes in the GUI.
You know, something with a protocol specification. No magic numbers, and a strong predisposition against external dependencies. Something with a little innovation. Something with coin control and MofN and other features included that people have been whining for in Bitcoin for a while.

Alt-coin devs need to look at what Bitcoin got wrong, and write a new client with that in mind. Instead what they're doing is coming up with some nice concept, then taking bitcoin-qt and fiddling with it, releasing it as soon as possible to get rich before the next guy comes up with the idea. Again, the fact that some of them even forget to do a search-and-replace is a great indicator of the fail which entails such an operation.

There probably is a need for 1-3 strong alt-coins, utilizing different hashing algos on top of other differentiating features. There is some value in having redundant crypto-currency networks that will survive an attack/bug/unintended feature affecting another. However, there is no value in a scenario where pure copies, like Litecoin & Feathercoin, both survive, since they are for all intents and purposes have near-identical vulnerabilities. In addition, I doubt even with 1-3 strong alt-coins, we will see significant dilution of BTC. For example, I don't foresee LTC ever reaching effective market cap parity with BTC (where 1 BTC = 4 LTC).

Litecoin may become a candidate for one strong alt-coin, but I'm fairly certain the rest of the current lot will fade away.

I think the more alt-coins there are, the less of an effect they will have on Bitcoin. If you look at the current situation it's a joke and indeed it makes even established alt-coins look bad.

I don't see it as a big deal. A thousand is a bit too many undoubtedly.. But a few are good for people who don't wanna deal with fiat lol

Alt coins also represent the bitcoin need for improvement/innovation.Many alts are to be developed yet and -learning from bitcoin/other alts mistakes-  eventually we will see one rising above bitcoin.

Alt-coins are not new. Back in 2011 there was also hype about i0coin, ixcoin, and others I won't even try to remember. Only namecoin kind of survived, because it offers something else than a currency. Although merged mining kind of killed it (you get them "for free" while mining bitcoin so for 99.9% of people they are worthless).

Litecoin may have some value because it actually improves upon bitcoin. But I expect it to follow BTC at best, not overtake it.

All the other clones are useless and their only purpose IMHO is to be an early adopter, mine tens of thousands of them, hype them, pump the price, then dump for profit.

I see a comparison with domain names

BTC is .com
LTC is .net or .org
All the other alt coins are the other new shitty extensions

Due to marketing and network effect, .com remains king despite the infinite number of new extensions

However if .com was the only domain extension, its value would be infinite (like some believe BTC will become)

But because of all the extensions, its value is capped

So to answer OP's question: 1000 altcoins is the same as 10 altcoins, crypto capitalization will be shared between the most popular altcoins depending on hype. Every new altcoin that brings technological innovation and hype will get a share of the crypto cake, but mostly they will get a share of the ALT cake as long as  Bitcoin developpers stay on top of their game.

Altcoins that only bring hype and no technological innovation (feathercoin, etc) will get dumped on the long term.

If you notice an altcoin with a good developping team, expect a quick change in value and possibly a transfer of capitalization from BTC.

I'm not sure how well the "fundamental value" argument works, or rather, if it works, does it work too well? I'll try to address each of the factors you chose to illustrate your point in the list below:

• 1 dev team
  See (2), and:  ECC, being an exact BTC copy, requires no dev. team to get off the ground, by simply reusing BTCs codebase.  Almost 100% parasitic.  This is a huge advantage for ECC.  If ECC gains traction, the dev situation should mirror BTC.
• 2 soundness of concept
  For the sake of simplicity, i'll argue for ExactCopyCoin (from here on ECC), so if the concept behind Bitcoin is sound, so is the concept of ECC.
• 3 uniqueness of utility
  I'm not sure if "uniqueness of utility" is established tech. jargon -- i'll assume it means exactly what it seems to mean.  If so, we can simply drop "uniqueness":  uniqueness of ECC == uniqueness of BTC.  Utility of of BTC is undeniably greater than that of ECC, but the ratio of utility to required investment is likely equal or better (I know "investment" here is vague & hard to quantify -- what i mean is investment in the general sense--time, money, everything one gambles on ECC).  At the outset, utility of BTC was also virtually nil, while initial investment needed to be much more substantial (if nothing else, there was no code base, no proof of concept,etc. -- a whole bunch of things needed to happen before a single BTC could be mined.  With ECC?  Download, build & you're good to go.
• 4 network effects

See (1), and:  Imagine if something like Google started ECC...  Talk about network...

• 5 hashing power
  See (1) and (3)
• 6 track record
  This one's the kicker.  Is BTC's track record enough to guarantee a win over alts?  Even in the long run, when RealBigMoney(tm) decides to jump in the game?  My guess is not if, but when.
  

Alt coin could open my computer up to viruses/trojans if I run it.
https://bitcointalk.org/index.php?topic=42465.0

Crumbcake, uniqueness of utility is compared to other coins, so for ECC it would be zero. The question is what does the new coin offer that Bitcoin doesn't. Litecoin has a little uniqueness since it uses scrypt and a tiny bit more uniqueness because of shorter confirmations and more coins. Namecoin might have quite a bit of uniqueness since it could work for anonymous domain registry, though I don't know if it works well in practice. The other altcoins seem to have either nothing very unique or their concept is unsound (centralized, not scarce, perishable, etc.).

Hi-
In that case, i'm not sure why why "uniqueness = 0" could not be simply written out of the equation.  If i'm reading this right, uniqueness of ECC = 0, while uniqueness of BTC = 0 also (by definition, ECC is a direct ripoff).  In other words, uniqueness value of *any two coins* is always equal.  Even if there's a qualifier for uniqueness, like "positive uniqueness" & "negative uniqueness," the obvious zero value in case of carbon copy (should have gone with that, CCC :D) lets us cross it out as a variable?

It comes down to mining power. Something akin to the "real" financial world is going on. Dollar is on top because US got the biggest share of military power. Bitcoin  is number one because of the hashing power it got and will continue building. Other currencies are irrelevant considering what they got backing them up especially the new ones where its just hype.

But hashing power isn't proportional to user base, is it?  Wouldn't the number of users be more important than the number of miners?  Otherwise, putting more hash power online would assure the rising value of BTC?

THE MOAR YOU KNOW
==============

"The cat that got the cream" is an idiomatic expression equivalent to "early mover advantage". It means the first person to do something has the benefit of being the first.

You're reply makes no sense, unless I had posted:

'Just like "Million Dollar Homepage", bitcoin is a great idea'

...but I didn't.

mining shifts to alt

bitcoin looks scammy by having another thousand clones

noise in exchanges

businesses lose focus on one coin

it is just wtf

Agree, so, what to do ???

Hashing power is proportional to miners not users. Well actually to combined capacity of all miners not the number. Bitcoin has the most, other alt coins combined can't touch it.

And yes Bitcoin also has the most users. If you think that some other coin can muster the amount of users or mining resources than Bitcoin you are dreaming.

That's BS, so far not a single alt coin contained virus/trojans, because it's all open source. A closed source altcoin would face nearly zero adoption.

I wouldn't say "dreaming," i'm not a fan of alt coins.  If they succeed at anything, they succeed at highlighting Bitcoin's fundamental flaws -- flaws that must be downplayed & glossed over if Bitcoin is to survive (on the other hand, these flaws are a non-issue for speculators: there's money to be made in everything, including pyramid schemes -- as long as the timing's right).

Here are a just a few worrisome scenarios:

• Amazon/Google get into crypto currency.  Their size & stability reassure the users & vehicles for increasing userbase are already in place.  Amazon/Google's sheer size is enough to influence gov. regulations, perhaps even creating a new subclass of pseudo-currencies to make Amazon/Google's crypto exempt.
• Bitcoin (rather than all digital currencies) becomes illegal in US/EU.  Other alt coins remain legal.  All hash power is diverted to alt coins.  Nobrainer.

True.  A nice scare tactic, though :D I mean, i have a few *nix boxen, and i've never even considered reading all the source code...

One example:
https://bitcointalk.org/index.php?topic=18514.0

Are you saying "it's possible to write a trojan"?   Of course it is ;D  "Only 2 lines of code"?  Well, if wallet.dat is in it's default dir && you're on a *nix box (Hint: /.bitcoin/wallet.dat), && ????, then sure, those 2 lines work (maybe not, just what I've noticed offhand).  Besides, who cares if it's 2 lines or 2000000? 

Only example how to easy clone Bitcoin then add 2 lines of code (somewhere), and you have new ShitCoins.

No, i agree with you, all i'm saying two or two hundred -- doesn't matter.  just read that thread to the end, and a similar point was already made https://bitcointalk.org/index.php?topic=18514.msg238001#msg238001 (the guy wrote it out as *one* line), so i get to feel foolish for bringing it up.
OTOH, it's not the fear of trojans/viruses that keeps me away from alts.  And there's not much keeping anyone from altering a Bitcoin client?

Fixed that for you

I think all we can do is wait and see.

You can of course be like Don Quixote and try to educate the miners why mining the new scamcoins is bad.

I'm researching mechanisms that would let you "transmute" one cryptocurrency into another, so that bringing (say) one "XTC" into circulation involves taking one BTC out of circulation, and perhaps vice versa.

This "transmute" operation would differ from a normal currency trade, in which both exchanged coins remain spendable.  Ideally, I'd envision a consensus that new alt-coins will only be taken seriously if seeded by such an operation from an existing respected coin, like BTC.

Potential advantages of such a consensus:

1. Removes the incentive to create pure pump-and-dump alt-coins by slightly tweaking the Bitcoin protocol, marketing your coin to drive up the price, and selling your initial hoard (as xorglub said).
2. Prevents dilution of bitcoins by these variations.  Right now each new alt-coin dilutes the cryptocurrency pool, as some BTC owners feel obliged to hedge themselves by shifting some of their stake into the latest CoinOfTheDay.
3. Opens the door to legitimately innovative alt-coins, say one that bakes in a fixed inflation rate, or that prevents the total float from shrinking by reallocating fractions of long-unspent coins to miners.  Right now these honest experiments can get lumped in with the pump-and-dumps.
4. Enables rolling out improvements to Bitcoin that require a new blockchain.  Fanciful example: a mining algorithm whose calculations help cancer research.  This could be rolled out as a "BTC v2", with users migrating gradually without diluting the BTC v1 pool.

There 'd be a lot of details to work out about pros and cons and how to implement the transmute, but first, has anyone seen any past discussion of an operation like this?  Links appreciated!  So far I've found these:

https://en.bitcoin.it/wiki/Contracts#Example_5:_Trading_across_chains (https://en.bitcoin.it/wiki/Contracts#Example_5:_Trading_across_chains)
https://en.bitcoin.it/wiki/Atomic_cross-chain_trading (https://en.bitcoin.it/wiki/Atomic_cross-chain_trading)
https://bitcointalk.org/index.php?topic=91843 (https://bitcointalk.org/index.php?topic=91843)
https://bitcointalk.org/index.php?topic=39777 (https://bitcointalk.org/index.php?topic=39777)

Thanks.

Neil

For anyone interested, I've posted some fleshed-out thoughts on the "transmute" operation in a fresh thread: https://bitcointalk.org/index.php?topic=256544 (https://bitcointalk.org/index.php?topic=256544)

I own BTC, LTC, PPC, and NMC and am looking into XPM.  The rest have very little to offer.  Anything other than BTC is just for diversification anyway for me.

FTFY

While you're wasting electricity with Bitcoin, I'll be dealing with more energy efficient coins such as those that deal with PoS, or those that create a new and innovative PoW system such as eMunie.

This is a battle for mind share and ideas ... the best currency will dominate the competition until the next best use of computing power and monetary properties comes along.

Get your thinking caps on chaps there is a vast panorama of greenfields research and applications in maths, science, engineering, finance and commerce opening up before us ... we are just scratching the surface.