Bitcoin Forum

of currency? When currency is meant to help for the flow and transfer of goods and services. Seems nonsensical to trade terracoin for primecoin when they essentially are both meant for the same thing. Help me understand

It's the same as trading fiat currency, like EUR to USD for example. Most people would only really do that if they were going on holiday or they wanted to buy something from another country. But, traders can take advantage of the tiny fluctuations in value to make gains. In the crypto world those fluctuations are huge, so smart crypto-traders are increasing their holdings by moving from one currency to another.

The importance of it is to find equilibrium.

Another advantage of multiple, competing currencies is that a market can absorb fluctuations in another market. Imagine, for example, if three months from now a major flaw was found in bitcoin or a severe exploit came to light (nevermind how this would effective screw over many copy-cat alts) that had a severe impact on being able to securely transact; instead of market panic and the collapse of BTC back into fiat, a secondary alt could absorb the panic and provide capital relief while the system was hotpatched.

This is a very crude example, but you get the gist. It doesn't even have to be something so system; competing markets can absorb the everyday ebb and flow, quelling panics and providing stability.