For one thing a government sponsored cryptocurrency would be scalable.

No government would ever issue a currency able to sustain only seven transactions per second.

Bitcoin can never become mainstream while able to handle less than a thousand transactions per second. 

If Bitcoin becomes any more mainstream than it is now, then mainstream investors will attempt to use it.

I mean, USE it, in its capacity as a financial network rather than as a speculative vehicle.

If this were to happen today, it would be disastrous.  Bitcoin is at this time nearly useless as a financial network, because it is still limited to less than a thousand transactions per second.

If mainstream investors attempt to use it as a financial network, this weakness will be exposed, and its value even as a speculative vehicle will collapse.

I would not classify Bitcoin as a derivative.  A derivative derives its value from something else -- wheat, soy, metal, oil, whatever.  Bitcoin does not.  Its value depends not on the value of some other commodity, but on the value of Bitcoin itself.  Which makes it something of a misfit among derivatives.  I agree with you that the derivative markets are probably best equipped to deal in it right now though, and the pattern of trades it shows so far is very similar to the patterns shown by derivative trading.

Insofar as I have bought stocks, I am no "big fish;" I own a portfolio of stocks about equal to the value of my home. I have traded on the basis of investment rather than speculation, as I do not typically hold any stocks I buy for less than five years, and I do insist on buying stocks that actually pay dividends.  So the 'currency speculation market' that dominates Bitcoin trading is a completely new experience for me.  I invested in Bitcoin because I believe it is the best solution so far proposed to International Internet commerce and has an advantage on its merits over traditional finance networks.  It moves money around the world quickly, efficiently, and cheaply. 

But it is not yet a mainstream way of doing that.  Furthermore, its scaling issues will not allow it to become a mainstream way of doing that.  A limit of seven transactions per second is laughable when compared to the number of tx per second a mainstream financial network has to process.  So that is the major technology risk as I see it;  I bought Bitcoin believing that the devs would work hard, and well before now, to fix the scalability problem.  So far, they have not.  The value of Bitcoin has not been driven by its use as a financial network, because it is still useless as a financial network.   Its value has been driven by currency speculators, and is now well above the mark at which I'd have bought (late in 2012) if I had known that at the beginning of 2014 the network would still not be able to handle at least a thousand tx per second. 

So, right now, the lack of development on the scalability front is making me worry a lot.  If that does not get fixed, and fairly soon, I believe the value of Bitcoin cannot be sustained at the current level.  It is attracting some mainstream speculator attention now, but when stock and bond traders are aware of it they will attempt to use it as a financial network and that is a whole different game.  If at that time they still cannot, they will discover that they cannot and the value sustained by speculation will be shown to be unjustified.  At that point, even if Bitcoin develops a scalability solution it won't help.  It will be dismissed in the minds of people who would like to use it as a financial network until long after its first mover advantage is lost. 

So, it should be no harder to spend than any other transaction you don't have the key for.   

Just find the corresponding private key and you're golden.

Glad to hear it.  :-)  As I said, I wasn't sure.  Sorry to be passing on rumors.

Also, it's good to know that I need to pay close attention when I'm doing things that depend closely on time in some altcoin code I'm working on.  I'm considering it completely reasonable that two computers whose clocks disagree by more than about ten seconds should not be able to peer with one another.  And if you do get a 'cannot peer due to time difference' error that should trigger a query to public nntp servers to check the offset from system time. 

I'm very interested in this blockchain parser.  When you're done I hope you don't mind letting others download and use it.

NXT is a departure from traditional cryptocurrency in several ways. 

1.  There is no mining for new coins.  New coins are awarded probabilistically according to the amount of coins you already have.  It's like getting interest at unpredictable intervals, adding up to an "average" that's fairly consistent.

2.  There is no way for a person who does not have coins to get coins.  The only ways in are to have gotten them in the preannounce period, get them from a faucet, buy them from someone else, or steal them.

3.  It is not based on Bitcoin sources.  The source code is a completely new implementation, and is rumored to be in Java and PHP.  Also, it is not available to the public yet, although several people have disassembled the publicly available JARs for the client.  It is claimed that the sources will be available on Jan 2 2014.  I am curious to discover whether this is true, and if it is, whether it contains security flaws that someone will immediately exploit. 

4.  It is not a full peer-to-peer network.  There is a central server without which the entire system does not function.

5.  The majority of NXT is held by the 75 or so people who got them during the preannounce period.

6.  Because the code has not been reviewed much, it is not clear whether there is any anonymity at all, or whether transactions are unlinkable.

Yeah, it's a bit of a mess.

Bitcoin protocol has allowed people whose clocks disagree by up to two hours to participate in the network.  I suppose the idea may have been something to do with clocks disagreeing until people reset them at daylight saving time transitions.

And some folks have tried to take advantage of that one way and another -- I think that at one time it may have been advantageous for miners to have their clocks set differently from the rest of the network or something a bit crazy like that.

So, yes, you're going to get a few later blocks that are timestamped earlier than the blocks they come after.  It didn't really happen that way of course; it just looks like it because some of the people had their clocks set wrong.

Personally I think that was a mistake.  If someone can't be bothered to keep her computer's clock set right, then kick her off the network. 

I'm someone who still believes in things being superior on merits eventually winning. 

An altcoin will overtake bitcoin (eventually) if an altcoin is superior in a few crucial ways:

1) price stability
2) flatter distribution -- there's a lot of distrust of early miners who have gigantic amounts of coins.
3) dispelling fears about coins whose keys may or may not be lost (and the potential impact on markets if they are suddenly for sale)
4) Better Dev Team (speed and quality)
5) Faster transaction confirmation
6) Cheaper transaction processing
7) Better Scalability
New Functionality
9) Better Privacy
10) Cooler interface
11) Better Security (integration with dedicated security devices like fingerprint readers or hardware wallets?)
12) Better Fiscal/Economic planning/insight.
13) A hard exchange promise for another fungible commodity such as the one BeerCoin attempted. 

I mean, if someone does any three and makes a good case for them, and then is just there working on it day after day for a few years making it work and continuing it, and I think a new alt could overtake Bitcoin.

Now, whether you can make a living wage doing that, or even avoid bankruptcy if you invest too much in it, is another exercise all together.

The reason why altcoins are a good idea is that some of them bring innovations. 

Some altcoin creators are designing something to address perceived flaws or weaknesses in extant cryptocurrencies, and as time goes on we can expect the technology to be refined.   

Some altcoin creators are just putting up a me-too to see if they can get as rich as Satoshi.  (hint; they can't.  Satoshi was an innovator)

I think I agree that the way Bitcoin is structured it must eventually become centralized, and that centralization will be the end of the era of bitcoin as we knew it.  Once centralized, it will inevitably be controlled by governments.  Once controlled by governments, it will inevitably become just a payment network for fiat currency.  If its structure did not favor centralization, we would not have mining pools in the first place.  

That is sad, but it's not going to happen immediately.  In order to prevent it we would need a fundamentally different reward structure and means of securing the block chain.  But we're not going to get that in Bitcoin.

Also, we shan't have to wait 127 years for the end of mining.  You said it yourself; the reward is halved every four years.  That means that it goes from 25 to 12.5 to 6.25 to 3.125 to 1.6  in just 5 halvings, or 20 years.  In another 5 halvings, forty years from now, it'll be less than 0.025 BTC, which is close enough to zero that it doesn't really matter after that.  Mining, insofar as it continues to be relevant given the threat of centralization and takeover by governments, will sink or swim on fee support in our lifetimes, not those of our descendants.

When I think of guns I think of hunting arms.  Yes, made for killing, but somehow I had just never connected the "killing PEOPLE" thing with guns until I ran into it in adulthood.  To me it seems flatly insane to even consider aiming a gun at a person, and I can't imagine owning one specifically for that purpose.  But this may be because I grew up between the boondocks and the sky in a place where violent crime and the need for violent self-defense  was practically unknown but everybody had a few shotguns for bird hunting, a few big rifles for deer hunting, a few small rifles for small game hunting, a little pistol for barn varmints, a big pistol for walks in bear country, etc... 

Now I live in a large city, and the *PRIMARY* purpose of firearms as considered around here involves the potential of using them against people.  I find that more than a little disturbing, and simply don't own firearms anymore because I no longer have land on which to hunt.  A few years ago someone broke into my house in the middle of the night and I overhanded a bowling ball at him.  Knocked him down, broke a couple of ribs, incapacitated him until the police arrived.  He did manage to break a marble tabletop with his head when he went down, but that's acceptable losses.  Bowling balls are as effective as a gun at the kind of ranges you need for home defense, and much less legal trouble. 

Folks in the San Francisco bay area (the San Francisco that's in the USA, not the one in Argentina) are now putting up a few dozen billboards to promote awareness of Bitcoin.

I think this is the first all-the-way to the mainstream publicity campaign I remember.  It'll be interesting to watch the effects.

http://www.coindesk.com/arisebitcoin-40-bitcoin-billboards-san-francisco-bay-area/

Kansas City would be another good spot to get such a campaign; it's a major hub for big money (KC does insurance companies the way NYC does banks) but usually about 3 years behind on hot trends. I bet the message would reach more people who haven't heard of it there.

OTOH, SF has a different attitude toward technology.  They've got no exclusive on being tech-savvy, but I think the SF bay area culture (especially the SF people who have a lot of money) *trusts* technology a hell of a lot more than the KC old-money network.  Big bucks will probably move more easily in SF.

Just a note:  A top-level goldman-sachs exec is now part of the board of the Bitcoin startup circle.

http://www.coindesk.com/goldman-sachs-director-board-bitcoin-startup-circle/

I may have figured it out.  At least I know someone who had the motivation, skills, and time to have made it, had no need for all the money Satoshi hasn't spent, and who also had a good reason to withdraw from the community when Satoshi did.  But there's no proof, and I'm not motivated to share my speculations.

To me a cryptocurrency is a trading medium with a complete and public record of transactions that is cryptographically secured against retroactive alteration or tampering.  The complete and public record must allow people to check it with trustable software (ie, they can see the source code) to test the validity of transactions and to make sure that they are seeing the same version of the record that other users are seeing. In the case of Bitcoin these validity conditions include money supply limitations, coinbase transactions, transaction outputs no greater than inputs, etc.  In the case of some other cryptocurrency the validity conditions could be different.

For example if someone wanted to issue a cryptocurrency carrying a promise that you could use one unit of that currency to buy a gram of gold from her on demand, then the validity conditions you'd be checking , aside from the conventional restrictions on individual transactions, would include that no one else besides her is issuing new coins, and that a monthly audit by some third party assayer continues to find enough gold in her vault to sell on demand to all holders.  It wouldn't be decentralized, nor completely trustless the way Bitcoin is, but it would be a cryptocurrency.  If the transaction record were updated in a decentralized way as Bitcoin's blockchain is, then people could go on trading with it even if the issuer takes her server offline completely.  She'd only have to connect to the network once in a while to announce sales of gold (destruction of the currency) or creation of new units of currency (with evidence of acquisition of corresponding gold for the vault).