Yes, it would be a huge security risk as eventually it would be so easy to generate a block that someone could generate multiple blocks at one time with their phone and double spend money.

Also there would be many more forks of the blockchain as multiple people would generate blocks at the same time and the network would have to figure out which is correct. This would result it lots of invalidated transactions. Business would have to wait even longer for the blockchain stabilize before accepting payment because they wouldn't be able to trust that a transaction is valid just because it's in a mined block.

Finally bitcoin would experience inflation at increasingly higher rates.

In short, it would be a disaster and completely kill bitcoin.

I have three problems with investing in bitcoins. Maybe someone can sooth my concerns.

1) I understand that bitcoins are limited in number. However anybody can make an alternative cryptocurrency (like litecoin). At the moment bitcoin is the most liquid as it is supported by all exchanges (like mtgox). However once mtgox supports litecoin it will become just as liquid. As it has the same functionality why wouldnt speculators pour into the "cheaper" litecoins once they can be easily bought over mtgox. Also why wouldnt miners start mining more litecoins, when it becomes more profitable than bitcoins. Lastly once the price is bid up, why wouldnt stores also accept litecoins.
Therefore a potentially unlimited number of cryptocurrency could be competing for available purchasing power. I understand the concept of first to market, however once litecoins or other good cryptocurrencies become as easily tradeable (over metgox) as bitcoin wont speculators speculate on them becoming as valuable as bitcoin. Why would the first to market concept and networking effect stop this dynamic.

2) Once bitcoin becomes a generally accepted medium of exchange, wont governments make it illegal to trade bitcoins with prison sentences waiting for anyone who tries. Wont this cause bitcoin to collapse in value.

3) There is always the possiblity that a better, more innovative cryptocurrency comes to market leaving my bitcoins worthless.

Diclosure: I own a substantial position in silver miners and like gold as well as silver. I am a follower of austrian school of economics. I hate fiat currencies and maybe want to buy some bitcoins in case they overtake gold as a medium of exchange. However I still have the concerns mentioned above.

    Obviously, these days are not here yet and it leaves me to ponder this question, did the well conceived, concerted Ddos effort to quash the exchanges abilities to cater to the needs of new buyers occur in order to deliberately devalue the BTC and cause it to slide out of public favor and, was the source of these attacks not so much 'rogue' forces attempting to deliberately manipulate markets to make for themselves a shady profit, but some high level hacking by those administrations within the G8 who saw the potential for the BTC as a new alternate currency over which they had no real power?
   Perhaps inside the TOR network might be the safest place to put the next 'Mt.Gox'? That is, if the major banks of the world (in partnership with the G8 and under a contract with clauses where the ownership of BTC is regulated to include full and open disclosure to those governing bodies of the identities of those who are purchasing BTC and also with the inclusion of equally mandatory, conditional requirement to allow the tracking of the detailed market movements of every BTC)
   I wonder if they aren't already arming their IT departments amd the world's largest supercomputer to assist in vending the BTC as the future 'media ordained' 'safe' brokers and take full advantage for themselves of this inevitable slide away from the world's ever crumbling hard currencies?