it probably isn't (both things)

Put another way, there are too many crappy little news sites, and nothing controlling their proliferation. People read their news where they think they can trust it. Or where the brand is strong.

Which gets back to the original question. If there is no control on the number of crytocurrencies, will we end up with masses of "crappy little news site" equivalents? Or will something (bitcoin or something better) float to the top and keep people engaged?

Maybe bitcoin just becomes a branding exercise. Battling to stay on top of a morass of competition. First mover might help, and might keep it entrenched for a while. Think Microsoft. But it will constantly be under assault if people can come up with something better. Actually that would be a good thing. Good money driving out the less good.

But since there is no central ownership (or so I'm told) who will fund the branding? Maybe the users in an attempt to protect the utility. But equally possible is a competitor currency driven by business people and cryptobankers. Who know how to make it work in a bigger piece of the economy. How to market it. How to work on PR. How to brand it, essentially.

Claiming to know the answer to all this is not really credible. We can only speculate on the outcomes.

I was being deliberately simplistic here, as obviously there are lots of factors affecting currencies on a day to day basis. But over the long run, print more and your currency will get dumped as people switch into (and bid up) others.

Maybe I should have said "existing" or "fiat" currencies to be clear. One that are in use. Obviously if you create one that no one uses it won't affect others. But it there is wealth tied up in it, and that wealth moves away, the value of the currency will fall. Put another way, buyers will pay less to get it and sellers will demand less to sell it.

Think of money like water. It flows between different places. Where it flows determines prices.

Half right, half wrong.

All other currencies affect each other. Print a lot and your currency falls versus the others. Control the supply relative to demand and it stays strong.

Currencies are currently more or less bounded by physical borders and a limited number of countries issuing them. Want to buy a burger in Idaho? Don't show up with Swiss Francs (even though Swiss Francs keep their value much better).

So what happens if you remove all physical border constraints (as with cryptocurrencies), but you also remove all constraints on how many currencies exist or can exist?

I don't think this has ever happened before. We've gone from many small communities with many currencies to progressively fewer countries with fewer currencies (think eurozone for recent, albeit disastrous, example).

Slam it in reverse with no constraints (on borders of numbers of currencies) and I don't think we should presume to know what might happen.

@emansipater

The Swiss dinar example you give is very interesting. Key points are the fixed (slightly falling) supply and wide recognition.

But also the lack of alternatives and (paper) cash economy. I suspect the Kurds have very little access to banking, foreign currency, and especially not internet banking or offshore accounts.

So it looks like a more or less closed system within their territory, with no meaningful monetary competition.

Thanks. I didn't know this on the transaction / security point.

I'll look at the other thing.

My point exactly on actually wanting something.

But let's say you have bitcoins or dollars. Bitcoins are strong and dollars are weak. Why buy your food with bitcoins? Much better to dump your dollars, until you run out.

New countries a rarely created or destroyed. Only after major upheavals. So the numbers of "normal" currencies are in more or less fixed supply, even if the quantity of "notes" of each of them isn't.

Cryptocurrencies can be created on a whim, just like bitcoin was.

So I don't think your analogy works.

NB you'll have more success spreading the word if you don't hack the arms and legs off potential converts.

You just reminded me of a great "Blackadder" episode in series 2, where Lord Percy tries his hand at alchemy.

He succeeds in creating a blob of "purest green".

Thanks.

Thanks this is helpful perspective.

You've just provoked another thought though. If bitcoin is super successful in the crytocurrency space, taking say 90% market share in 10 years time, then it will be time for the antitrust regulators to start getting heavy.

Maybe the technology makes this hard. Maybe the supranationality makes it hard. Maybe the de-centralisation makes it hard. But where there's a will there's usually a way.

Bitcoin hoarding might be an issue as well. Price deflation (measured in bitcoins) would make it a bad decision to ever spend them unless you have no alternative.

Lower transaction volumes would reduce its utility as a form of exchange. Then it becomes more of an investment tool than a transactional tool. Plus it would gravitate towards the hands of a few rich people, as with all forms of wealth since time immemorial.

Who's to say. It would be organic. It will be fascinating to see how it works out. Unfettered libertarian capitalism, for now at least.

A niche would be a "success", but by definition not "huge".

My business targets investors outside the mainstream Wall Street advice. Many would even call themselves "fringe libertarians", including a lot of the people I work with. The guy I share office space with even calls himself an anarchist - basically a libertarian under his definition.

Anyway, it's a very successful niche. But we'll probably never have more than a few thousand customers worldwide.

Some of the stuff circulating about bitcoin seems to point to it replacing all fiat currency and taking over the monetary world. I've learnt quickly that I should ignore that and focus on more realistic aspirations.

@forever-d

Put another way, bitcoin's success could sow the seeds of its ultimate failure.

Copycats and government intervention in other words.

This makes sense.

But if everyone does this then it never gains the network effects to make it successful.

So you still need a lot of people to take the plunge.

Not absolutist, just questioning.

I agree it could well have a niche that lasts for a long time. So not a "complete failure", as you put it.

But there just seem to be good reasons to believe it's unlikely to go mainstream, or be a "huge success".

Yes you might be right. Time will tell.

Bitcoin supply is limited. So far so good.

The supply of alternative, competing cryptocurrencies is unlimited. Very bad.

Imagine a world with dozens or hundreds of competing cryptocurrencies. They would each have minimal value.

Bitcoin doesn't look like a hard currency solution to government money printing. It's the ultimate soft currency.

Bitcoins may have a brief moment in the sun as media coverage inflates a bubble of interest. But I doubt it's sustainable.

I'm sure this simple observation will grate with many of you. Sorry.

Spare me your rants. Share your solutions.

@moa

"we'll agree to disagree"

from a heretic and unbeliever (not just in this particular religion), I'd like to say:

Amen to that

As usual you prejudice leads you down a blind alley. I've been an advocate of gold for 7 years, ever since I started educating myself about the ballooning debt problem and failing financial system. Two years after the gold market bottom maybe, but better than being 6 years early like yourself and the other superhumans.

I have not been dissing bitcoin. Merely asking legitimate questions about how it might work in the real world. It's a pity you think that's negative. This kind of intolerance to the unbelievers is typical of a religious dogma. It makes me more certain that bitcoin is more a philosophy or ideal than a workable solution for the economy.

I don't know much about technology. More than that I don't want to know much about technology. Everyone has their areas of expertise, and that isn't mine. But the vast majority of people don't understand technology. So for bitcoin to become viable it has to gain our trust and understanding. It will need level headed advocates in other words.

What I do know a lot about are finance, business and investing. The sort of things that bitcoin would be used in if it was successful. Perhaps YOU are out of your depth once you get beyond the technical side. Indeed your responses (or rather lack of constructive responses) confirm that.

I didn't expect that kind of blind dogma in this kind of forum, but then, as the folks at Monty Python said, no one expects the Spanish Inquisition.

ah ha!

or maybe 2 splitcoins