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As many of you know, there have been much development in the alternative cryptocurrency market since Bitcoin with recent advent of i0coin, ixcoin, and etc (along with existing alternative like namecoin). One of the current issues with Bitcoin is that there may be too much mining and its supporting market (merchants who accept bitcoin, silk road, and other good and service) is not growing fast enough. With more and more people generating Bitcoins and not enough exchange for the value of bitcoin to grow, mining of Bitcoin will soon become unprofitable due to greater difficulty and rising energy costs. While some may argue that this may increase the value of Bitcoin because less is being generated, if this happens too soon (especially before there is a good support market to buffer its effect) it will be devastating for Bitcoin. Do not understand the finicky nature of people, if this scenario were to happen people will lose interest in Bitcoin which would be the worst thing to happen for the market. The growing interest of bitcoin as well as speculation of its future worth is essentially what it is keeping Bitcoin at its current value today but the growth of bitcoin needs to be maintained at a relatively steady pace.
So here is my proposal:
I would like developers knowledgeable in cryptocurrency to create new alternative cryptocurrency (call it iacoin, scamcoin, crapcoin, or whatever you like) and introduce it to the market along with supporting currency exchanges with bitcoin (like mt gox, ruxum, and tradehill). Of course, people should NOT release new cryptocurrencies often but maybe roll out the new currencies every 2 or 3 months in order to allow time for people to generate interest & hype, fueled by speculation as well as greed to make some quick money by being an early adopter to mining the new currency. People will proceed to mine the new currency until it becomes unprofitable or lose interest and move on to the next shiny new thing.
What's the benefit?
The biggest benefit is that it will slow down the new generation of Bitcoin. Early adopters of the new currency will use their mining power to generate new currencies as oppose to flooding the saturated pools of bitcoin mining. This is huge because slowing down bitcoin generation gives time for the market to grow: giving time for merchants to consider accepting Bitcoins for goods and services, allowing late adopters a chance to get into the bitcoin market , and giving time for graphic card hardware manufacturers to create new more powerful/efficient gpus to support the growing difficulty of mining.
The 2nd benefit is that the new currencies will essentially be a commodity supporting the bitcoin market by what really amount to printing money to grow the economy. By having safe currencies exchanges like mt gox, ruxum and tradehill support the exchange "new currency" to BTC, there will allows be a constant exchange of buying and selling as oppose to miners hoarding Bitcoin with the idea that it may hypothetically grow in value despite the fact that there need to be a buyer willing to pay that high price for a bitcoin. Its like game fuel by speculation and greed in which new adopters believe the "new currency" will surpass Bitcoin in the future and they want to hoard as much of it as they can when the price is still low. In reality, many of the new currency will die out as people lose interest and/or realize their "new currency" is worthless. I kinda view it like investing my money in stocks of a new company: you many get an APPLE, or a ENRON.
So how would it benefit developers? Well, they could be unscrupulous and before official release mine the first 1000 blocks for themselves or do it to support bitcoin. It doesn't really matter.
Conclusion
So there's my proposal. Why write this? I did it to mock the ridiculous recent release of currencies like i0coin and ixcoin and the growing buzz around them. However, I don't think this is such a crazy idea. After all, do not underestimate the stupidity of people. Let me know what you think in the comments.
"Only two things are infinite, the universe and human stupidity, and I'm not sure about the former." - Albert Einstein
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