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December 22, 2013, 04:25:14 PM |
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Even though I mine altcoins, I really think the proliferation of alt-coins is bad for Bitcoin and the eco-system in general. Any value stored in altcoins is essentially an inflation on digital currencies as a whole, as the price of the dominant digital currency (BTC right now) is dictated by the supply and demand, so alt-coins are effectively a way to increase supply beyond the original mechanism BTC introduced. Of course, this all hinges on people believing they are valuable - much like any currency.
In the end, I think it's best if we have one dominant currency which has a reasonable distribution across the user base. Right now, due to the nature of the mining/difficulty process, all of the digital currencies tend to have skewed distributions where a very small number of users hold most of the coins. (This is the primary reason we see alt-coins created every day - launching a coin puts you in a profitable position). This trend will likely increase with the life of a currency, just as it has with USD (which is majority held by a small number of people), unless some form of redistribution system is added, such as a progressive tax (coin rot?). But that presents a major issue, since no one would move from BTC to something else if such a system was added. So, unless there is a compelling reason not to - I suspect we will see the continued launch of alt-coins, and if those alt-coins become somewhat successful (as LTC has), they will act as an inflationary mechanic on the dominant coin.
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