Looking ahead to potential market competition between current and future cryptocurrencies, an adapting traditional payment-processing market, internal and external security threats, and legal issues regarding Bitcoin, an in-depth analysis would be beneficial to potential adopters when determining strength, stability, and other risks of investment. If someone could direct me to conclusive research, that would be awesome.
Some Discussion...Competition of Alternate Cryptocurrencies:From what I understand, which is technically very little, Bitcoin's hashing algorithm was not chosen with CPU processing in mind, but instead for security. That being said, Litecoin's hashing algorithm (scrypt?) WAS chosen for having CPU-friendly qualities? Which leads me to ask: Having been developed for traditional CPU processing and thus not using the most secure form of cryptography, is Litecoin not as robust and secure as Bitcoin? I would imagine, if true, this would make it considerably less competitive.
So... In this new open source market where ideas lack ownership, will Bitcoin maintain a monopoly on the market, having the right and capability of integrating all of the best aspects of current and future cryptocurrencies? Will Bitcoin, being the first and current best, continue to adapt and evolve to keep ahead, leaving competition to act as a foundation for further implementations?
If not, does anyone else believe that there are other cryptocurrencies which are fundamentally better than Bitcoin?
Traditional Markets:Certain payment processors are running transactions cheaper than say, BitPays 2.69%. Sure their costs against fraud are huge, and global-transfer limitations allow for a negligible threat of competition in this regard, but cheap innovative services like squareup.com can be very competitive in local markets. I'm not entirely worried about this threat though, but am curious if anyone else believes this area could be competitive still. I'm sure you guys have a lot more to say than I do about this.
On the other hand, I believe this what-could-be-massive transfer of wealth we are pulling here will not go down unnoticed, and without some fighting from the existing powers that be. I'm not exactly sure how Bitcoin would face threats against this front, so maybe you guys have some thoughts on this as well.
Internal/External Security Issues:"Difficulty is intended as an automatic stabilizer allowing mining for bitcoins to remain only minimally profitable in the long run for the most efficient miners, independently of the fluctuations in demand of bitcoin in relation to other currencies." -
http://en.wikipedia.org/wiki/Bitcoin#Mining_difficultyI'm not worried about a 51% take-over. I'm worried about double-spend issues hindering the growth and adoption of Bitcoin, when transaction verification should be trending towards instantaneous, opposed to every 10 minutes, and a general slow-down in the network hash-rate creeps in as a growing divergence between Difficulty and Mining Revenues increases; possibly as coin-rewards drop and mining revenues are increasingly derived from fee's.
Can the Bitcoin network really sustain
trillions billions of transactions per day?
http://www.gfmag.com/tools/global-database/economic-data/12058-payments-volumes-worldwide.html#axzz2IxBZysD7I would imagine, at the very least, the internal trading of emerging Bitcoin financial institutions (private companies, banks, institutions, exchanges, the Paypal's of bitcoin, etc) will develop as they are implemented, relieving much of the burden upon the public mining network, and reducing many double-spend issues as lump-sum inter-bank transactions make up a larger portion of the Bitcoin network's transactions. Effectively, these new private networks will help to reduce mining fee's in the future, which I believe will rise, by bulking their internal-transactions up before sending them off to the what-will-be-massive mining network, who's main responsibilities will become more similar to today's clearing houses. This overall development would help to sustain hash-rates, keep transactions fast, and transaction fee's competitive.
http://blog.bitpay.com/2013/01/bitpay-surpasses-10000-bitcoin-merchant.html?m=1You guys most likely have better visions of Bitcoin than this, theories of the future that actually have futuristic technologies - that I have no idea about. I'd like to hear 'em.
Either way, why is it every 10 minutes for a block? Why not every 5 minutes? Why every 2016 blocks for Difficulty (I know its two weeks at 10 min)? Why not every 1008 blocks? Maybe evaluating the change in Difficulty at a weekly rate would be a better idea economically? Or how about a self-regulating algorithm to determine the best timing of Difficulty adjustments? Perhaps an automatic adjustment if the hash-rate deviates by 1.6180% from a moving average? Who knows, in the future, little things like this may be important.
Legal threats:Currently, Bitcoin does not have any legal status in most jurisdictions, as they say. Therefore, it has no legal threats in any direct way. Bitcoin related ventures being a different beast - which governments seem to enjoy poking at.
I'm curious what you guys have to say on this one too. Think we'll face issues in the future? I think I read somewhere that England may have already stated that Bitcoin was perfectly legal. Regardless, do you guys think they may come to regret that statement? I have a feeling the Bank of England might...
Ahhhhhhhhh!
