Is competition healthy for Bitcoin?

[Mjbmonetarymetals]

I've been taking a look into litecoin there seems to be a consensus that it would compete for the attention of current Bitcoin users as such its a bad thing, isn't there an argument in favour of having more than one crypto-coin, I would have thought that for anyone that hadn't heard of Bitcoin the idea it wasnt a one trick pony in that there's a few competing coins would add weight to the fact these are the future and here to stay rather than something that looks like a one off ongoing experiment for enthusiastic techies.

Is it likely bit pay etc. could offer checkout in any alt-coin of choice?

[1714021417]

1714021417

[1714021417]

1714021417

[1714021417]

1714021417

[John (John K.)]

IMO, atm Bitcoin is pegged to Mtgox USD, and Litecoin is pegged to Bitcoin.

[Gabi]

Competition is ALWAYS healthy

[Mjbmonetarymetals]

If there is to be 4 times the number of litcoin does that suggest that litecoin may achieve a quarter of bitcoins price, or is that totally dependent on merchants being able to accept both litecoin and Bitcoin and is that impractical?.

[Steve]

Yes, competition is good.  The Bitcoin community should work hard at making Bitcoin as good as it can be to ensure the network effect takes hold and makes it as difficult as possible for an alt-coin to gain market share.  This doesn't mean that an alt-coin would ultimately have to cease to exist, it just means that Bitcoin should capture the bulk of the new adopters of digital currencies such that Bitcoin enjoys a better growth rate (and hence, appreciation in value) than these competitors.  The altcoins could still exist and serve some niche markets.

Is it likely bit pay etc. could offer checkout in any alt-coin of choice?

Yes, but not in the way you think.  Here's some insight into our thought process on this question: Bitcoin is currently the most secure method of electronic payment on the planet.  The network of miners is what provides that security and today it vastly exceeds that of any altcoin.  Bitpay will use the most secure and private payment method available for the actual transaction.  But that doesn't mean you couldn't use Litecoin, you just need a wallet that can automatically exchange Litecoin for Bitcoin just prior to a transaction.  Should something disastrous happen with Bitcoin and Litecoin became the most secure method of payment, we would transition to using Litecoin for the payment mechanism (and then you would need to exchange your Bitcoins for Litecoins just prior to conducting the transaction).

So, when I think about Litecoin (and the other alt coins), I think of it in terms of:
- providing that competitive pressure to Bitcoin that you allude to
- being a contingency solution should something disastrous happen to Bitcoin
- being of some utility for people that might like to have transactions that aren't visible on the Bitcoin blockchain

[franky1]

IMO, atm Bitcoin is pegged to Mtgox USD, and Litecoin is pegged to Bitcoin.

bitcoin is pegged to the mtgox.com dollar price so miners can calculate their electricity costs to ensure profit
litecoin is pegged to the btc-e.com dollar price so miners can calculate their electricity costs to ensure profit
this is proven by the BTC price rise causing the bitcoin/litecoin direct trading prices to drop on btc-e.com, while the litecoin/dollar prices rise. and litecoin enthusiasts are happy, not sad.

Yes, competition is good.  The Bitcoin community should work hard at making Bitcoin as good as it can be to ensure the network effect takes hold and makes it as difficult as possible for an alt-coin to gain market share.  This doesn't mean that an alt-coin would ultimately have to cease to exist, it just means that Bitcoin should capture the bulk of the new adopters of digital currencies such that Bitcoin enjoys a better growth rate (and hence, appreciation in value) than these competitors.  The altcoins could still exist and serve some niche markets.

yet ASICs will make it even harder to grab new adopters to bitcoin. i believe new adopters would use litecoin as their training ground, before investing huge wealth into ASIC's..

Yes, but not in the way you think.  Here's some insight into our thought process on this question: Bitcoin is currently the most secure method of electronic payment on the planet.  The network of miners is what provides that security and today it vastly exceeds that of any altcoin.  Bitpay will use the most secure and private payment method available for the actual transaction.  But that doesn't mean you couldn't use Litecoin, you just need a wallet that can automatically exchange Litecoin for Bitcoin just prior to a transaction.  Should something disastrous happen with Bitcoin and Litecoin became the most secure method of payment, we would transition to using Litecoin for the payment mechanism (and then you would need to exchange your Bitcoins for Litecoins just prior to conducting the transaction).

So, when I think about Litecoin (and the other alt coins), I think of it in terms of:
- providing that competitive pressure to Bitcoin that you allude to
- being a contingency solution should something disastrous happen to Bitcoin
- being of some utility for people that might like to have transactions that aren't visible on the Bitcoin blockchain

those three points i totally agree with.

and seeing as you work for bitpay. Can i just highlight the great PR skills bitpay has to this website just-eat.com and leave it as food for thought. although they do not have USA offices and services, they do have a regional HQ in canada, which should be close enough, and as you will see a wealth of business around the world once you get the foot in the door
 

As for litecoin being competitive or not, litecoin is exactly where bitcoin was when bitcoin was 14months old. its still new, but it is the only alt coin to survive this long without being hard wired to bitcoin (nmc).
many consider bitcoin as a teenager, still young with things to learn, trying out drugs and hacking computers for fun as most teenagers do. litecoin is the step brother who is still just a todler. yes they bicker and fight for attention and they don't have the same dad (satoshi/coblee) but when they grow up, who knows bitcoin could become drug dependant and stick with his drug fuelled ways or change his ways and succeed. and litecoin could either follow the same path, or learn from the step brother and find a different route in lfe.

plus there is an increase of services and people using litecoin everyweek. so watch this space.
http://www.litecoingames.com/
that link is to sway away troll replies that no one is using litecoin for anything else but mining. there are other links, but ill leave the fun of finding them to anyone interested.

[finway]

Competition is good, but i don't think litecoin is competitive.  
Could you tell me about how competitive it is ?

[Mjbmonetarymetals]

Is there a wallet that can make on the fly conversion between LTC and BTC? That makes sense rather than merchant services needing to deliver LTC options.

That's quite interesting, from what your saying a new user should use Bitcoin first and foremost and certainly any interest in litecoin shouldn't come at the expense of Bitcoin.

This certainly might not be what you were indicating , but you mention something disastrous happening to Bitcoin-If wallets could make conversion from BTC - LTC , could an alt. coin act as a back-up or fail safe in a worst case scenario for Bitcoin that was hard wired in whereby all btc could instantly be transferred to the next most used coin. Then just rename it Bitcoin  

[Spaceman_Spiff]

While I think it is good that competition is allowed, I don't think that adoption of litecoin or a number of other bitcoin clones would be a good thing. (If somebody invents a currency that is actually superior to bitcoin in some aspects, and it has its own niche, then sure).

I think my reasoning why this would not be a good thing is probably not very original.  If 2 more or less identical currencies are being used, what is to stop people from using hundreds or thousands of coins.  Since this would only dilute the wealth, in effect the currencies themselves become worthless.

I think in this case "competition" is a word which we are programmed to like, like "freedom", "democracy" etc. .  Just remember that these words that are positive in the majority of the situations can be negative too.  Absolute freedom would give me the freedom to shoot my neighbour without getting punished for it, minorities can be bullied democratically etc.

[Matthew N. Wright]

With the cat is out of the bag and the entire world developing their own digital currencies and payment services, the next few decades will see a currency struggle unlike any in history with private institutions becoming banks and lenders and incorporating technologies such as Ripple through social networks.

Bitcoin will always have a place because speculators (and miners) continue to back it. With the threat of competition inevitable, I'd guess that it'd be time better spent making sure Bitcoin can keep up with it's future competitors. They're coming you know.

In my personal opinion, I used to think alternative currencies as just another money and fame grab for the authors, but in discussing the dynamics I think we absolutely need them. Many aspects of this project are still unproven, and as such we cannot discount the benefits of other project currencies and the wealth of experiences they can bring.

That's just my two cents.

[Mjbmonetarymetals]

It's better to check LTC pricing against USD than Using LTC/BTC. Think btc-e will be offering LTC/GBP soon

It's all really about new users as I would find it hard to believe a Bitcoin enthusiast woud wake up and think I've had enough of Bitcoin I'm moving to (insert alt. coin here).

I do see the point that it's what an alternate offers that woud give it value as I agree an exact photocopy of Bitcoin aka "Bitcoin 2.0" would only dilute bitcoins value.

It's maybe the phrase "litecoin is silver to bitcoins gold" (not sure who coined it) , that caught  my attention.

[markm]

It is useful to be able to store value in bitcoins and use that as collateral to borrow something else to actually spend.

It is a pain having to have that something else lack the convenience of cryptocurrency, thus it is good to have several cryptocurrencies to choose among when picking what to borrow. You are looking for one that is not climbing in value as fast as bitcoins are, basically.

Thus I do not see multiple cryptocurrencies as "competition" so much as "symbiosis" or "enhancement". Using bitcoins as collateral to borrow bitcoins does not seem to make as much sense as borrowing something else, with which if more bitcoins is what you actually want you can then buy more bitcoins. Having to use fiat as that second asset is not as nice as using another cryptocurrency.

-MarkM-

[Spaceman_Spiff]

It is useful to be able to store value in bitcoins and use that as collateral to borrow something else to actually spend.

It is a pain having to have that something else lack the convenience of cryptocurrency, thus it is good to have several cryptocurrencies to choose among when picking what to borrow. You are looking for one that is not climbing in value as fast as bitcoins are, basically.

Why?  Why would you hold currency that doesn't increase in value as fast as bitcoins, even if only for a small amount of time, especially when you can spend your bitcoins just as easily.

[markm]

It is useful to be able to store value in bitcoins and use that as collateral to borrow something else to actually spend.

It is a pain having to have that something else lack the convenience of cryptocurrency, thus it is good to have several cryptocurrencies to choose among when picking what to borrow. You are looking for one that is not climbing in value as fast as bitcoins are, basically.

Why?  Why would you hold currency that doesn't increase in value as fast as bitcoins, even if only for a small amount of time, especially when you can spend your bitcoins just as easily.

Borrow devcoins, buy bitcoins with them, use the bitcoins as more collateral to borrow more devcoins, buy bitcoins with them. When devcoins experience a dip to half or even a third of their value as measured in bitcoins, as has happened lately, snap up the cheap devcoins to pay back the loans.

Basically it makes no sense to borrow the, or one of the, fastest-appreciating assets with which to buy things, if instead you can borrow something that goes up in value slower or even drops in value.

Given that devcoins are now at about a third of the price they were at a few weeks or months ago, while bitcoins have increased maybe 30% or 1/3 in value over the same time, it makes a lot of sense to have been borrowing devcoins to spend instead of spending bitcoins,

When devcoins seem to be about as low as they are going for now would maybe be a great time to buy up a bunch to pay back the loans. This plan was massively profitable for those who did it, compared to spending their bitcoins.

-MarkM-

[misterbigg]

I like freicoin and Litecoin precisely because it allows the discerning cryptocurrency enthusiast to immediately identify who the fools are.

[FreeMoney]

Competition ends up killing almost everything, it is bad for any particular thing at all in the longest run, but competition is certainly good for people/humanity.

[DeathAndTaxes]

It's maybe the phrase "litecoin is silver to bitcoins gold" (not sure who coined it) , that caught  my attention.

Only a fool would latch on to that sound bite.

Silver became "Gold's Silver" simply because of the constraints of physical metal.  It was not efficient to try to use Gold in transactions of modest value.  Bitcoin doesn't have that problem.  Unlike gold where a 0.1 gram coin would have huge cost overheads combined with difficulty in assaying Bitcoin works equally well in transactions of thousands of coins or less than a single Bitcoin.

"Bitcoin is Bitcoin's Silver" is a more accurate soundbite. 

That being said there is potential for alt-coins but the current crop of Bitcoin clones (including LTC) have no improved utility.

The first scenario is that Bitcoin fails and something superior replaces it.  For example after a massive 51% attack the idea of a POS coin (possible POW combined with POS) will be seen as potentially superior.

The second scenario is an alt-coin carving out a profitable niche.  Bitcoin has three major niches where it creates the potential for a superior alternative.  High speed transactions, microtransactions, improve anonymity.  However building a coin around one of these would require real research not just replacing SHA256 with another algorithm.  Also no simply changing the block target time to 60 second or 30 seconds wouldn't acheive much either.  I am talking REAL research, real out of the box thinking, coming out with a comprehensive system to bring VALUE to users.  

[DeathAndTaxes]

Borrow devcoins, buy bitcoins with them, use the bitcoins as more collateral to borrow more devcoins, buy bitcoins with them. When devcoins experience a dip to half or even a third of their value as measured in bitcoins, as has happened lately, snap up the cheap devcoins to pay back the loans.

So greater fool's theory?

Person A has xCoin.
Person B has BTC but would prefer to not spend them.
Person B uses BTC as collateral to borrow xCoin.
When xCoin tanks Person B profits by repaying the loan in devalued coins.

This is a zero sum transaction.  For every % that Person B profits it is at the example of Person A.  Person B only profits because Person A (the greater fool) didn't realize that he could simply sell his xCoin for BTC and even if he wanted xCoin later rebuy them using the BTC which has gone up in value.

It is hardly a strong basis for a currency that it has utility because the holders of the currency are idiots who can be exploited by outsiders.

[franky1]

It's maybe the phrase "litecoin is silver to bitcoins gold" (not sure who coined it) , that caught  my attention.

Only a fool would latch on to that sound bite.

Silver became "Gold's Silver" simply because of the constraints of physical metal.  It was not efficient to try to use Gold in transactions of modest value.  Bitcoin doesn't have that problem.  Unlike gold where a 0.1 gram coin would have huge cost overheads combined with difficulty in assaying Bitcoin works equally well in transactions of thousands of coins or less than a single Bitcoin.

"Bitcoin is Bitcoin's Silver" is a more accurate soundbite.  

That being said there is potential for alt-coins but the current crop of Bitcoin clones (including LTC) have no improved utility.

The first scenario is that Bitcoin fails and something superior replaces it.  For example after a massive 51% attack the idea of a POS coin (possible POW combined with POS) will be seen as potentially superior.

The second scenario is an alt-coin carving out a profitable niche.  Bitcoin has three major niches where it creates the potential for a superior alternative.  High speed transactions, microtransactions, improve anonymity.  However building a coin around one of these would require real research not just replacing SHA256 with another algorithm.  Also no simply changing the block target time to 60 second or 30 seconds wouldn't acheive much either.  I am talking REAL research, real out of the box thinking, coming out with a comprehensive system to bring VALUE to users.  

""Bitcoin is Bitcoin's Silver" is a more accurate soundbite.  " ..... no

bitcoin is bitcoin. its not 2 different elements, just one. bitcoin is gold bars and satoshis are gold coins/nuggets.. both still forms of gold.

the whole gold and silver idea arrived from the term mining... which in itself is where the paradox begins. because people then feel bitcoin is a commodity purely because of the 'mining' term.

in actual fact bitcoin and other crypto-currencies are Assets. not commodities. you cannot eat, drink, melt, bend, or create anything else out of crypto-currency. so it is definitely not a commodity. its more of an Asset like a piece of art. once created i stores value and its only use is for changing ownership, and storing value.

so i said it in another thread.

bitcoin is a van Gough and litecoin is a Picasso. oth fighting for popularity to gain value when trading ownership.

now thats a sound bite more accurate to use

[markm]

Consider someone who has a million or a few million bitcoins sitting arouind, and is thinking of buying a mansion or estate.

If they buy it with bitcoins, chances are a heck of a lot of those bitcoins will jit the markets, suppressing the price, and thus the perceived value to many people, of bitcoins.

Suppose instead they used their bitcoins as collateral for a loan, and bought the mansion with what they borrowed.

Again, chances are whatever they bought the mansion with would end up back on the market. If they use fiat, the fiat market is maybe huge enough that just one less than a hundred million dollar mansion or estate won't make a blip on the market.

But if there were enough alternatives out there so that one could use one(s) that are not as vast markets as the fiat markets, maybe their market(s) might blip, suppressing the price allowing the mansion-buyer to pick back up what they borrowed cheaper than the price is was valued at when they bought the mansion, thus effectively getting them the mansion cheaper than it would have been otherwise.

Meanwhile their bitcoin might be up another 25%, which they would have missed out on if they had parted with them...

A problem this scale reveals of course is that bitcoins are so cheap still that one cannot likely buy more than a few such relatively cheap estates without blipping the market.

(If "why not mortgage the estate itself" comes into it think shiploads of cocaine instead of estates maybe.)

-MarkM-