Is competition healthy for Bitcoin?

[JoelKatz]

Well, this would make the telephone calls extremely valuable

I have yet to hear this theory articulated by anyone who doesn't have a conflict of interests in this area. Nor has anyone ever been able to give me an example in the real world where making a service deliberately less useful causes its value to increase.

I think we must be talking past each other. I certainly don't think that making a service less useful will increase its value.

Say there was a drastic car shortage and the price of cars went up to $100,000. There are some people who need a car badly enough that they'll pay $100,000 for one. Thus, the price/value of a car will go up. However, the total value of all cars will go down. And, of course, the car market will be vulnerable because cars will be overpriced -- any substitute for a car could take a huge chunk of the market very quickly.

This is "good" in two ways. Anyone who needs a car badly enough will still get one and the price of cars will go way up. But this will make the market as a whole vulnerable.

[MarlboroMan]

Honestly Litecoin is ridiculous, Its no better then Bitcoin and just something that will sidetrack the Bitcoin economy. Im sure the creator is sitting on Billions of Litecoins so if the price does ever achieve something hes a millionare.

[smoothie]

Honestly Litecoin is ridiculous, Its no better then Bitcoin and just something that will sidetrack the Bitcoin economy. Im sure the creator is sitting on Billions of Litecoins so if the price does ever achieve something hes a millionare.

Gosh you LTC haters need new material that has facts.

LTC is better in that it is FASTER. I hate having to wait 1 hour to send coins. Litecoin is super fast. go get a cup of coffee come back and its transferred.

In the technological arena...faster has value...more than you might think.

[JoelKatz]

LTC is better in that it is FASTER. I hate having to wait 1 hour to send coins. Litecoin is super fast. go get a cup of coffee come back and its transferred.

It is not faster. This is a myth.

The reason you wait 1 hour is because you want to make sure there are sufficient computations behind your transaction that the chance of it being reverted is low. If you want the same security with Litecoin, you need the same number of computations, not the same number of confirmations. That is, it takes just as long (assuming the hash rate is the same, long if it's less).

[JoelKatz]

Aren't you confusing 2 different concepts?
Sure, an attack on the network could orphan an hour's worth of transactions.
But normal orphaning (due to questionable non-clocked, non-deterministic design choices of both LTC and BTC) seems much more likely.

You can't just defend against the most likely threats. If you make a habit of that, the less likely threats will suddenly start happening an awful lot more. You might get away with it for awhile, but I wouldn't suggest it.

You need sufficient hashing power after your transaction, not some magic number of confirmations. Some crypto-currencies dishonestly and deceptively promote "faster confirmations" as if that meant your could rely on a transaction sooner. In fact, it just means you need more confirmations to acquire sufficient proof of work after your transaction to secure it.

[Mjbmonetarymetals]

Litecoin wiki - bad news for Bitcoin ? - interesting video ?

http://financialsurvivalnetwork.com/2013/03/bitcoin-calls-litecoin-a-pyramid-scheme/?utm_source=rss&utm_medium=rss&utm_campaign=bitcoin-calls-litecoin-a-pyramid-scheme

[Walter Rothbard]

LTC is better in that it is FASTER. I hate having to wait 1 hour to send coins. Litecoin is super fast. go get a cup of coffee come back and its transferred.

It is not faster. This is a myth.

The reason you wait 1 hour is because you want to make sure there are sufficient computations behind your transaction that the chance of it being reverted is low. If you want the same security with Litecoin, you need the same number of computations, not the same number of confirmations. That is, it takes just as long (assuming the hash rate is the same, long if it's less).

Thank you for pointing this out.  I have been quietly thinking that this is an issue for several alternative cryptocurrencies (including my preference, TerraCoin).  I notice that some processors wait for more confirmations in TRC than they would for BTC, and I assume that is because they are aware of this issue.

[smoothie]

LTC is better in that it is FASTER. I hate having to wait 1 hour to send coins. Litecoin is super fast. go get a cup of coffee come back and its transferred.

It is not faster. This is a myth.

The reason you wait 1 hour is because you want to make sure there are sufficient computations behind your transaction that the chance of it being reverted is low. If you want the same security with Litecoin, you need the same number of computations, not the same number of confirmations. That is, it takes just as long (assuming the hash rate is the same, long if it's less).

Who is to say how much time to "secure" a transaction is SUFFICIENT? You? I think not.

So my coins getting transferred to and from the exchange is a myth? No buddy, I disagree, it is reality.

I would rather put my faith in a less secure (lower hash rate) network that is decentralized as opposed to something that is centralized in currency creation like RIPPLE.

Litecoin > Ripple

I refuse to trust one single entity in the currency creation process. I may as well just use the Federal Reserve system if I wanted that.

READ MORE: Why Ripple is a scam -----> https://bitcointalk.org/index.php?topic=147789.msg1574024#msg1574024

[JoelKatz]

Who is to say how much time to "secure" a transaction is SUFFICIENT? You? I think not.

I'm not offering any opinion about how much time it takes to secure a transaction sufficiently. I'm only explaining what units it has to be measured in -- how much effort it takes to undo it.

So my coins getting transferred to and from the exchange is a myth? No buddy, I disagree, it is reality.

Huh?

I would rather put my faith in a less secure (lower hash rate) network that is decentralized as opposed to something that is centralized in currency creation like RIPPLE.

If all else fails, change the subject. And, of course, do so as hysterically as possible. I'm not even trying to compare Litecoin to Ripple as I don't think that makes any sense.

I'm comparing Litecoin to Bitcoin and pointing out that a claim of "faster transactions" is simply bogus and is based on the misconception that 6 is some magic number of confirmations. People use 6 confirmations as a "magic number" with Bitcoin because they believe 6 confirmations provides sufficient *hashing power* on top of the transaction. Someone who believes 6 confirmations is necessary for Bitcoin would, assuming they understand the issues involved, likely not find 6 confirmations sufficient in Litecoin for transactions of comparable value.

[bitcool]

Who is to say how much time to "secure" a transaction is SUFFICIENT? You? I think not.

I'm not offering any opinion about how much time it takes to secure a transaction sufficiently. I'm only explaining what units it has to be measured in -- how much effort it takes to undo it.

If I have a "SlowCoin", which generates a block per 60 minutes, does that mean 1 confirmation will be sufficient? It seems 51% attack would be much easier that way. I have to say your conclusion is counter intuitive.

The fact that each block is based on previous hash and a nonce has nothing to do with securing the block chain?

[justusranvier]

If I have a "SlowCoin", which generates a block per 60 minutes, does that mean 1 confirmation will be sufficient?

"Sufficient confirmations" means the resources needed to successfully orphan the branch containing a given transaction are more expensive than the transaction itself.

6 confirmations is a number that somebody pulled out of their nether regions back when the network was small and people were still CPU mining, and nobody has since then come up with a better answer to the question.

[JoelKatz]

Who is to say how much time to "secure" a transaction is SUFFICIENT? You? I think not.

I'm not offering any opinion about how much time it takes to secure a transaction sufficiently. I'm only explaining what units it has to be measured in -- how much effort it takes to undo it.

If I have a "SlowCoin", which generates a block per 60 minutes, does that mean 1 confirmation will be sufficient? It seems 51% attack would be much easier that way. I have to say your conclusion is counter intuitive.

The fact that each block is based on previous hash and a nonce has nothing to do with securing the block chain?

No, one confirmation would not be sufficient because there's a potential for two blocks to be found at the same time. The first confirmation is "special" because that indicates your transaction was chosen over any conflicting transactions and all that's needed is for that block to win for your transaction to win.

However, with faster confirmations, the probability of two blocks being found at very close to the same time (within the network's propagation time and miners 'switch over' time) is higher. So the faster confirmations are, the less "special" the first one is. With your SlowCoin, getting one confirmation would worth much more than it is in Bitcoin because the probability of two blocks being found close in time is much lower.

If you assume six Bitcoin confirmations is the confidence level you want, you're looking at 60 minutes on average to get it. If you imagine an alt coin with faster confirmations, you could have your first confirmation sooner, reducing the time to reach the same security level if you assume the same hash rate. It's only the time to first confirmation you can improve, and your cost of doing so is that the first confirmation is less valuable.

If you do the math, you get that's it's possible to reduce the time to "full confirmation" (with the above assumptions) by about 8-12%. 55 minutes average instead of an hour doesn't seem like much to celebrate.

[fixxi.net]

Yes it is healthy.

In fact Bitcoin must set a trend: The break of the proprietary money system.

New networks can span and it will all depend on marketing principals. You gamble you lose.

Imagine new networks created on these peer to peer principles . Much better democracy in the new monetary system. Break from the slavery.

[ArticMine]

Litecoins android to Bitcoins apple  

A better analogy is Solidcoin is Apple to Bitcoin's Android.

PS: If it were not for Bitcoin, I would seriously consider taking a short position on Apple stock.

[bitkat]

competition is always a good thing unless you have a monopoly.

[JoelKatz]

competition is always a good thing unless you have a monopoly.

It's not quite necessarily so. You can have unusual cases where competition is actually bad, at least for short periods of time. One of those cases is a significant risk for crypto-currencies.

With crypto-currencies like Bitcoin and the various alt coins, the usefulness of the currency as a means of exchange is dependent on how many people accept that currency. If you have lots of competition, it may result in each currency being better, however, it can also result in no currency ever getting significant adoption because that adoption is spread over more currencies.

So competition can lead to a case where no currency reaches critical mass, which can be worse for almost everyone.

This is one of the reasons Bitcoiners are hostile to alternative currencies. If they reduce Bitcoin adoption, they can reduce the chances or delay the time when any currency make a major impact. The tradeoff is that when a currency does make a major impact, it will likely be a better currency. If alternative currencies push Bitcoin to be better, that's a pure win.

[Mike Christ]

competition is always a good thing unless you have a monopoly.

It's not quite necessarily so. You can have unusual cases where competition is actually bad, at least for short periods of time. One of those cases is a significant risk for crypto-currencies.

With crypto-currencies like Bitcoin and the various alt coins, the usefulness of the currency as a means of exchange is dependent on how many people accept that currency. If you have lots of competition, it may result in each currency being better, however, it can also result in no currency ever getting significant adoption because that adoption is spread over more currencies.

So competition can lead to a case where no currency reaches critical mass, which can be worse for almost everyone.

True.  It'd split whatever one currency would've been worth with several different kinds.  Which isn't too bad, but considering the end user might have to wind up using several different wallets for several different crypto-currencies, it'd get a little annoying.  Some people might refuse a highly popular currency all together just because they don't want to be paid that way.  Because of this, I don't believe any two currencies will ever duel side by side, at least when there isn't a #1 currency already in place.

Then again, considering social barriers, it could be possible; one nation speaking language X would prefer XCoin, while another nation speaking language Y would prefer YCoin...

[Ignore@YourPeril]

Then again, considering social barriers, it could be possible; one nation speaking language X would prefer XCoin, while another nation speaking language Y would prefer YCoin...

No, competing crypto currencies will rather split nations on demographics, politics and even religion, based on different solutions of the initial distribution problem. E.g. CatholicCoin, with initial distribution by the Roman Catholic Church to each of its members (maybe not the best example when I come to think of it, as they are very conservative....

[JoelKatz]

No, competing crypto currencies will rather split nations on demographics, politics and even religion, based on different solutions of the initial distribution problem. E.g. CatholicCoin, with initial distribution by the Roman Catholic Church to each of its members (maybe not the best example when I come to think of it, as they are very conservative....

I don't think so. The value of the initial distribution of a crypto-currency is very low relative to the value of the currency as a means of exchange (assuming the currency is successful). And the value of the currency as a means of exchange is dependent on broad adoption.

If the currency doesn't achieve broad adoption, the initial distribution doesn't matter much because the total real value of all currency of that type in existence will never be significant.

For example, the early adopters of Bitcoin mined about 2 million Bitcoins at a time when Bitcoin was worth, at most, $2 apiece. That puts the value of the initial distribution to the early adopters at $4 million. That's microscopic compared to the current total value of Bitcoin.

[Cred]

This was my first thought when I found out about Bitcoin. What's to stop others just copying it and devaluing it?

Well, power and influence. Nobody is going to choose to use something that adds no extra utility over bitcoin's established value.

However if I was Amazon I'd be modifying the source code and uploading a new block chain to their cloud right now to create Amazon coins that I can give away free to normal customers to start with, allowing them to spend them later or offer them as gifts with a guaranteed minimum value. Just open an exchange where people can buy or sell them as gifts and voila, people will start pouring money into Amazon coins knowing that they will always be able to spend them on books and DVDs and with the possibility of them going up in value too. All at no risk to Amazon.

Repeat for eBay, Apple etc., and bitcoin starts to look like dirty money.

The only thing an alt coin could offer is the legitimacy of knowing who you are dealing with as oppose to bitcoin's anonymity. Trusting some mysterious stranger on the other side of the internet with no recourse if something goes wrong is not something ordinary consumers are going to accept.