Why would there be just one cryptocurrency?

[AliceWonderMiscreations]

It's a good question. The answer has to do with the properties of currency itself. Try a thought experiment: Say you go to the grocery store and the cashier tells you your total is 565 Goblats. You look in your wallet or on your phone and see that of the 1,000 currencies you have, including Bitcoin, Litecoin, Ether etc. you don't have any Goblats. What do you do? Try to find somebody to make an exchange? All you want to do is pay and leave.

On the other hand say the merchant doesn't want to miss any sales so he accepts 5,000 currencies. How does he manage the exchange rate? Some coins may lose 40% in one day or even one hour!

See the problem? For currency, people (average people, not traders) only want very few choices, not many as it makes things too complicated.

I see the problem with there being 5,000 currencies. I don't see the problem with there being 3-10. Bitcoin for your savings, an altcoin for your every day purchases, an altcoin for investing with, etc... Also with proper wallet software the user wouldn't have to think twice about how to pay. Even if there were 5,000 options.

What makes Bitcoin worth it for my savings? That it increases in value.

Will it increase in value if there is no demand for it? No.

What gives it demans? Utility.

I don't mind buying my groceries using LettuceCoin but what if it takes me 3 days to convert bitcoin to LettuceCoin? Do you think I will keep very much in Bitcoin or do you think it would have lost its utility for me?

[johnny_day]

What makes Bitcoin worth it for my savings? That it increases in value.

Will it increase in value if there is no demand for it? No.

What gives it demans? Utility.

I don't mind buying my groceries using LettuceCoin but what if it takes me 3 days to convert bitcoin to LettuceCoin? Do you think I will keep very much in Bitcoin or do you think it would have lost its utility for me?

Why would it take 3 days to convert bitcoin to LettuceCoin? All of that can happen instantaneously as far as the user is concerned.

[dinofelis]

What makes Bitcoin worth it for my savings? That it increases in value.

Now, really think deep about this.  Suppose that most adoption of bitcoin comes from people thinking like that (which is probably the case).  That means that Joe is only to go and buy bitcoin, if he expects it to rise in price.  By doing so, he made it rise in price: someone who bought it at a lower price is going to sell it to him, right ?  So Joe is counting, essentially, on finding Bill, who will also buy it from him at a higher price, right ?   (that's what it means "increasing in value": finding people willing to buy it at a higher price than the one you bought it at").  Etc....

In this game, people come to bitcoin, because they think they will end up finding someone who will buy it at a higher price.  It is called "a greater-fool game".  You are a greater fool than the one you're buying from, and you do this because you think you will find a still greater fool.

Now, this has a fundamental problem to it: there's only a finite number of fools on the planet.  What is going to happen when the last layer of fools sees that there's not a "layer after them" ?

If the main motive of acquiring an asset is that you think you will be able to sell it at a higher price than you buy it, and if there is no other value-generating mechanism, this is the very definition of a greater-fool game, a bubble.  These are the mechanisms behind speculative bubbles, pyramid games and Ponzi schemes.   Which doesn't mean that you cannot make a lot of money from it when you're in and especially out in time.  All gain in such a system is financed by the "last layer of fools".  So simply don't be part of the last layer.

I don't mind buying my groceries using LettuceCoin but what if it takes me 3 days to convert bitcoin to LettuceCoin? Do you think I will keep very much in Bitcoin or do you think it would have lost its utility for me?

At least, with lettucecoin, you will get groceries

In any case, a single block chain cannot scale to the level of all transactions for all vegetables in the world.  The idea that Sven, in Sweden, must acquire, and process, the buying of a salad by Joe in Australia 7 years ago in order for Sven to be able to process his monetary asset to be able to buy some petrol for his car, is simply crazy.

[AliceWonderMiscreations]

What makes Bitcoin worth it for my savings? That it increases in value.

Will it increase in value if there is no demand for it? No.

What gives it demans? Utility.

I don't mind buying my groceries using LettuceCoin but what if it takes me 3 days to convert bitcoin to LettuceCoin? Do you think I will keep very much in Bitcoin or do you think it would have lost its utility for me?

Why would it take 3 days to convert bitcoin to LettuceCoin? All of that can happen instantaneously as far as the user is concerned.

Not if there isn't room in the blockchain for the TX to confirm.

[dinofelis]

I see the problem with there being 5,000 currencies. I don't see the problem with there being 3-10. Bitcoin for your savings, an altcoin for your every day purchases, an altcoin for investing with, etc... Also with proper wallet software the user wouldn't have to think twice about how to pay. Even if there were 5,000 options.

I don't see necessarily a problem with 5000 coins.  It depends on how they are linked together (through distributed exchanges).  The lightning network can abstractly be seen as "as many coins as there are payment channels" in a certain way, where the "coins" are virtual block chains you build with the successive instructions on the payment channel.  Coins that "start out" when the channel is set up, and "die" when the channel is settled.  They get their value by using a collateral (the bitcoins engaged).  They die when they release the collateral. 
In the LN, all the "new coins" are of the same type, defined in the same way with a uniform (centralized ?) protocol.  But you can see "small coins" as totally anarchistic versions of this, where every other coin has other principles, engages another collateral (another coin, maybe bitcoin, maybe something else) on some distributed exchanges, and can release to *other* coins on these exchanges.

To pay for something "far away in coin space", you'd have to hop over several exchanges, like in the LN, you hop over several payment channels to reach destination.  But at least, contrary to the LN, things wouldn't be frozen in, uniform, ... Yes, there would be a need for some "standards" linking them.  But like in the technology world, the standards serve to interface different systems, but at least, systems of different types, with different technology and features, and innovation is possible.  The internet has standards, but the things connected to internet are of different nature, and evolve.  Bitcoin's tech is getting old now.  It can still serve as a kind of backbone, reserve currency in a way.  But it will never be able to handle all commerce all over the world.  Its monetary model is also problematic and it will end up being totally centralized because of economies of scale. 

If we want a distributed system, we need constantly new tech, new coins, and competing systems.  Not a monopoly.

[Sundark]

tl;dr
Why try and make Bitcoin do everything instead of having an ecosystem of specialized currencies?

One Coin to rule them all, One Coin to find them,
One Coin to bring them all and in the darkness bind them

And that, my friend, is why bitcoin was created.



Joking aside.

Isn't the situation you are talking about is happening right now? We have over 6000 altcoins, at least judging by ANN topics from the Altcoin section.
700 or so is listed on coinmarketcap and 100 coins are over $1 million marketcap. Still, most of them offer nothing interesting and are waste of time and effort.

[AliceWonderMiscreations]

tl;dr
Why try and make Bitcoin do everything instead of having an ecosystem of specialized currencies?

One Coin to rule them all, One Coin to find them,
One Coin to bring them all and in the darkness bind them

And that, my friend, is why bitcoin was created.



Joking aside.

Isn't the situation you are talking about is happening right now? We have over 6000 altcoins, at least judging by ANN topics from the Altcoin section.
700 or so is listed on coinmarketcap and 100 coins are over $1 million marketcap. Still, most of them offer nothing interesting and are waste of time and effort.

Most of them lack the hashing power that would be needed to withstand a sustained attack by a state level adversary wanting to re-write transaction history.

Mining power is extremely important. One of the drawbacks to promoting side-chains for the bulk of transactions is it removes the financial incentive to professionally mine, reducing the security provided by the hash power.

[dinofelis]

700 or so is listed on coinmarketcap and 100 coins are over $1 million marketcap. Still, most of them offer nothing interesting and are waste of time and effort.

I don't think they are a waste of time and effort.  Like in all innovative tech, most of what you do, fails.  But without all the failures, the good ideas wouldn't emerge either.  Thinking that a monopoly works better than a free market, is somewhat strange for people that think "distributed, decentralized, trustless".  As of now, bitcoin is more or less holding a monopoly on crypto.  Its tech is getting old now.  There are many more sophisticated crypto ideas around, like ring signatures, zero knowledge proofs, smart contracts, proof of stake versions, directed graphs instead of chains, .... There are also experimentations with flexible block sizes...
Bitcoin starts looking like the state telephone company holding the monopoly over telephony, while mobile phones are being invented.

[dinofelis]

Most of them lack the hashing power that would be needed to withstand a sustained attack by a state level adversary wanting to re-write transaction history.

Mining power is extremely important. One of the drawbacks to promoting side-chains for the bulk of transactions is it removes the financial incentive to professionally mine, reducing the security provided by the hash power.

You are thinking from a pure Proof of Work viewpoint.  Maybe proof of work alone is not a good idea, because its security is limited by the financial power and incentive of its adversaries.  That is good enough to stop your local hacker from messing with it, but it won't stop the Chinese government, if one day it really gets pissed at bitcoin, from killing if it throws a few billion dollars at it.

On the other hand, small chains don't need big protection, because there's not much at stake ; and there are other cryptographical protections possible.  What is good with proof of work, is the initial distribution of the emitted coin, and the fact that seigniorage is burned.

My idea of many small crypto currencies in which people don't "invest" but just use to sell and buy goods and hence for which the market cap is low, and of which it is not a big drama if it dies, is exactly the fact that there's not much incentive to destroy it, because there's not much at stake.   The goal being to *pay* people, not to *store value*.   If a currency exists, I buy some coins (with another currency of course), with those coins, I buy what I want to buy, and that's it, I don't care much about the future of that coin: it did for me what it had to do.  If that coin gets destroyed by the Chinese government (why would they ?), I don't care.  Tomorrow, there's another coin, I buy some, I pay the stuff I want to obtain with it, and that's it, again.

That's how I use bitcoin.  Well, how I used bitcoin.  I bought some bitcoin when I wanted to buy stuff on the internet with it.  What happens with bitcoin after that, doesn't really matter.  If the merchants would accept monero, I'd pay in monero.  Or in Litecoin.  Or whatever.  The day they destroy bitcoin, I wouldn't care.  There are other coins.  And if those get destroyed too, no problem.  There are still other coins, and we can make new ones.

That's my idea of decentralized.  Not a single monopoly.

[Sled]

I don't think that it is good for bitcoin to be just the only one cryptocurrency in the market because we can't deny that the altcoins is one of the factor why other people come into bitcoin because they want to trade another kind of cryptocurrency and that is altcoin. So if there is no altcoins or back up coins other than bitcoin then the market users will be few because they can't just stick with bitcoin.

[Xester]

Correct me if I'm wrong, and move me if this is the wrong board, but in my opinion we should not focus on how to make Bitcoin do everything. Right now Bitcoin works well as a store of value, digital gold if you will. A $1 transaction fee means nothing to a $1,000,000 transaction. It does however severely cripple smaller payments, something that a cryptocurrency could be very good at.

Now it is my understanding that the point of SegWit/BU is to allow Bitcoin to be used for smaller payments by bringing that transaction fee down. Instead of making Bitcoin the jack of all trades, why not have multiple cryptocurrencies that each excel in their own areas? Leave Bitcoin exactly as is, and invest money and time into establishing a micropayment currency, a smart contract currency, etc...

Just some food for though.
Johnny


tl;dr
Why try and make Bitcoin do everything instead of having an ecosystem of specialized currencies?

One possible solution for this problem is to require each country to make their own local cryptocurrency. Those national cryptocurrencies will be exchanged to bitcoin to purchase items abroad but local transactions will make use of local crytpcurrency. In this way the volume of transactions using bitcoin will be lessened making the transactions much faster and with lower fees.

[DomainMagnate]

Correct me if I'm wrong, and move me if this is the wrong board, but in my opinion we should not focus on how to make Bitcoin do everything. Right now Bitcoin works well as a store of value, digital gold if you will. A $1 transaction fee means nothing to a $1,000,000 transaction. It does however severely cripple smaller payments, something that a cryptocurrency could be very good at.

Now it is my understanding that the point of SegWit/BU is to allow Bitcoin to be used for smaller payments by bringing that transaction fee down. Instead of making Bitcoin the jack of all trades, why not have multiple cryptocurrencies that each excel in their own areas? Leave Bitcoin exactly as is, and invest money and time into establishing a micropayment currency, a smart contract currency, etc...

Just some food for though.
Johnny


tl;dr
Why try and make Bitcoin do everything instead of having an ecosystem of specialized currencies?

Bitcoin will lose its value if it is not used as currency as well.Also creating new currency at will make them valuable also and people will start holding it as well

[talkbitcoin]

Correct me if I'm wrong, and move me if this is the wrong board, but in my opinion we should not focus on how to make Bitcoin do everything. Right now Bitcoin works well as a store of value, digital gold if you will. A $1 transaction fee means nothing to a $1,000,000 transaction. It does however severely cripple smaller payments, something that a cryptocurrency could be very good at.

Now it is my understanding that the point of SegWit/BU is to allow Bitcoin to be used for smaller payments by bringing that transaction fee down. Instead of making Bitcoin the jack of all trades, why not have multiple cryptocurrencies that each excel in their own areas? Leave Bitcoin exactly as is, and invest money and time into establishing a micropayment currency, a smart contract currency, etc...

Just some food for though.
Johnny


tl;dr
Why try and make Bitcoin do everything instead of having an ecosystem of specialized currencies?

you have some major mistakes. in my opinion.
- bitcoin was never supposed to be a store of value. it was always meant to be a digital cash, and i believe this is one of the reasons it is being adopted. if it becomes just an investment that means we are trading numbers on our screen and that is pointless in my opinion.

- also the biggest mistake you made is that you are assuming it is not possible with bitcoin. but it is! if scaling was something that was 100% impossible then you were right we should have thought about alternatives but it is possible and everything was fined a year ago and before that. things are messy these days only. and i hope we again see fine days after we are past this period.

[iqlimasyadiqa]

in the future maybe there will only be a few digital currency in the world. this time I think too many existing digital currency.
I believe the next few years the digital currency will grow very well.

[chixka000]

For now since crypt curriency is not yet widely adopted so it is better if we focus on one(bitcoin to be specific). However i  am not telling as well that we should disregard alt cryptos because i also believe that they are part of the development but we should not also think for now to let them be on the higjer place than btc has right now

[dinofelis]

you have some major mistakes. in my opinion.
- bitcoin was never supposed to be a store of value. it was always meant to be a digital cash, and i believe this is one of the reasons it is being adopted. if it becomes just an investment that means we are trading numbers on our screen and that is pointless in my opinion.

Then bitcoin was not well designed for this task.   No single block chain can do that ; but moreover, then there shouldn't have been a finite number of bitcoins, there shouldn't have been block reward halvings, there shouldn't have been any block size limits.  All these things lead you to a purely speculative asset.  People don't pay groceries with paintings of Picasso of which there are only a finite number ever.  And with 2-3 transactions at most per second, transactions becoming a finite resource, that's not possible either for a fluid currency.

Bitcoin has *all the right aspects* to become a very expensive reserve currency kept in vaults and only transacted in very big amounts.

[shield132]

Why won't we focuse bitcoin on that? We need something trusted and unique and bitcoin is that. Well, wealthy competition is always good and we hav ability of that but nowdays mostly altcoins can't to offer us such services and they are doing hard forks, lets take etherium for example. Also another factor is that there are many big datacenteres, exchangers and there is much, really much invested in bitcoins and everyone knows that bitcoin is really most trusted coin.

[AliceWonderMiscreations]

you have some major mistakes. in my opinion.
- bitcoin was never supposed to be a store of value. it was always meant to be a digital cash, and i believe this is one of the reasons it is being adopted. if it becomes just an investment that means we are trading numbers on our screen and that is pointless in my opinion.

Then bitcoin was not well designed for this task.   No single block chain can do that ; but moreover, then there shouldn't have been a finite number of bitcoins, there shouldn't have been block reward halvings, there shouldn't have been any block size limits.  All these things lead you to a purely speculative asset.  People don't pay groceries with paintings of Picasso of which there are only a finite number ever.  And with 2-3 transactions at most per second, transactions becoming a finite resource, that's not possible either for a fluid currency.

Bitcoin has *all the right aspects* to become a very expensive reserve currency kept in vaults and only transacted in very big amounts.

21M bitcoins is a lot of bitcoins when you can divide them down into mBTC, uBTC, and Satoshis.

21M is plenty to use for a payment system - especially since the code was released open source making it easy for anyone to create a new crypto-currency if bitcoins did become too scarce.

I do not think Satoshi ever intended Bitcoin to be the only implementation. In fact I seem to remember that he asked for others, resulting in namecoin, before he went on walkabout.

Creating the digital currency everyone in the world would use was not his goal.

[dinofelis]

21M bitcoins is a lot of bitcoins when you can divide them down into mBTC, uBTC, and Satoshis.

Ah, the point is not that "there wouldn't be enough of them".  The point is that if you use a deflationary currency, you won't.  You'll obtain a collectible that will be hodled and that will rise spectacularly in price, and which mainly becomes a speculative asset.

I do not think Satoshi ever intended Bitcoin to be the only implementation. In fact I seem to remember that he asked for others, resulting in namecoin, before he went on walkabout.

As a first beta project it was brilliant.  And it IS still brilliant, but it is not what you think it is.  It is "gold".  Gold is not a currency.  It is kept in institutional vaults, its transactions are expensive with armored trucks and so on.  And it is mainly a speculative good.  It is not just a store of value, people see it as a speculative investment "that will rise".  Bitcoin has all the aspects of gold.  Not those of a currency.  Although of course, long ago, gold was used as a currency, until it was kept in vaults, it became expensive to handle and not very practical.  So people built fiat systems on top of it.  

Yes, some amateurs have some physical gold in their houses.  And they dare not move it.  But most gold is in vaults of central banks, and other big players.  Like bitcoin soon will be.

This is why there won't come a solution to the full blocks.  And why it is not needed either.

[AliceWonderMiscreations]

21M bitcoins is a lot of bitcoins when you can divide them down into mBTC, uBTC, and Satoshis.

Ah, the point is not that "there wouldn't be enough of them".  The point is that if you use a deflationary currency, you won't.  You'll obtain a collectible that will be hodled and that will rise spectacularly in price, and which mainly becomes a speculative asset.

The problem is if you create too many, you get inflation.

The utility of digital currency for some may be the deflationary nature, but really only for those who have excess income.

For many of us, the utility is the ability to spend without tracking or over-sight of the corporate financial sector,

I don't need my bank knowing what I spend my money on. I don't need my bank denying a charge because they think it doesn't fit my profile of spending. I don't need my bank putting a 24-hour hold on funds I legitimately received. I don't need the IRS freezing my account.

Growing up, my dad took a second job as a LISP contractor and made some real bank. Unfortunately he did his own taxes and screwed up. Yup - our tax laws are so complex a LISP programmer has trouble figuring them out.

The IRS decided to audit and then suddenly froze all of his accounts, and after 9 months of haggling realized they also had made a mistake - Yup - our tax laws are so complex that our own IRS has trouble figuring them out - and realized that while Dad had underpaid them, it was not nearly the magnitude they had thought.

But for those nine months, we were really poor because all the assets were frozen - excess assets frozen.

Bitcoin, the IRS may be able to take my home but they can't take my accounts.

That's the value it has for me, it is free from government and banking tyranny and that is why I would rather spend bitcoin than use a fiat bank card.

With respect to bitcoin being deflationary, it is only deflationary if demand grows faster than supply. Other crypto-currencies have the potential to balance that out.

The problem is the majority of alternate crypto-currencies so far have been get rich schemes without developers qualified. However in the wake of bitcoin, more and more people are understanding block-chain technology and real alternatives to take some of the bitcoin demand will appear. Possibly even a fork of Bitcoin itself if the BU forks but blockstream loyalists keep using the 1MB chain.