There is one main parameter I am watching for Altcoins: the potential for growth to reach BTC parity, taking into account the total amount of coins to be issued. This can be calculated as the ratio of market caps (Cap) :
Cap_Bitcoin / Cap_Altcoin = (BitcoinPrice * 21 million coins) / (AltcoinPrice * total coins to be issued)
The rationale behind this ratio is that when, say, all litecoins and all bitcoins have been issued, both coins are on par when their total market value is equal. The public has then invested equally in both currencies. Bear with me...
According to this ratio, Worldcoin currently can grow about 600 times to catch up with Bitcoin, Terracoin 300 times and Namecoin 200 times. On the other hand, Ripple has already maxed out at about 1.4, PPC does a lousy 10, and CNC and FTC "only" reach 100. Now even if Litecoin scores a low 10, it obviously is much older and mature, has a consumer market building up and proved to be honest so far (no premining, etc.), so Litecoin still compares favorably with other Altcoins.
Here is my take: I just had 22 bitcoins before the boom, so all the expensive bitcoins I buy from now on get converted straight away into Altcoins, building a balanced portfolio of high potential, seemingly honest coins. Spreading the risk on several Altcoins, if one tanks but another grows 10 or 100 times, I am still largely winning.
I expect at least some Altcoins to later catch up with their BTC elder brother. Why?
- Historically Bitcoin fluctuations are strongly amplified on the Altcoin markets. So if BTC jumps, the others will take off even faster.
- Conversions between cryptos are super easy and fast, unlike entering the market with fiat money.
- New tools like the Metalair p2p exchange, Zerocoin anonymizing or advanced wallets will soon be available for all cryptos, leveling the playing field.
- Altcoins will still allow smaller players to access Cryptoland. They, like me, will be ready to take more risk as they don't have anything to loose (yet).
- People from poorer countries that mainly do microtransactions will favor "softer" cryptos, with a larger total emission of coins and lower prices. Read CNC=China and WDC=India.
- If there is a hostile attack on cryptos, BTC will be the prime target, and Altcoins may be able to implement protocol changes before they even get hit. This gives Altcoins a safety hedge compared to BTC.
So I am quite confident that if BTC grows crazily, there automatically will be a mass transfer into Altcoins.
Conclusion: select high potential coins and spread the risk.
