Some altcoins have utility. They derive value the same way Bitcoin does:
The ways of acquiring them, the people interested in doing so and economic activity taking place because and after it.
Litecoin had utility initially because its different hashing algorithm, which became more pronounced with the release of Bitcoin ASICs, it would never have gotten that far without that and only recently secondary economic activity started taking place. I don't see any other altcoin archiving that, except namecoin which derives it's utility by other means.
This not true, LTC copied the scrypt hashing algorithm from tenebrix, yet tenebrix failed.
tenebrix was not a coin. It was inflationary, and it was pre-mined.
Had it not been either of these things it probably would have succeeded. It lacked utility in a sense that the time till inflation would have negated the gargantuan pre-mine would have been many years.
Fairbrix would have succeeded if it had protection against a 51% attack.
Yes exactly, why did LTC not suffer 51% attack? because there were significant amount of support at launch, it maintained a very high hash rate. This is my point, LTC succeeded because there were a lot of people behind it, mining it, building services for it, and then attracts more people mining it. LTC didn't succeed because it was the first scrypt (it's not), or it has good dev team (it does not). LTC is successful because there are many supporters for it, right from the start. No other coin has nearly as many supporters at launch as LTC did.
