While Bitcoins supply itself can not be inflated, the number of forks can. Each new fork eats into the market cap of btc. People just learning about Bitcoin wrestles with the notion of Bitcoin not having intrinsic value, ie. "Cant they just create new kinds of Bitcoin". Well they are right and yet their fears is misguided because what matter is not the fork itself, but the dedication of the people working behind and supporting the fork. What gives a coin value is the work put into it - therefor you can not simply just fork something and expect it to catch on for the long run. Newcomers might not realize this though. I think proponents of Bitcoin is aware of these issues. I think they think that "if bitcoin can be replaced by an alt, it proves to the public that cryptocoins can not be trusted as a store of value over longer periods of time". Also they probably have a stash of btc, but that I think is secondary. Well thats my thoughts.
I would argue that Bitcoin have at least three flaws:
no built in escrow (solved by zerocoin hopefully)
Waste energy (primecoin seem to show that this must not be so)
centralization (attempt to solve by litecoins/scrypt but far from solved)
Actually I think the third one is unsolveable and also the worst flaw of them all. Strangely this issue is however being solved by the creation of altcoins! Think of it: perhaps asic will dominate Bitcoins, well the total ecosystem will still be decntralized because they can not mine litecoins. But what about fpgaburner or asics for litecoin? Well, its always possible to fork and make something new at little cost that would require much cost in terms of creating new hardware. At least until asic manufacturing has come way down.
So, in my oppinion altcoins is not a problem, its the solution to a problem. What is needed is a multicoin wallet and multicoin payment infrastructure that make it possible for a gadget to be bought by combining several different coins. As a wallet owner you should be able to configure this wallet to your own liking (excluding aliencoin and including bitcoin and what not). Arbitrage botz will make sure that price levels outand switched mining that processing power is dispersed over thw toral ecosystem of coins. This, in my opinion, solves much of the centralization issues.
Sorry for rant also typing on cellphone so sorry for typos.
This is getting a little ridiculous how much the mainstream bitcoin users hate altcoins. People on the forums ask "Is Gpu mining dead, I have blah blah blah can i mine anything?" and people respond that there is no money to be made at all with gpus. The second someone responds litecoin or another currency, they are attacked. I was also watching one of the bitcoin 2013 developer round tables and at one point gavin mentions litecoin and Mike Hearn looks over and gives him the stink eye and Gavin stops mid sentence. They talk about the free market and the ability for people to chose their own coin, but act as if bitcoin is the only reasonable solution. Litecoin might not have much of a difference, but with a market cap of around 600k btc it is petty at this point to ignore altcoins completely. Sorry if this was a little bit of a rant. What do you guys think?
