Possible bitcoin crash catalyst? The rise of altcoins

[crazy_rabbit]

Except of course that the teams/infrastructure/systems behind the alt-coins pale in comparison to that behind bitcoin. For example- Facebook is the dominate social network- by an enormous margin. But there are other social networks out there as well. Does facebook have to stay nimble to stay ahead? Of course it does- and so will Bitcoin. But that doesn't mean the alt-coins won't be valuable in their own right.

[damnek]

Except of course that the teams/infrastructure/systems behind the alt-coins pale in comparison to that behind bitcoin. For example- Facebook is the dominate social network- by an enormous margin. But there are other social networks out there as well. Does facebook have to stay nimble to stay ahead? Of course it does- and so will Bitcoin. But that doesn't mean the alt-coins won't be valuable in their own right.

This is exactly the argument that is often used which I'm arguing against, this comparison with facebook. My point is that moving value from altcoin to altcoin will be nearly frictionless in the future, whereas moving your personal profile and friends between social networks is of course not.

[User705]

All cryptos are early stage.  LTC hasn't even halfed 1st time.  It's a bit bubbly investment now but nothing wrong with that.  LTC or alt cryptos can't kill all of BTC value but it's certainly an effect.  The only way an alt kills of BTC is if they provide something that BTC doesn't.

[fred1111]

All cryptos are early stage.  LTC hasn't even halfed 1st time.  It's a bit bubbly investment now but nothing wrong with that.  LTC or alt cryptos can't kill all of BTC value but it's certainly an effect.  The only way an alt kills of BTC is if they provide something that BTC doesn't.

BTC can be upgraded, while still keeping the most secure network.
LTC can be taken over by a 51% attack if a huge botnet is suddently created.

[ImI]

All cryptos are early stage.  LTC hasn't even halfed 1st time.  It's a bit bubbly investment now but nothing wrong with that.  LTC or alt cryptos can't kill all of BTC value but it's certainly an effect.  The only way an alt kills of BTC is if they provide something that BTC doesn't.

BTC can be upgraded, while still keeping the most secure network.
LTC can be taken over by a 51% attack if a huge botnet is suddently created.

as far as i can tell the bitcoin-network is far more centralized than the litecoin-gpu network.

[ElectricMucus]

All cryptos are early stage.  LTC hasn't even halfed 1st time.  It's a bit bubbly investment now but nothing wrong with that.  LTC or alt cryptos can't kill all of BTC value but it's certainly an effect.  The only way an alt kills of BTC is if they provide something that BTC doesn't.

BTC can be upgraded, while still keeping the most secure network.

Do you remember 486/Pentium overdrive cpus?

[Don007]

All cryptos are early stage.  LTC hasn't even halfed 1st time.  It's a bit bubbly investment now but nothing wrong with that.  LTC or alt cryptos can't kill all of BTC value but it's certainly an effect.  The only way an alt kills of BTC is if they provide something that BTC doesn't.

I totally agree with you. It isn't bad that any altcoin is in an early stage. I think investing in altcoins is more violate indeed, but hey, that means there's profit in it for daytraders.     Altcoins offering an unique thing is indeed something that can harm Bitcoin. But, as weird as it sounds, I think the Bitcoin is quite solid now.

[eternaluniverse]

I'd like to think of bitcoin as the new global currency, and altcoins as the new global stock market.

[Zangelbert Bingledack]

Any coin is valuable only as much as its infrastructure is developed (user base, hashing speed, merchant support).

merchant support isnt needed.

imagine a service/website/whatever that exchanges innert milliseconds every cryto into another crypto for near zero fees. not likely? oh yes it is very likely to happen.

that would lead to the situation that a webshop would have to accept only ONE cryptocurrency and would therefore equally accept ALL cryptocurrencies.

why? pretty simple. the user with currency B comes to the webshop that uses currency A. his browser could automatically show him prices in crypto B and when he pays the merchant gets instantly currency A . just like at the moment the merchant gets instantly dollars instead of bitcoins.

so you dont need a merchant to accept your cryto. ist enough if he accepts one of hundreds.

Yes, ultimately it's about store of value. You only store with the best, unless your risk appetite is quite high.

[User705]

Best is a relative term.  Just like fiat forex markets different crypto features will impact the exchange rate between them.

[Zangelbert Bingledack]

Why on earth would you store your value in any but the most scrutinized, monitored, long-running, stress-tested, brilliant dev-backed blockchain? I could see diversifying into a few alt-ledgers, but not more than a few, and only in proportion to their excellence in terms of dev team and track record. The rest would be speculation based on future promise, but that is even more limited. The marginal utility of each additional alt-ledger very quickly drops off.

The fundamental value in parallel blockchains each having a different hashing algorithm is that it mitigates some of the risk of one of the hashing algorithms getting broken. Altcoin software with such trivial tweaks can be effortlessly kept in sync with the latest bitcoin developments through build scripts, so I disagree with your dev-team and track record argument.

This argument is self-contradictory. If the tweaks are trivial, there's only trivial value (and unknown risk of harm) in using them. If they aren't trivial, dev team and track record matter. If the tweaks are useless or of unknown value/harm, there is no reason to switch no matter how easy it is (just puts your wealth at risk needlessly). If the tweaks are useful, known to be harmless, and can be effortlessly kept in sync with Bitcoin, they will soon be incorporated into Bitcoin. Also scrutiny and stress-testing and overall moment-to-moment monitoring will naturally gravitate toward the main blockchain.  

If it were not the case, why not just re-release Bitcoin 2 - exactly the same as Bitcoin, but launched today? Then you could really instantly incorporate all development changes from Bitcoin. And people would have a chance to be an early adopter all over again. That's all most of the altcoins are. They just offer a trivial tweak as a gimmick to get people to switch, since "there's a chance!" it might prove superior and become king.

In the end, when switching costs are trivial, even invisible to the end user like in the case of fully incorporated decentralized exchanges, it comes down to who's maintaining your blockchain. If Bitcoin 2 has fewer people watching for slow orphan blocks and it's exactly the same as Bitcoin, only an idiot would have their money there (or speculators preying on idiots). And the more an altcoin gets away from being an exact clone of Bitcoin, incentivizing a possible switch, the less automatic dev support it can get.

The economics of blockchain maintenance/monitoring dictate that talent will gravitate toward the most important one with the largest market cap, as that has the most people's money on the line. Everything else follows from there.

[Zangelbert Bingledack]

Best is a relative term.  Just like fiat forex markets different crypto features will impact the exchange rate between them.

Yes but there's a limited number of dimensions to be the best in. Reliability, first confirmation time, anonymity, monitoring, mining power, etc. One might choose to spend a few minutes in a more anonymous altchain for tumbling purposes but leave ASAP because reliability and monitoring are low. That will give such an altcoin a nominal value. But then any additional altcoin will have to provide something more than better anonymity.

Therefore any inflation due to altcoins is very limited in the grand scheme of things.

[User705]

That assumes bitcoin is the one and only crypto solution.  A bit too religious.  Bitcoin is an idea.  Who knows where and how all implementation ends up.

[byronbb]

Actually it stabilizes the price of bitcoin. Imagine only btc....we would be at mars by now with epic bubbles. I have heard some intelligent comments that defend ltc.  If the alts can be integrated with btc somehow, they can serve a purpose. Ltc has yet to bubble crash the way btc has, if ltc sees a large correction the RACE to btc will be massive creating an unbelievable bull run. Be VERY careful with ltc.

[damnek]

Why on earth would you store your value in any but the most scrutinized, monitored, long-running, stress-tested, brilliant dev-backed blockchain? I could see diversifying into a few alt-ledgers, but not more than a few, and only in proportion to their excellence in terms of dev team and track record. The rest would be speculation based on future promise, but that is even more limited. The marginal utility of each additional alt-ledger very quickly drops off.

The fundamental value in parallel blockchains each having a different hashing algorithm is that it mitigates some of the risk of one of the hashing algorithms getting broken. Altcoin software with such trivial tweaks can be effortlessly kept in sync with the latest bitcoin developments through build scripts, so I disagree with your dev-team and track record argument.

This argument is self-contradictory. If the tweaks are trivial, there's only trivial value (and unknown risk of harm) in using them. If they aren't trivial, dev team and track record matter. If the tweaks are useless or of unknown value/harm, there is no reason to switch no matter how easy it is (just puts your wealth at risk needlessly). If the tweaks are useful, known to be harmless, and can be effortlessly kept in sync with Bitcoin, they will soon be incorporated into Bitcoin. Also scrutiny and stress-testing and overall moment-to-moment monitoring will naturally gravitate toward the main blockchain.d

Perhaps my use of the word trivial is confusing. By a trivial tweak I mean for example replacing SHA256 by SCrypt as in litecoin, because bitcoin's design is modular in the actual hashing algorithm, i.e. it will work no matter what hashing algorithm is being used. The method in the source code that calculates the hash can be directly replaced by another without affecting anything else in the code. It is undeniable by now that there is some form of value in such tweaks as witnessed by the litecoin price, which is not equal to 0.

If it were not the case, why not just re-release Bitcoin 2 - exactly the same as Bitcoin, but launched today? Then you could really instantly incorporate all development changes from Bitcoin. And people would have a chance to be an early adopter all over again. That's all most of the altcoins are. They just offer a trivial tweak as a gimmick to get people to switch, since "there's a chance!" it might prove superior and become king.

To me this is actually not unreasonable at all. As long as the scalability issue with bitcoin is not addressed and the network keeps growing at its current pace, transaction fees will have to go up (and I've seen a bit of complaining about transaction fees already here and there). This creates incentive for an alternative blockchains with cheaper fees. Add to this the early adaptor dream and it might actually gain a foothold (again, I'm thinking of litecoin). On the other hand, bitcoin miners have an incentive to kill off new chains, and so the market will have to find a balance.

If bitcoin-only payment processors will not accept the most popular altcoins, I foresee the creation of portals that will do the exchange from altcoin XYZ into bitcoin under the hood for a commission, just like we can buy Amazon giftcards now with bitcoin to enable us to spend out bitcoins at Amazon. So the merchant adoption argument is also moot. Eventually payment processors will be forced to adopt altcoins, because these exchange portals eat their potential profit.

I would like to make clear that I have no stake in any altcoin whatsoever, I'm merely speculating about the future of the cryptocurrencies space, and I'm extremely excited about the next chapter of it. It's rather ironic that decentralization is a bitcoin keyword yet people find it very difficult to accept that we may have to decentralize away from one blockchain. Is it because their beloved currency won't become worth millions because of it?

[johnyj]

Since the conversion between different coins are frictionless, LTC bought will be used to buy BTC. I have been scamed by some litecoin pools, the infrastructure for altcoins are very poor, never want to touch them again

[PenAndPaper]

During the last bubble in March I bought LTC and PPC just to diversify and hedge my BTC a little bit.

Buying LTC is not hedging. If BTC collapses LTC will collapse 2 secs later. You should be happy now with your choise but it was speculation not hedging.

[notme]

During the last bubble in March I bought LTC and PPC just to diversify and hedge my BTC a little bit.

Buying LTC is not hedging. If BTC collapses LTC will collapse 2 secs later. You should be happy now with your choise but it was speculation not hedging.

In dollar terms, yes LTC will fall.  However, traditionally LTC has risen in BTC terms when BTCUSD falls.  This means LTC falls slower in dollar terms.

That might not hold going forward though since LTCBTC has risen quite dramatically already recently.

[conspirosphere.tk]

if alt.coins kill btc, so be it. it's the market baby.
but i would not bet a bitcent on that.
at the moment:

Total marketcap of all Altcoins (without BTC) is 996,521.00 BTC and the total 24h volume traded with all trading pairs in the cryptocurrency altcoin universe is 262,438.00 BTC.

but their market jumps and mining with vgas like it's 2010 again is quite some fun.
http://www.cryptocoincharts.info/v2/main/smallCharts

moreover they will probably act as entrypoints like monopoly cryptocoins for noobs before they invest in the serious coin.
all in all, there is space for all in the crypto-wild west.