Do you believe in cryptocurrency competition?

[revans]

I see a lot of people here wishing Litecoin would just go away; why? I thought libertarians believed in free markets and competition? Litecoin is really surging right now, and if it ends up overtaking Bitcoin, what's the problem? Bitcoin was the first attempt at a cryptocurrency, and it is rare for first attempts to succeed. Maybe the future belongs to Litecoin, and Bitcoin will simply be remembered as  a beta test.

[Kleptoid]

Yes, competition is good.
No, alts are inflationary.

[Bitcopia]

LTC is essentially a BTC fork with faster confirmations resulting in a less secure network. However, bitcoin payment processing companies can use off the block transactions for instant confirmations. I'm not saying LTC is useless. It just doesn't do anything bitcoin doesn't accept for send money slightly faster at the expense of security. But as the masses adopt, they will almost certainly be using simplified services that allow for off the block transactions.

I don't wish LTC would go away, I think it is and always will be a secondary to BTC. If anything, something like peercoin should prove to be more competition, as it is actually based on proof of stake AND proof of work, instead of just copying bitcoin and making a slight modification.

In the future an alt currency with real benefits over BTC could certainly be developed. Just hasn't happened yet.

[Bitcopia]

Yes, competition is good.
No, alts are inflationary.

 

Please explain...

[revans]

Litecoin is fine. Competition is good. Not everyone here is a libertarian. Litecoin has no reason to surpass Bitcoin because none of it's changes are improvements.

And yet is has already magicked a 1 billion USD market cap from nowhere, with scarcely a hint of media attention.

[KFR]

The differences between LTC and BTC are important.  I for one am very glad that both are around.  Only a very few altcoins are worth watching, LTC in particular.  I'm not too bothered about the pump-and-dump junkcoins - they really are a flash in the pan IMHO.

[zby]

Litecoin was supposed to be impossible to mine with GPU and ASICs - but the first is already not true and the second is likely to be not true soon. Nearly all of the coins are copycats with little genuine changes - just the meaningless 'faster confirmations'. But I do believe that there will be genuine new algorithms - PPC with proof of stake is a likely example (even though I have read lots of criticism of its algorithm - but I don't know what to trust - there is lots of trolling around alt-coins).

[revans]

The differences between LTC and BTC are important.  I for one am very glad that both are around.  Only a very few altcoins are worth watching, LTC in particular.  I'm not too bothered about the pump-and-dump junkcoins - they really are a flash in the pan IMHO.

Why are they pump and dump? In a free market surely anyone can in good conscience start their own currency?

[Kleptoid]

Yes, competition is good.
No, alts are inflationary.

 

Please explain...

I'll have to be brief, I'm in the middle of painting my bedroom, apologies. If you require further explanation I'll post more later or tomorrow....

Most people agree that cryptocurrencies are a new asset class, and bitcoin is the first to become established. While bitcoin is technically inflationary until the last coin is mined, this is offset by the increase in it's adoption/capitalisation. Once the last coin is mined there will be a fixed amount of bitcoins, and bitcoin inflation will stop, no more bitcoins can be created. The growth of altcoins increases the money supply within the crypto asset class, and therefore leads to crypto-inflation. The more the crypto-coins of any kind that are created, the less each individual coin of any kind is worth, it represents a smaller fraction of the total wealth in it's asset class. For me, and for many believers in sound money, the fixed supply of bitcoins is one of the (many) key advantages bitcoin has over the farce that fiat has become. Alt-coins are a threat to this.

You see?

[KFR]

... there is lots of trolling around alt-coins).

Never a truer word said.  FWIW the hashing algorithm employed by Litecoin is highly resistant to ASICs.  ASIC simply means "application specific".  Until memory/bus architecture undergoes a revolution of its own, the ratio of GPU to ASIC performance for SHA-256 (i.e. Bitcoin) will always differ hugely from the ratio of GPU to 'ASIC' performance for Scrypt (i.e. Litecoin).  This is important because it means the playing field for mining LTC will be much more level and for much longer.  That in itself has potentially far-reaching implications.

Litecoin is not superior to Bitcoin.  It is however a very healthy complement to it.

[Bitarchist]

Litecoin and all other altcoins are a good thing. The whole idea of creating a decentralized crypto-currency is to introduce competition to fiat/government currency. So IMO it would be hypocritical to celebrate the Bitcoin for challenging existing currency while simultaneously bashing altcoins for challenging Bitcoin.

Also, I feel that the issues of security, inflation and speed of transfer are basically unimportant in the grand scheme of things because using crypto-currency is entirely voluntary. No person or group of people is claiming the authority to FORCE anyone to use any specific coin. Therefore, if one is not satisfied with the fundamental characteristics of any coin or class of coin, they can simply refuse to use it. This is not true with the current monetary system which certainly is forced upon us by a central authority through legal tender laws and the like.

Having said that, time will allow the market's preference to weed out the less desirable coins and to gravitate toward the ones it values. We will likely see advancements in the future that could make our current perception of digital money seem weak by comparison. The coin that overtakes Bitcoin my not be dreamed up for many years, or never dreamed up at all, or maybe people will refuse to change and will instead cling to worthless pieces of paper that are created out of thin air by a group of tyrannical psychopaths.

The point is, it's important to have a choice! =)

[byronbb]

The differences between LTC and BTC are important.  I for one am very glad that both are around.  Only a very few altcoins are worth watching, LTC in particular.  I'm not too bothered about the pump-and-dump junkcoins - they really are a flash in the pan IMHO.

Why are they pump and dump? In a free market surely anyone can in good conscience start their own currency?

Fiat was created in good conscience, then once everyone is psychologically conditioned to trust it's value they removed the hard assets backing it and are free to print themselves unlimited money. Creators of alt coins all have the vested interest of pre mining themselves money then hoping it becomes adopted.  I have seen this criticism leveled at PPC.

[revans]

The differences between LTC and BTC are important.  I for one am very glad that both are around.  Only a very few altcoins are worth watching, LTC in particular.  I'm not too bothered about the pump-and-dump junkcoins - they really are a flash in the pan IMHO.

Why are they pump and dump? In a free market surely anyone can in good conscience start their own currency?

Fiat was created in good conscience, then once everyone is psychologically conditioned to trust it's value they removed the hard assets backing it and are free to print themselves unlimited money. Creators of alt coins all have the vested interest of pre mining themselves money then hoping it becomes adopted.  I have seen this criticism leveled at PPC.

This seems like dodgy ground for someone supporting a currency where over 5% of the entire monetary base is owned by the creator.

[jonat3]

Yes, competition is good.
No, alts are inflationary.

 

Please explain...

I'll have to be brief, I'm in the middle of painting my bedroom, apologies. If you require further explanation I'll post more later or tomorrow....

Most people agree that cryptocurrencies are a new asset class, and bitcoin is the first to become established. While bitcoin is technically inflationary until the last coin is mined, this is offset by the increase in it's adoption/capitalisation. Once the last coin is mined there will be a fixed amount of bitcoins, and bitcoin inflation will stop, no more bitcoins can be created. The growth of altcoins increases the money supply within the crypto asset class, and therefore leads to crypto-inflation. The more the crypto-coins of any kind that are created, the less each individual coin of any kind is worth, it represents a smaller fraction of the total wealth in it's asset class. For me, and for many believers in sound money, the fixed supply of bitcoins is one of the (many) key advantages bitcoin has over the farce that fiat has become. Alt-coins are a threat to this.

You see?

I find this idea that alts are inflationary a flawed concept. You people do realize that BTC and LTC are digitally more different than the digital version of the USD and the EUR (which makes up most of their supply and is thus the largest factor influencing their exchange rate), right? The only way computers can differentiate between USD and EUR is that each of their digital coins has DIFFERENT LETTERS to identify them. That's about the only difference between the digital version of the USD and the EUR. Yet, most would agree that it's ludicrous to say that the EUR inflates the supply of the USD, even though we can say that these currencies fall in the same asset class (government issued currency).

Fact of the matter is that even slight differences such as a name can make coins lose fungibility. And it's this aspect that determines if a coin can inflate the supply. New coins must be 100% FUNGIBLE with the old coins in order for the new coins to inflate the old supply. If these coins are seen as different, they will be essentially seen as alternates and will achieve their own exchange rate with their own unique behaviour. Perception is everything.

Remember that price inflation results from how we PERCEIVE the scarcity of the money supply and based on that perception do we decide if the coin is valuable or not. People tend to forget that money is all in the mind. It's entirely a psychological concept. SOME people believe that altcoins inflate the supply. If a lot of people believed this, altcoins would indeed be inflationary, because belief is what ultimately decides how we value scarcity. But the average person would disregard any digital currency that's not called Bitcoin.

Average person: "Litecoin? What the hell is that? No, I don't know that coin. I don't want it. I rather stay with that thingy that's been all over the news."

Different perceptions lead to essentially the coins being seen as two seperate currencies (thus losing fungibility) and these coins achieving vastly different exchange rates and having diverging supply and demand. If there exists only 10 BTC in existence (with no monetary inflation) and someone comes along with 10 000 LTC that has yearly inflation of 2%. The average person would still see BTC as being scarce, because they BELIEVE the coins to be different. Try asking the average person what LTC is. If they don't even know what it is, how can they ever perceive LTC increasing BTC's supply thus creating the PERCEPTION of reduced scarcity of BTC? It's a ridiculous idea.

[Kleptoid]

Litecoin and all other altcoins are a good thing. The whole idea of creating a decentralized crypto-currency is to introduce competition to fiat/government currency. So IMO it would be hypocritical to celebrate the Bitcoin for challenging existing currency while simultaneously bashing altcoins for challenging Bitcoin.

Also, I feel that the issues of security, inflation and speed of transfer are basically unimportant in the grand scheme of things because using crypto-currency is entirely voluntary. No person or group of people is claiming the authority to FORCE anyone to use any specific coin. Therefore, if one is not satisfied with the fundamental characteristics of any coin or class of coin, they can simply refuse to use it. This is not true with the current monetary system which certainly is forced upon us by a central authority through legal tender laws and the like.

Having said that, time will allow the market's preference to weed out the less desirable coins and to gravitate toward the ones it values. We will likely see advancements in the future that could make our current perception of digital money seem weak by comparison. The coin that overtakes Bitcoin my not be dreamed up for many years, or never dreamed up at all, or maybe people will refuse to change and will instead cling to worthless pieces of paper that are created out of thin air by a group of tyrannical psychopaths.

The point is, it's important to have a choice! =)

Please don't misunderstand me, I'm not bashing alts or championing bitcoin over other crypto-currencies. I'm not even saying I don't approve of alts, I am very much in favour of freedom and choice. I do believe that inflationary currencies are a bad idea, and having multiple competing crypto-currencies does lead to inflation within crypto. If no one bought LTC then BTC would be worth more. I'm merely identifying a problem, not trying to impose a solution.

I like your nick very much.

[revans]

Litecoin and all other altcoins are a good thing. The whole idea of creating a decentralized crypto-currency is to introduce competition to fiat/government currency. So IMO it would be hypocritical to celebrate the Bitcoin for challenging existing currency while simultaneously bashing altcoins for challenging Bitcoin.

Also, I feel that the issues of security, inflation and speed of transfer are basically unimportant in the grand scheme of things because using crypto-currency is entirely voluntary. No person or group of people is claiming the authority to FORCE anyone to use any specific coin. Therefore, if one is not satisfied with the fundamental characteristics of any coin or class of coin, they can simply refuse to use it. This is not true with the current monetary system which certainly is forced upon us by a central authority through legal tender laws and the like.

Having said that, time will allow the market's preference to weed out the less desirable coins and to gravitate toward the ones it values. We will likely see advancements in the future that could make our current perception of digital money seem weak by comparison. The coin that overtakes Bitcoin my not be dreamed up for many years, or never dreamed up at all, or maybe people will refuse to change and will instead cling to worthless pieces of paper that are created out of thin air by a group of tyrannical psychopaths.

The point is, it's important to have a choice! =)

Please don't misunderstand me, I'm not bashing alts or championing bitcoin over other crypto-currencies. I'm not even saying I don't approve of alts, I am very much in favour of freedom and choice. I do believe that inflationary currencies are a bad idea, and having multiple competing crypto-currencies does lead to inflation within crypto. If no one bought LTC then BTC would be worth more. I'm merely identifying a problem, not trying to impose a solution.

I like your nick very much.

But hang on, how can a different currency be deemed inflationary to Bitcoin? The much ballyhooed 21 million Bitcoin limit and all that. Are you suggesting that given that all these alt coins are basically identical to Bitcoin  their existence effectively inflates the Bitcoin pool?

If that is the case, there goes the scarcity argument as now there are effectively a limitless supply of Bitcoins.

[jonat3]

Litecoin and all other altcoins are a good thing. The whole idea of creating a decentralized crypto-currency is to introduce competition to fiat/government currency. So IMO it would be hypocritical to celebrate the Bitcoin for challenging existing currency while simultaneously bashing altcoins for challenging Bitcoin.

Also, I feel that the issues of security, inflation and speed of transfer are basically unimportant in the grand scheme of things because using crypto-currency is entirely voluntary. No person or group of people is claiming the authority to FORCE anyone to use any specific coin. Therefore, if one is not satisfied with the fundamental characteristics of any coin or class of coin, they can simply refuse to use it. This is not true with the current monetary system which certainly is forced upon us by a central authority through legal tender laws and the like.

Having said that, time will allow the market's preference to weed out the less desirable coins and to gravitate toward the ones it values. We will likely see advancements in the future that could make our current perception of digital money seem weak by comparison. The coin that overtakes Bitcoin my not be dreamed up for many years, or never dreamed up at all, or maybe people will refuse to change and will instead cling to worthless pieces of paper that are created out of thin air by a group of tyrannical psychopaths.

The point is, it's important to have a choice! =)

Please don't misunderstand me, I'm not bashing alts or championing bitcoin over other crypto-currencies. I'm not even saying I don't approve of alts, I am very much in favour of freedom and choice. I do believe that inflationary currencies are a bad idea, and having multiple competing crypto-currencies does lead to inflation within crypto. If no one bought LTC then BTC would be worth more. I'm merely identifying a problem, not trying to impose a solution.

I like your nick very much.

But hang on, how can a different currency be deemed inflationary to Bitcoin? The much ballyhooed 21 million Bitcoin limit and all that. Are you suggesting that given that all these alt coins are basically identical to Bitcoin  their existence effectively inflates the Bitcoin pool?

If that is the case, there goes the scarcity argument as now there are effectively a limitless supply of Bitcoins.

It is scarce. Because I perceive it to be so and because most others do so as well. It's only a very small minority that equate altcoins with bitcoins. Perception is everything.

[revans]

Litecoin and all other altcoins are a good thing. The whole idea of creating a decentralized crypto-currency is to introduce competition to fiat/government currency. So IMO it would be hypocritical to celebrate the Bitcoin for challenging existing currency while simultaneously bashing altcoins for challenging Bitcoin.

Also, I feel that the issues of security, inflation and speed of transfer are basically unimportant in the grand scheme of things because using crypto-currency is entirely voluntary. No person or group of people is claiming the authority to FORCE anyone to use any specific coin. Therefore, if one is not satisfied with the fundamental characteristics of any coin or class of coin, they can simply refuse to use it. This is not true with the current monetary system which certainly is forced upon us by a central authority through legal tender laws and the like.

Having said that, time will allow the market's preference to weed out the less desirable coins and to gravitate toward the ones it values. We will likely see advancements in the future that could make our current perception of digital money seem weak by comparison. The coin that overtakes Bitcoin my not be dreamed up for many years, or never dreamed up at all, or maybe people will refuse to change and will instead cling to worthless pieces of paper that are created out of thin air by a group of tyrannical psychopaths.

The point is, it's important to have a choice! =)

Please don't misunderstand me, I'm not bashing alts or championing bitcoin over other crypto-currencies. I'm not even saying I don't approve of alts, I am very much in favour of freedom and choice. I do believe that inflationary currencies are a bad idea, and having multiple competing crypto-currencies does lead to inflation within crypto. If no one bought LTC then BTC would be worth more. I'm merely identifying a problem, not trying to impose a solution.

I like your nick very much.

But hang on, how can a different currency be deemed inflationary to Bitcoin? The much ballyhooed 21 million Bitcoin limit and all that. Are you suggesting that given that all these alt coins are basically identical to Bitcoin  their existence effectively inflates the Bitcoin pool?

If that is the case, there goes the scarcity argument as now there are effectively a limitless supply of Bitcoins.

It is scarce. Because I perceive it to be so and because most others do so as well. It's only a very small minority that equate altcoins with bitcoins. Perception is everything.

How do you known it is a small minority.

It may be a very  small minority amongst people with a vested interest in Bitcoin, but what about the wider public?

[Kleptoid]

People tend to forget that money is all in the mind. It's entirely a psychological concept.

I agree completely, money isn't real, it's a tool for allocating goods and services, nothing more.

Let's take a very simple example. Let's say there are only two equal sized countries in the world and they both use the same currency (and only that currency) which has a fixed supply of 1 trillion units. Each of those units represents one trillionth of the total wealth of the world. One day one of the two countries decides that it will create it's own currency, also with a fixed supply of one trillion units. There are now twice the amount of currency units in the world, but the real wealth of the world hasn't doubled. Each currency unit now only represents a two-trillionth of the total wealth of the world, the original currency has been devalued by 50%. How this is perceived by people makes no difference, you can't perceive a new loaf of bread into existence when you only have one (without getting lost in metaphysics at least). Having an exchange to barter the two currencies with each other makes no difference, you have still doubled the total number of currency units, and thereby halved their value.

Of course the situation in the real world is infinitely more complex, and while crypto remains a tiny fraction of the world's money it's easy to imagine that there is the capacity for unlimited growth, but in reality the world is finite, the universe is finite, I think my fundamental point stands. If I'm missing something then I'd love to be enlightened.

[jonat3]

Read my reply to Kleptoid and try answering the question I posed to him. If people don't even know what the heck LTC is, how can they even perceive reduced scarcity? Because that's essentially what is necessary for price inflation. The person must BELIEVE that the scarcity of BTC is reduced by LTC. That can't happen if they aren't even aware of it.