Someone will solve our problem. We won't like it.

[Cryddit]

Satoshi's invention combines a printing press capable of producing tokens that can be easily verified real and can't be forged, an international courier service that can take these tokens anywhere in just a few minutes, and 'brakes' on the printing press that guarantee that no more than a given number of tokens will ever be produced from that printing press. 

And now anyone can set up one of these printing presses, each with its own international courier service and its own supply of unforgeable, easily-verified tokens.

I've been trying to identify a reason why one of them should become (or remain) dominant in the long run, and I don't think there is one.  Some will die off as their developers give up or their innovations lead to security failures or whatever, and some will become more popular because of good technical innovations, responsive devs, good interface design, or good support.... but I just can't identify a reason why any of them should ever achieve lasting dominance.  They are competitors in a market with little or no barrier to entry, and many of them are more or less suited to particular commercial niches, so there are incentives to choose one over another that vary from one task to another. 

In the physical world, on paper, anybody can set up a printing press (or a laser printer) and print his own money.  But most of the time nobody cares.  If I show somebody my freshly-designed $4 bill with Guy Fawkes on the front, they'll look at me funny and treat it as a joke.  Or a crime, although some folks can't tell the difference. I can promise I'll never print more than a few million of them, and they'll wonder why the hell that's relevant.  I can demonstrate that nobody else can make them exactly the same, and show how you can tell mine from any attempted copies -- and by this time they'll be getting mad at me for standing around talking uselessly so much and kick me out.  If I happened to drop any of those $4 bills, they go in the trash once I'm gone.

What would I need to get my paper $4 bills taken seriously?  And is it something that any of these cryptocurrencies have?

This is our unacknowleged problem.  Altcoins didn't cause it; they just exposed it.

Sooner or later someone is going to issue a cryptocurrency with a promise that you can use it to buy a certain amount of a particular thing from the issuer.  And other things being as equal as possible,  and most folks being unconcerned with privacy, I think people are going to appreciate that more, and be more confident about it, than they appreciate and are confident in abstractions like privacy and decentralization.

[User705]

Responses to this should be interesting.  Bitcoin scarcity argument depends on denying this premise.  This also means any large bitcoin holder almost has to keep diversifying into alt coins continuously since it would be hard to predict which coin wins out in the end or even simply gets popular.

[MindGrenade]

I see what you're doing, it's a good way to think of it.

The inherent flaw in the comparison is purely that the currency you describe is just like what we have already. It brings nothing to the table, other than scarcity, which alone does not provide value. I'm the only one alive with my DNA, but everyone else has their own too. I'm sure if they had a niche use they may gain value. But in the state you describe they have nothing to offer other than being paper. I find it bad enough we value paper (ie USD, AUD etc) as much as we do now, but unfortunately that is what the governments that rule us dictate as currency, so that is why that paper is worth what your paper is not besides being very similar.

The fact is the hypothetical bills don't have the desirable advantages BTC and alts provide. Digital currencies have that advantage of being digital. They can't be stolen as easily as the bills. You can't move those bills across the globe and back in hours. These are undeniable advantages over any physical currency. I personally see value for the reasons that a govt cannot intervene, that there is a limited supply, and all the advantages of being digital. Reasons vary, but crypto is desirable (not necessarily the value quantified by $$$) because of the traits they possess. At the same time, it's safe to say most people holding gold wouldn't want it for it's industrial uses, and that is definitely not where it's value comes from.

That being said I do agree about the altcoin scenario. I find it highly unlikely that BTC will be at the top purely because it was first and is now most popular. When has the first version of any software or the first innovation ever remained as king? BTC has plenty of flaws, namely the sustainability of it's network (both hashrate and power usage), moving away from decentralized nature as more and more are forced out of mining and so on and it becomes a monopoly between companies who can afford to do so. There will be updated coins that address this issue, I believe personally will take over BTC eventually. I think we have seen scrypt, which will make the next wave and is in the process of doing so, then we will see CPU coins make an impact, which they have also already started to. I think an ASIC resistant CPU-only coin will remain to be more decentralised given that it has a much lower barrier to entry and much harder to monopolise.

[ondratra]

What the hell is point of this thread??? I don't get it.

You ultimately say that bitcoin(and all cryptos as we know them today) isn't perfect and won't stay forever - yes everyone agrees with this and everyone knows that since the beginning. But what's the problem?? This is one evolution step forward - we will learn about good and bad of current paradigm and take a lesson from it in the future. Probably states will emit their own cryptos in future after current cryptos proof themself as stable(i don't mean price now) and secure. I am thinking since the beginning, that even hobby communities will make their own cryptos - example: fishermen will make their own currency so you can buy equip, buy trips to go fishing to some exotic place with local pros + you can win them on fish catching tournaments + hundreds of other possibilities.

But today is today! Bitcoin enables worldwide payment even when some idiotic bank says: "I won't send YOUR money today - what you think? Its saturday! I will send them monday and they will get to your friend on other side of planet in 7 working days." Or: "You know, we don't like business you do - we cancel your account and keep your money until goverment or some other 'legal terrorists' tells you your money are officially confiscated". etc.

So yes - bitcoin isn't perfect as anything in universe except universe itself, but it's great leap forward - don't invest all your value into cryptos and you are fine

I hope i made myself clear (no offense against anyone)

[Puppet]

I've been trying to identify a reason why one of them should become (or remain) dominant in the long run, and I don't think there is one.

Crypto currency market is a "winner takes all" market. The reason one will become or remain dominant is that the value of the system correlates directly with the number of users. Sure, I can make a Puppetcoin, but if no one accepts it (and no one mines it), its worthless.

Just think of facebook or twitter. Any half competent web developer could design something quite similar to facebook or twitter in a few weeks. Possibly even something e little better. But facebook is worth >$100B and that facebook copy, little more than nothing. Why? Because the true value of facebook is the fact its used by a billion users. Its a network. Thats the barrier to entry, just ask Google+. Likewise, bitcoin is not only a currency, its a network of users, and it derives most of its usefulness and ultimately value from the size of the network. And the bigger it is, the easier it is to grow it further. Quite the opposite of any new challenger.

PS bitcoin is still small enough, and cyrpto currency still new enough I think its entirely plausible in the end its not actually bitcoin that wins. Something better might come along. Time will tell, but there will be a single winner.

[black_swan]

What would I need to get my paper $4 bills taken seriously?  And is it something that any of these cryptocurrencies have?
This is our unacknowleged problem.  Altcoins didn't cause it; they just exposed it.

Today you need (b?)millions of people and "hashing power" to be taken seriously
You need people willing to use it and trust the "network",  the value is on the blockchain, nowhere else.
The only thing altcoins, used in my sentence as copy with no innovation, merely exposed the greed ruling this world.

[knightcoin]

to OP, sounds like philosophical question for me, I prefer stick to BTC ... and I think Satoshi deserve his BTCillion 10^9, (in the short scale) |or| BTCillion 10^12 (in the long scale)  for bootup the sys ...

I would give him a Tesla BTCilion bank note



Ok, maybe to much Darwn ( the survival of the fittest coolest )

""Survival of the fit enough" is also emphasized by the fact that while direct competition has been observed between individuals, populations and species, there is little evidence that competition has been the driving force in the evolution of large groups. For example, between amphibians, reptiles and mammals; rather these animals have evolved by expanding into empty ecological niches.[8] In the punctuated equilibrium model of environmental and biological change, the factor determining survival is often not superiority over another in competition but ability to survive dramatic changes in environmental conditions, such as after a meteor impact energetic enough to greatly change the environment globally. The main land dwelling animals to survive the K-Pg impact 66 million years ago had the ability to live in underground tunnels, for example."

/

[meanig]

Satoshi's invention combines a printing press capable of producing tokens that can be easily verified real and can't be forged, an international courier service that can take these tokens anywhere in just a few minutes, and 'brakes' on the printing press that guarantee that no more than a given number of tokens will ever be produced from that printing press. 

And now anyone can set up one of these printing presses, each with its own international courier service and its own supply of unforgeable, easily-verified tokens.

I've been trying to identify a reason why one of them should become (or remain) dominant in the long run, and I don't think there is one.  Some will die off as their developers give up or their innovations lead to security failures or whatever, and some will become more popular because of good technical innovations, responsive devs, good interface design, or good support.... but I just can't identify a reason why any of them should ever achieve lasting dominance.  They are competitors in a market with little or no barrier to entry, and many of them are more or less suited to particular commercial niches, so there are incentives to choose one over another that vary from one task to another. 

In the physical world, on paper, anybody can set up a printing press (or a laser printer) and print his own money.  But most of the time nobody cares.  If I show somebody my freshly-designed $4 bill with Guy Fawkes on the front, they'll look at me funny and treat it as a joke.  Or a crime, although some folks can't tell the difference. I can promise I'll never print more than a few million of them, and they'll wonder why the hell that's relevant.  I can demonstrate that nobody else can make them exactly the same, and show how you can tell mine from any attempted copies -- and by this time they'll be getting mad at me for standing around talking uselessly so much and kick me out.  If I happened to drop any of those $4 bills, they go in the trash once I'm gone.

What would I need to get my paper $4 bills taken seriously?  And is it something that any of these cryptocurrencies have?

This is our unacknowleged problem.  Altcoins didn't cause it; they just exposed it.

Sooner or later someone is going to issue a cryptocurrency with a promise that you can use it to buy a certain amount of a particular thing from the issuer.  And other things being as equal as possible,  and most folks being unconcerned with privacy, I think people are going to appreciate that more, and be more confident about it, than they appreciate and are confident in abstractions like privacy and decentralization.

Cryptocurrency is not issued. It is mined. If an entity is going to guarantee that a certain product can be purchased with a currency they wouldn't go down the proof of work/proof of stake cryptocurrency route. Instead they would have a centralised database and they would be in control of issuing the currency and validating transactions.

Think of dollars, euros etc. They are issued by governments and they guarantee that you can pay your taxes with them. Why would they change from a centrally issued currency to a cryptocurrency that they have no control over? Same for a private company which produces a product and guarantees convertibility between their product and their cryptocurrency. What if they company had a bad year and production fell. They wouldn't be able to honour their guarantee if the rate of cryptocurrency mining was out of their control.

[piramida]

What would I need to get my paper $4 bills taken seriously?  And is it something that any of these cryptocurrencies have?

Good question ; what altcoins really show (will show in the nearest future) is that the currency can be issued by anyone, and these currencies have very close to zero value right after inception. They might be speculatively pumped, however, when the currency exchange volumes grows to a serious level, only the networks which would be able to withstand attacks and operate under real-world conditions would stay, others would be rapidly crashing to zero at one point. So the value is not in just cloning the coin; the value is in running the coin. Development, stability, merchant acceptance, hashing network - these are the things that give any currency value.

So, once your $4 bills get backed by serious VC money, your friends would be interested.

[zimmah]

Sooner or later someone is going to issue a cryptocurrency with a promise that you can use it to buy a certain amount of a particular thing from the issuer.  And other things being as equal as possible,  and most folks being unconcerned with privacy, I think people are going to appreciate that more, and be more confident about it, than they appreciate and are confident in abstractions like privacy and decentralization.

Altcoins are not taken seriously by most, and they shouldn't. Anything an altcoin can do, bitcoin can do better, and bitcoin already has a massive network, altcoins don't.

Just like bitcoin has to be a MASSIVE advantage over fiat currency (and it is), any altcoin that wishes to overthrow bitcoin has to have a MASSIVE advantage over bitcoin (and has to do something that bitcoin absolutely can't do, for whatever reason). This is simply not going to happen, therefore bitcoin will stay the one and only true crypto.

You can't make a decentralized crypto that is guaranteed to buy a certain amount of particular good, because if you want to keep you value equal to anything you need to centralize it, and the whole point of bitcoin is that they are decentralized. The market will decide the price and that's exactly how money SHOULD work.

Bitcoin is not the problem, the problem is that most people have a very wrong idea about money, and a very wrong idea about who to trust. People put a lot trust in large corporations, banks, and politicians, even though these 3 are known to be power and money-hungry and do not care about you at all. They trust central banks not to debase their currency while history has shown that the opposite is true.

[Cryddit]

First, yeah, you can 'issue' a cryptocurrency.  It would be centralized, but with transaction log published in real time and automatically auditable by any client.  You get a couple of the major advantages of bitcoin without all that messy anarchic decentralization stuff that "reasonable consumers" don't care about anyway.  You can make promises about the money supply and people can use software to ensure that those promises remain unbroken.  You can transfer it across the globe in minutes, etc. 

And it's just not true that anything an altcoin can do can be done better by Bitcoin.  Peercoin does proof-of-stake mining (keeping transaction fees low enough that it can be used in vending machine sales etc), and Bitcoin doesn't.  Nextcoin promises to do that even better, btw.   Anoncoin does Tor integration and Bitcoin doesn't.  Several coins resist centralization by being ASIC resistant and Bitcoin doesn't.  Bitcoin transaction fees are already too high for vending-machine sized sales and several altcoins are able to fit into that niche.  Technically speaking there are already valid reasons to choose different cryptocurrencies for different applications rather than choosing Bitcoin for all applications.  Bitcoin currently has a bigger network, and that is to its advantage in many, but not all, applications. 

Cryptocurrencies have a massive advantage over paper currencies in terms of counterfeit detection, auditability, liquidity and speed/reliability in transmission.  But they're not really more resistant to theft (as wallet-stealing programs demonstrate), nor inherently resistant to being extorted from someone against their will (or cryptolocker wouldn't work).  Anyway the nub of the problem is whether any cryptocurrency, in the long run, has a massive advantage over other cryptocurrencies.   The question of why someone prefers one paper currency over another is not posed as an analogy to the question of why someone prefers a crypto over a paper currency.   The interesting question is why to prefer one cryptocurrency over another cryptocurrency.

I don't see any evidence yet that this is a "natural monopoly" wherein network effects will automatically cause a single mover to become dominant.  That's an interesting idea, and may be true, but I don't see evidence for it yet.

[meanig]

First, yeah, you can 'issue' a cryptocurrency.  It would be centralized, but with transaction log published in real time and automatically auditable by any client.  You get a couple of the major advantages of bitcoin without all that messy anarchic decentralization stuff that "reasonable consumers" don't care about anyway.  You can make promises about the money supply and people can use software to ensure that those promises remain unbroken.  You can transfer it across the globe in minutes, etc. 

And it's just not true that anything an altcoin can do can be done better by Bitcoin.  Peercoin does proof-of-stake mining (keeping transaction fees low enough that it can be used in vending machine sales etc), and Bitcoin doesn't.  Nextcoin promises to do that even better, btw.   Anoncoin does Tor integration and Bitcoin doesn't.  Several coins resist centralization by being ASIC resistant and Bitcoin doesn't.  Bitcoin transaction fees are already too high for vending-machine sized sales and several altcoins are able to fit into that niche.  Technically speaking there are already valid reasons to choose different cryptocurrencies for different applications rather than choosing Bitcoin for all applications.  Bitcoin currently has a bigger network, and that is to its advantage in many, but not all, applications. 

Cryptocurrencies have a massive advantage over paper currencies in terms of counterfeit detection, auditability, liquidity and speed/reliability in transmission.  But they're not really more resistant to theft (as wallet-stealing programs demonstrate), nor inherently resistant to being extorted from someone against their will (or cryptolocker wouldn't work).  Anyway the nub of the problem is whether any cryptocurrency, in the long run, has a massive advantage over other cryptocurrencies.   The question of why someone prefers one paper currency over another is not posed as an analogy to the question of why someone prefers a crypto over a paper currency.   The interesting question is why to prefer one cryptocurrency over another cryptocurrency.

I don't see any evidence yet that this is a "natural monopoly" wherein network effects will automatically cause a single mover to become dominant.  That's an interesting idea, and may be true, but I don't see evidence for it yet.

If the airmiles transaction database was fully auditable would you consider it to be a cryptocurrency?

Can you give us your definition of cryptocurrency.

[vadoff]

A coin's value depends on:

* Confidence
* Number/talent of developers working on it
* Number of merchants accepting it
* Hashing power of the network

Right now Bitcoin has all of these, as well as the ability to evolve as a protocol.
I don't see it being usurped anytime soon, but I do see a handful of other altcoins up there with it.

[Cryddit]

To me a cryptocurrency is a trading medium with a complete and public record of transactions that is cryptographically secured against retroactive alteration or tampering.  The complete and public record must allow people to check it with trustable software (ie, they can see the source code) to test the validity of transactions and to make sure that they are seeing the same version of the record that other users are seeing. In the case of Bitcoin these validity conditions include money supply limitations, coinbase transactions, transaction outputs no greater than inputs, etc.  In the case of some other cryptocurrency the validity conditions could be different.

For example if someone wanted to issue a cryptocurrency carrying a promise that you could use one unit of that currency to buy a gram of gold from her on demand, then the validity conditions you'd be checking , aside from the conventional restrictions on individual transactions, would include that no one else besides her is issuing new coins, and that a monthly audit by some third party assayer continues to find enough gold in her vault to sell on demand to all holders.  It wouldn't be decentralized, nor completely trustless the way Bitcoin is, but it would be a cryptocurrency.  If the transaction record were updated in a decentralized way as Bitcoin's blockchain is, then people could go on trading with it even if the issuer takes her server offline completely.  She'd only have to connect to the network once in a while to announce sales of gold (destruction of the currency) or creation of new units of currency (with evidence of acquisition of corresponding gold for the vault).

[meanig]

To me a cryptocurrency is a trading medium with a complete and public record of transactions that is cryptographically secured against retroactive alteration or tampering.  The complete and public record must allow people to check it with trustable software (ie, they can see the source code) to test the validity of transactions and to make sure that they are seeing the same version of the record that other users are seeing. In the case of Bitcoin these validity conditions include money supply limitations, coinbase transactions, transaction outputs no greater than inputs, etc.  In the case of some other cryptocurrency the validity conditions could be different.

For example if someone wanted to issue a cryptocurrency carrying a promise that you could use one unit of that currency to buy a gram of gold from her on demand, then the validity conditions you'd be checking , aside from the conventional restrictions on individual transactions, would include that no one else besides her is issuing new coins, and that a monthly audit by some third party assayer continues to find enough gold in her vault to sell on demand to all holders.  It wouldn't be decentralized, nor completely trustless the way Bitcoin is, but it would be a cryptocurrency.  If the transaction record were updated in a decentralized way as Bitcoin's blockchain is, then people could go on trading with it even if the issuer takes her server offline completely.  She'd only have to connect to the network once in a while to announce sales of gold (destruction of the currency) or creation of new units of currency (with evidence of acquisition of corresponding gold for the vault).

Check out Ripple. You'll cum in your pants.

[skivrmt]

I've been trying to identify a reason why one of them should become (or remain) dominant in the long run, and I don't think there is one.

Crypto currency market is a "winner takes all" market. The reason one will become or remain dominant is that the value of the system correlates directly with the number of users. Sure, I can make a Puppetcoin, but if no one accepts it (and no one mines it), its worthless.

Just think of facebook or twitter. Any half competent web developer could design something quite similar to facebook or twitter in a few weeks. Possibly even something e little better. But facebook is worth >$100B and that facebook copy, little more than nothing. Why? Because the true value of facebook is the fact its used by a billion users. Its a network. Thats the barrier to entry, just ask Google+. Likewise, bitcoin is not only a currency, its a network of users, and it derives most of its usefulness and ultimately value from the size of the network. And the bigger it is, the easier it is to grow it further. Quite the opposite of any new challenger.

PS bitcoin is still small enough, and crypto currency still new enough I think its entirely plausible in the end its not actually bitcoin that wins. Something better might come along. Time will tell, but there will be a single winner.

But to play devil's advocate neither FB or Twitter where first to the market.  We look back now and it sounds silly.  But remember Netscape?  Altavista?  They had 70%+ market share at their peaks.  MySpace beat FB out there but FB did "it" better. 

On the other hand, crypto I think is different.  There will always be other coins out there, but, especially in the first 5-10 years, I can't see the mainstream public supporting more than one.  Its complicated enough to them.  This is why I think XBT has a huge first to market advantage despite some of its shortfalls.

[casascius]

Sooner or later someone is going to issue a cryptocurrency with a promise that you can use it to buy a certain amount of a particular thing from the issuer.  And other things being as equal as possible,  and most folks being unconcerned with privacy, I think people are going to appreciate that more, and be more confident about it, than they appreciate and are confident in abstractions like privacy and decentralization.

In Bitcoin, the costs of the mining rewards are spread equally throughout the community.  We all pay for mining by being willing to accept inflation: we have all agreed to be willing to accept coins as payment which have not yet been mined into circulation.  We accept that as part of the bootstrapping plan, and at Bitcoin's current rate of adoption, it's more than offset by all of the seignorage all Bitcoin holders earn over time due to people continuing to adopt the system.

If and when an organization creates a coin they subsidize themselves with a particular thing, they will be spending an enormous amount of resources providing that "thing" to the user base including those who have mined the coins out of thin air.  They will, in effect, be fully subsidizing the mining rewards forever - or until they stop, at which moment the coin will likely collapse.  That is a huge, huge, huge cost to start your own coin.

[Puppet]

But to play devil's advocate neither FB or Twitter where first to the market.  We look back now and it sounds silly.  But remember Netscape?  Altavista?  They had 70%+ market share at their peaks.  MySpace beat FB out there but FB did "it" better. 

Altavista  and Netscape are bad examples, there is no network effect there. If someone builds a better browser than Firefox (chrome, whatever) ,  there is no reason they couldnt grab marketshare, even today.  But try to get people to sign up to yet another social network where none of their friends are on, while Facebook and twitter have them all; thats a different story. So the Myspace comparison is much more apt. And I agree, its far from certain bitcoin will be the winner in the end. The market is still young. Something better might come along, but it will have an uphill fight against the current market leader. Simply because it is the market leader.

[User705]

But to play devil's advocate neither FB or Twitter where first to the market.  We look back now and it sounds silly.  But remember Netscape?  Altavista?  They had 70%+ market share at their peaks.  MySpace beat FB out there but FB did "it" better. 

Altavista  and Netscape are bad examples, there is no network effect there. If someone builds a better browser than Firefox (chrome, whatever) ,  there is no reason they couldnt grab marketshare, even today.  But try to get people to sign up to yet another social network where none of their friends are on, while Facebook and twitter have them all; thats a different story. So the Myspace comparison is much more apt. And I agree, its far from certain bitcoin will be the winner in the end. The market is still young. Something better might come along, but it will have an uphill fight against the current market leader. Simply because it is the market leader.

It's not as uphill as you think.  In small illiquid markets all it takes is one real or perceived negative.  Every next generation of new users represents a bigger user base then the last.  Once they are comfortable and familiar with it there is no learning curve and 1st to market advantage isn't that great.

[skivrmt]

But to play devil's advocate neither FB or Twitter where first to the market.  We look back now and it sounds silly.  But remember Netscape?  Altavista?  They had 70%+ market share at their peaks.  MySpace beat FB out there but FB did "it" better. 

Altavista  and Netscape are bad examples, there is no network effect there. If someone builds a better browser than Firefox (chrome, whatever) ,  there is no reason they couldnt grab marketshare, even today.  But try to get people to sign up to yet another social network where none of their friends are on, while Facebook and twitter have them all; thats a different story. So the Myspace comparison is much more apt. And I agree, its far from certain bitcoin will be the winner in the end. The market is still young. Something better might come along, but it will have an uphill fight against the current market leader. Simply because it is the market leader.

It's not as uphill as you think.  In small illiquid markets all it takes is one real or perceived negative.  Every next generation of new users represents a bigger user base then the last.  Once they are comfortable and familiar with it there is no learning curve and 1st to market advantage isn't that great.

But thats the real question, once they are comfortable with it.  1 year?  3 years?  5 years?   And of course, will they ever be comfortable with it?  I don't know if the majority of people will be comfortable if they can't physically hold it.  I mean look how many people are uncomfortable even owning stocks yet they are "real".  So if the majority of people are not comfortable with it, I think the market leader does huge a nice advantage over the rest.