Phases in altcoin evolution (some history)

[niniyo]

Just wanted to share my observation regarding the way the altcoin scene has been shaping and evolving.  I started watching altcoins around early 2013 when I got into Bitcoin, so there's probably some history before that which I'm missing.  I've divided the evolution up into some distinct phases.

Stage 1: Technical differentiation

The first wave of altcoins attempted to stand out through their technical differences.  The most common selling point was the block interval, which progressively became faster and faster until it hit the limits of practicality (eg. 30 second coins).  Other common tweaks were: different proof-of-work algorithms, different inflation schedules / block reward schemes, and proof-of-stake.

By the end of this phase, there were hundreds coins with different combinations of technical parameters.  It was becoming increasingly hard for any new coin to attract a following based on technical parameters alone.

Stage 2: Popular appeal
This phase kicked off with Dogecoin.  Dogecoin rose out of the sea of hundreds of altcoins and obtained a mass following and significant market value within weeks.  This was all on the back of a popular joke.  Dogecoin proved that marketing and popular appeal was key to building a successful coin.  Following dogecoin, many new popular coins emerged with professional-looking websites & logos, and funny themes (eg. Kanye Coin, Kitteh Coin, Bro Coin, Ron Paul Coin etc).  By the end of this phase, there was a coin for so many different memes/animals/people, it again became difficult for any new coin to stand out.

Stage 3: Airdrop Coins
This began with Auroracoin which, like Dogecoin, proved a new formula for success and caused many to try to emulate it.  This time the formula was to associate the coin with a specific nation or community, premine a large portion of the coins, and announce a date when the coins would be "airdropped" or distributed for free to all members of the target community.  Following the surge in value of Auroracoin, many other coins have replicated this same pattern, such as Spaincoin, Aphroditecoin, and Silicon Valley Coin.

Anyone got any thoughts/comments on this observation of the three trends?  Maybe there were other phases that I'm missing.  What's next after we get saturated with too many airdrop coins?

[spiffcow]

I'm really hoping the next phase is community oversight and a return to technical differences.  Of course, technical differences are harder to come by now..  But therein lies the challenge

[ebliever]

Interesting post. I suspect with the rise of Scrypt ASICs we will see GPU miners driven out - they may try to adopt some of the niche coins, but the value is just not going to be there to sustain them.

With Scrypt mining concentrated the way Bitcoin mining is concentrated, there will only be a limited number of coins that will be able to maintain a decent hashrate. So I'm expecting a die-off of sorts.

My own thinking has been a little more simplified than yours - focusing on technical characteristics first, and then recognizing that emotional loyalty would play a role as well. I lumped Dogecoin with Auroracoin in the latter category, thus conflating your stages 2 and 3. I think the technical leaders will emerge, but that at least some emotional loyalty coins with strong communities will thrive as well.

[DieJohnny]

There will be another phase no doubt about it. Something that is unique and fun will come along. In a year from now there will be 10,000 Alt coins, how the hell are they going to differentiate themselves? Only so many countries to print coins for.....

I thought HunterCoin would be a trend and maybe it still has possibility. I think ultimately a coin that successfully merges with a popular game will create a trend.

[ebliever]

Here's one thought in answer to your "what's next?" question: What makes you or I value a coin?

Either it has to be a store of value (which any cryptocurrency can be), or you have to be able to use it to buy something. So coins that offer ready access to some good or service will have greater demand than the hordes of altcoins being released today that cannot be used directly to buy ANYTHING, anywhere.

So what if Amazon releases/sponsors an Amazoncoin and says they will accept only it rather than going the BTC route? And then Walmart released their own coin, and so on? It might be far-fetched, but that would be one possible Stage 4.

[Maluridea]

-1 on cryptos being a good store of value. Maybe in the future but for today nah.
+1 on a large organization releasing their coin, I was hoping for Wikipedia or Wikileaks though

[crimealone]

I think it comes to the stage that only really valuable coins based on useful innovative technique can survive and explode.

[wasamata]

according to maslows hierachy of shitcoin history:

1. premine
2. pump
3. dump
4. rinse
5. repeat