Crypto-currencies in 10 years

[Ed4252]

Digital currencies themselves can be Fiat.  Why does Dogecoin have a larger capitalization than an innovative coin like NxT or layered improvements like Mastercoin / Counterparty?  Why does BTC and LTC maintain their position ~ despite hordes of technically better coins?

It seems to me community is king for currencies.  Bitcoin may have an infamous reputation among the mainstream but it frankly hasn't had a serious challenger to date.

how can you tell how large the community is?  If you go into altcoins, one of the largest topics in that section is Darkcoins yet no one has subscribed in reddit.

Be careful holding Dogecoin..Over the past few weeks the hashrates have decreased and it seems like people are migrating to other coins.

[Lauda]

Digital currencies themselves can be Fiat.  Why does Dogecoin have a larger capitalization than an innovative coin like NxT or layered improvements like Mastercoin / Counterparty?  Why does BTC and LTC maintain their position ~ despite hordes of technically better coins?

It seems to me community is king for currencies.  Bitcoin may have an infamous reputation among the mainstream but it frankly hasn't had a serious challenger to date.

You are right. People still aren't looking enough at the technical features of coins such as Darkcoin (or others). The dogecoin community is what keeps its price up, even though it offers no real/new features.

[hamiltino]

My thoughts:

Once a crypto-currency contains a mathamatical mechanism that stabalizes the price of its currency then we will start seeing mass adoption and a true alternative to FIAT. This can be achieved by dynamically changing the supply of currency units instead of the value per currency unit. This system would prevent both inflation and deflation.
Once this happens, bitcoin will no longer be a viable option as a safe and stable storage of wealth or method of transaction.

Once a crytpo currency uses market forces to stabalize the purchasing power then we will start seeing mass adoption.

You are essentially suggesting that we need monetary inflation and deflation to stave off price inflation and deflation. That is the wrong route. We need neither type of inflation and deflation. We need to go back to sound money, with the backing for that money coming from crypto-assets that have a stable supply.

Are you suggesting backing money with bitcoin instead of backing money with gold like we used to?

We would be back to square one, where people would be issuing more money than what they have backed by bitcoin.

OR

Are you saying backing bitcoin with crypto-assets?

Backing anything (i.e. crypto-assets) requires us trusting the owner of that asset, which would also take us back to square one.

I'm saying create a p2p network like bitcoin that has its own crypto asset like bitcoin but is not distributed through mining and maintains a set or more stable money supply. Embedded in this network is a banking system that creates debt instruments (collateralize by the underlying equity of the network) that can be used as currency. There is a reason why we have historically used debt as currency, because it is stable. You invest/save through equity and you spend through debt.

A crypto-currency backed by another crypto-currency?  That's like saying backing silver with gold. These things don't need to be backed by anything because they have intrinsic value in themselves. Doing this to force debt does not make any logical sense. Crypto-currencies such as bitcoin are only unstable relative to USD or EUR..etc. Once they are the only currency in town, then their will be no price stabilization issue and people won't be forced to create useless goods and services by destroying the planet in order to keep this debt based economy alive. I prefer a scenario where people are actually able to store their economic power than force to spend/use it due to the way the economy works.

[clout]

My thoughts:

Once a crypto-currency contains a mathamatical mechanism that stabalizes the price of its currency then we will start seeing mass adoption and a true alternative to FIAT. This can be achieved by dynamically changing the supply of currency units instead of the value per currency unit. This system would prevent both inflation and deflation.
Once this happens, bitcoin will no longer be a viable option as a safe and stable storage of wealth or method of transaction.

Once a crytpo currency uses market forces to stabalize the purchasing power then we will start seeing mass adoption.

You are essentially suggesting that we need monetary inflation and deflation to stave off price inflation and deflation. That is the wrong route. We need neither type of inflation and deflation. We need to go back to sound money, with the backing for that money coming from crypto-assets that have a stable supply.

Are you suggesting backing money with bitcoin instead of backing money with gold like we used to?

We would be back to square one, where people would be issuing more money than what they have backed by bitcoin.

OR

Are you saying backing bitcoin with crypto-assets?

Backing anything (i.e. crypto-assets) requires us trusting the owner of that asset, which would also take us back to square one.

I'm saying create a p2p network like bitcoin that has its own crypto asset like bitcoin but is not distributed through mining and maintains a set or more stable money supply. Embedded in this network is a banking system that creates debt instruments (collateralize by the underlying equity of the network) that can be used as currency. There is a reason why we have historically used debt as currency, because it is stable. You invest/save through equity and you spend through debt.

A crypto-currency backed by another crypto-currency?  That's like saying backing silver with gold. These things don't need to be backed by anything because they have intrinsic value in themselves. Doing this to force debt does not make any logical sense. Crypto-currencies such as bitcoin are only unstable relative to USD or EUR..etc. Once they are the only currency in town, then their will be no price stabilization issue and people won't be forced to create useless goods and services by destroying the planet in order to keep this debt based economy alive. I prefer a scenario where people are actually able to store their economic power than force to spend/use it due to the way the economy works.

No you've entirely misunderstood, both my statements and the economic reality. I'm saying back crypto-debt with crypto-equity and use that debt as a currency because you can achieve any measure of price stability through debt instruments. What I'm trying to say is create a digital banking system that offers its clients the option of storing value in whatever asset they want. Collateralize the value of the debt with the equity of the network. You do realize that money is debt? You give the bank your collateral. They hold on to it and they give you a claim to your collateral. When banking first started, you gave the banker your gold and got a promissory note from the bank. Now you give the bank your fiat currency and the promissory note comes in the form of a debit card. In the digital banking system you give the bank your collateral and they give you a promissory note (crypto-currency) not for the collateral but for the purchasing power power of a specified asset. Lets say I have a  1 btc ($436) but I do not like the volatility of bitcoin. I put my bitcoin in the bank and get back a crypto-currency form of the usd, so I have 436 crypto-usd. If the price of bitcoin falls it doesnt matter to me because I have claim to $436 worth of bitcoin. I simply end up with more bitcoin than I started off with. If the price of bitcoin rises well then I end up with less bitcoin than I started off with but still maintain the purchasing power of $435 usd.

Money has throughout most of history been debt and that is not a bad thing. But as you have alluded to, debt plays a very perverse role in our society. As I mentioned early I think the proper use for debt is money and not financing production, which should be done through equity. Also I have said nothing about forcing people to do things. It is simply in there best interest to use crypto currencies that have the users desired purchasing power. Crypto currencies will become mainstream when they have all the properties of bitcoin but maintain the price stability of the dollar.

[hamiltino]

Neo and Bee Bitcoin bank aimed to do something similar to what you mentioned but it was a centralized approach which lead to its demise.

I actually made a reddit post 2 weeks ago about if it was possible to create a decentralized banking system: http://www.reddit.com/r/Bitcoin/comments/240n26/decentralized_bitcoin_bank_possible/

But what if there is a run on the bank, lets say bitcoin went down to $100 from $500 and everyone wanted to withdraw their bitcoins at the same time, the bank wouldn't have the equity.

[clout]

Neo and Bee Bitcoin bank aimed to do what you mentioned but it was a centralized approach which lead to its demise.

I actually made a reddit post 2 weeks ago about if it was possible to create a decentralized banking system: http://www.reddit.com/r/Bitcoin/comments/240n26/decentralized_bitcoin_bank_possible/

But what if there is a run on the bank, lets say bitcoin went down to $100 from $500 and everyone wanted to withdraw their bitcoins at the same time, the bank wouldn't have the equity.

Just like the bitcoin network has a protocol for transactions this banking network would have a protocol for issuing the debt. You can set the required collateralization to the desired level for each respective network as easily as you change the block reward on a bitcoin fork. Bitshares is already creating a decentralized bank and exchange with 200% reserves. There is a lot more information at bitshares.org and bitsharestalk.org. 


I don't believe that this system is impervious to bank runs even though it does not use the fraudulent fractional reserve system.  If markets are not efficient and there is a run on the bank then ppl will lose money. But this is true of any banking system as we will soon see in the US when interest rates adjusts and banks default again.

[1Referee]

Whatever happens to Bitcoin in 10 years, I will never forget it But perhaps if the retailers, local & large companies, etc, will support Bitcoin we might see the value and acceptance shoot up like a rocket.

Just in case I have 20BTC that I will never sell, I will keep them 10 years, and who knows what the value is by that time  

[clout]

Also this bank doesn't deal in fiat you have to buy the underlying crypto-equity of the bank in order to use its services just in the same way you have to purchase bitcoin to use the network as payment processor. In the end, you wont have to worry about exchanging cryptos for fiat because no one will use fiat.

[LiteCoinGuy]

Will be replaced by the next great innovation and will watch their market share dwindle down to nothing.

MySpace is a company, Bitcoin is a protocol

The internet is a protocol, nothing similar to the internet preceded it and nothing similar will replace it. The protocol will simply be updated.

Same will happen with bitcoin, the protocol will be updated where necessary and nothing needs to replace it.

The infrastructure around bitcoin is too large to just be replaced every few years, it took years to build and it's far from complete. No way merchants, banks, exchanges etc. will change to the newest altcoin all the time just for some random functionality that bitcoin doesn't have but the altcoin does or claims to have, it will be far too costly, it's far easier to just update the bitcoin protocol and no infrastructure needs to be changed drastically.

thats it. thanks.

[Velkro]

10 years sounds about right, global adoption takes time

[hamiltino]

Neo and Bee Bitcoin bank aimed to do what you mentioned but it was a centralized approach which lead to its demise.

I actually made a reddit post 2 weeks ago about if it was possible to create a decentralized banking system: http://www.reddit.com/r/Bitcoin/comments/240n26/decentralized_bitcoin_bank_possible/

But what if there is a run on the bank, lets say bitcoin went down to $100 from $500 and everyone wanted to withdraw their bitcoins at the same time, the bank wouldn't have the equity.

Just like the bitcoin network has a protocol for transactions this banking network would have a protocol for issuing the debt. You can set the required collateralization to the desired level for each respective network as easily as you change the block reward on a bitcoin fork. Bitshares is already creating a decentralized bank and exchange with 200% reserves. There is a lot more information at bitshares.org and bitsharestalk.org. 


I don't believe that this system is impervious to bank runs even though it does not use the fraudulent fractional reserve system.  If markets are not efficient and there is a run on the bank then ppl will lose money. But this is true of any banking system as we will soon see in the US when interest rates adjusts and banks default again.

Wow that is really amazing, i had no clue bitshares was developing a decentralized bank that would allow people to deposit bitcoin and remove the risk of volatility. That is truly a game changer once it finishes development.

[QuestionAuthority]

How many of you people go out and buy Bitcoins and then use those Bitcoins to make a purchase? I'd be willing to bet none of you do because it's too difficult to make it worthwhile and if you do you just increased the cost of your purchase.

That's a bet you will lose quickly: yesterday 50,000 bitcoins were spent.  For me it is much easier to make a purchase and I have decreased the total cost. 

That's absurd. I seriously doubt you could even find 50,000 Bitcoins to purchase let alone spend. That's one 12th of all the Bitcoins Gox lost and those were amassed over a 4 year period when mining had a 50 coin reward. What you are seeing is total transactions. I'm talking about individuals BUYING Bitcoins to make purchases not MINING them. By the way, you need to take another look at the system of fees to buy Bitcoins and spend them again. It's not what you think it is. Also, I sent $10,000 to a relative in Germany for an investment in his company. I used Amazon Payments for the transfer. I registered my bank account with Amazon, called them to remove the $500 monthly limit on my account and sent the money. Guess what? It was free!

[Peter R]

Neo and Bee Bitcoin bank aimed to do what you mentioned but it was a centralized approach which lead to its demise.

I actually made a reddit post 2 weeks ago about if it was possible to create a decentralized banking system: http://www.reddit.com/r/Bitcoin/comments/240n26/decentralized_bitcoin_bank_possible/

But what if there is a run on the bank, lets say bitcoin went down to $100 from $500 and everyone wanted to withdraw their bitcoins at the same time, the bank wouldn't have the equity.

Just like the bitcoin network has a protocol for transactions this banking network would have a protocol for issuing the debt. You can set the required collateralization to the desired level for each respective network as easily as you change the block reward on a bitcoin fork. Bitshares is already creating a decentralized bank and exchange with 200% reserves. There is a lot more information at bitshares.org and bitsharestalk.org. 


I don't believe that this system is impervious to bank runs even though it does not use the fraudulent fractional reserve system.  If markets are not efficient and there is a run on the bank then ppl will lose money. But this is true of any banking system as we will soon see in the US when interest rates adjusts and banks default again.

Wow that is really amazing, i had no clue bitshares was developing a decentralized bank that would allow people to deposit bitcoin and remove the risk of volatility. That is truly a game changer once it finishes development.

If you are interested in decentralized exchanges, coins pegged to the USD, gold, or other assets, then check our colored coins (the video here is a pretty good summary): http://coloredcoins.org

The major advantage of colored coins is that they exist purely in bitcoin-space--there's no need to buy some foo-coin to create them.  

Colored coins are essentially small amounts of bitcoins that encode IOUs for various assets.  For example, Bitstamp could create BitstampUSD colored coins.  The value of a colored coin is thus the value of the underlying bitcoins + the market value of the IOU.  I could buy BitstampUSD from anyone, send them to Bitstamp, and then have Bitstamp honour the IOU by wiring money to my bank account.  

Colored coins open up exciting opportunities for the bitcoin network.  However, colored coins are not a threat to bitcoins themselves.  The reason they are not a threat is that all colored coins are IOUs; they are only worth something as long as the counterparty can honour them.  In other words, colored coins are not completely trustless.  There is only one asset in bitcoin-space that is not also someone else's liability: bitcoins themselves.  

[Peter R]

In order for any crypto coin to remain more than a popular generational fad it needs to be more simple to use than just directly using your countries fiat and have a zero exchange fee. Would you rather go to the store and buy a stereo or go to a gold dealer, buy just the right amount of gold bars, pay a fee for the gold purchase, then find a store that takes gold bars and then buy the stereo. How many average joes are going to take the extra steps necessary?

It sounds like what you're saying is that if bitcoin is only used as a store of value (and not as a medium of exchange), then it is more analogous to gold than to currency.  The total value all mined gold is estimated as $8.3 trillion dollar.  Since the total bitcoin supply is presently valued at $5.6 billion, the gold/bitcoin analogy suggests that bitcoin can grow on the order of 100,000% fulfilling store-of-value demand.

[MrBea]

Digital currencies themselves can be Fiat.  Why does Dogecoin have a larger capitalization than an innovative coin like NxT or layered improvements like Mastercoin / Counterparty?  Why does BTC and LTC maintain their position ~ despite hordes of technically better coins?

It seems to me community is king for currencies.  Bitcoin may have an infamous reputation among the mainstream but it frankly hasn't had a serious challenger to date.

And to get a community that will be bigger than bitcoin, requires the crypto-currency to have certain properties...The question is what properties would it need to have to reign over bitcoin. Price stabilization is the key property for me.

Nxt has a lower market cap than doge despite it being innovative is its lack of user friendliness, poor distribution and poor marketing compared to Doge. These are properties that a top contender needs to have. I'll also add there is no reason for anyone to use nxt over bitcoin when we don't take into account return on investment.

NXT also has very little trade volume.  Its almost masterbatory.  Doge is awesome because the people are awesome and develop great projects.  Android wallet, dogecar, magazine, charity work, twitterbot, artists, activists like savethemhood and more in the works. 

If im at a party doge is the only crypto to talk about because its silly and social. 

Bitcoin will always be gold imho, ideal savings.  Litecoin is meh. 

I see bitcoin, litecoin, dogecoin and an inflationary proof of stake coin.

[clout]

Neo and Bee Bitcoin bank aimed to do what you mentioned but it was a centralized approach which lead to its demise.

I actually made a reddit post 2 weeks ago about if it was possible to create a decentralized banking system: http://www.reddit.com/r/Bitcoin/comments/240n26/decentralized_bitcoin_bank_possible/

But what if there is a run on the bank, lets say bitcoin went down to $100 from $500 and everyone wanted to withdraw their bitcoins at the same time, the bank wouldn't have the equity.

Just like the bitcoin network has a protocol for transactions this banking network would have a protocol for issuing the debt. You can set the required collateralization to the desired level for each respective network as easily as you change the block reward on a bitcoin fork. Bitshares is already creating a decentralized bank and exchange with 200% reserves. There is a lot more information at bitshares.org and bitsharestalk.org. 


I don't believe that this system is impervious to bank runs even though it does not use the fraudulent fractional reserve system.  If markets are not efficient and there is a run on the bank then ppl will lose money. But this is true of any banking system as we will soon see in the US when interest rates adjusts and banks default again.

Wow that is really amazing, i had no clue bitshares was developing a decentralized bank that would allow people to deposit bitcoin and remove the risk of volatility. That is truly a game changer once it finishes development.

If you are interested in decentralized exchanges, coins pegged to the USD, gold, or other assets, then check our colored coins (the video here is a pretty good summary): http://coloredcoins.org

The major advantage of colored coins is that they exist purely in bitcoin-space--there's no need to buy some foo-coin to create them.  

Colored coins are essentially small amounts of bitcoins that encode IOUs for various assets.  For example, Bitstamp could create BitstampUSD colored coins.  The value of a colored coin is thus the value of the underlying bitcoins + the market value of the IOU.  I could buy BitstampUSD from anyone, send them to Bitstamp, and then have Bitstamp honour the IOU by wiring money to my bank account.  

Colored coins open up exciting opportunities for the bitcoin network.  However, colored coins are not a threat to bitcoins themselves.  The reason they are not a threat is that all colored coins are IOUs; they are only worth something as long as the counterparty can honour them.  In other words, colored coins are not completely trustless.  There is only one asset in bitcoin-space that is not also someone else's liability: bitcoins themselves.  

I don't see what that advantage of colored coins is over any of the other decentralized exchanges that offer IOUs such as matercoin, counterparty, nxt, and ripple?

Am I the only one that thinks its absolutely ridiculous that so many ppl in this opensource space are creating different projects to do the same thing. Its an absolute waste of resources. These teams should be collaborating instead of competing.

[hamiltino]

Neo and Bee Bitcoin bank aimed to do what you mentioned but it was a centralized approach which lead to its demise.

I actually made a reddit post 2 weeks ago about if it was possible to create a decentralized banking system: http://www.reddit.com/r/Bitcoin/comments/240n26/decentralized_bitcoin_bank_possible/

But what if there is a run on the bank, lets say bitcoin went down to $100 from $500 and everyone wanted to withdraw their bitcoins at the same time, the bank wouldn't have the equity.

Just like the bitcoin network has a protocol for transactions this banking network would have a protocol for issuing the debt. You can set the required collateralization to the desired level for each respective network as easily as you change the block reward on a bitcoin fork. Bitshares is already creating a decentralized bank and exchange with 200% reserves. There is a lot more information at bitshares.org and bitsharestalk.org.  


I don't believe that this system is impervious to bank runs even though it does not use the fraudulent fractional reserve system.  If markets are not efficient and there is a run on the bank then ppl will lose money. But this is true of any banking system as we will soon see in the US when interest rates adjusts and banks default again.

Wow that is really amazing, i had no clue bitshares was developing a decentralized bank that would allow people to deposit bitcoin and remove the risk of volatility. That is truly a game changer once it finishes development.

If you are interested in decentralized exchanges, coins pegged to the USD, gold, or other assets, then check our colored coins (the video here is a pretty good summary): http://coloredcoins.org

The major advantage of colored coins is that they exist purely in bitcoin-space--there's no need to buy some foo-coin to create them.  

Colored coins are essentially small amounts of bitcoins that encode IOUs for various assets.  For example, Bitstamp could create BitstampUSD colored coins.  The value of a colored coin is thus the value of the underlying bitcoins + the market value of the IOU.  I could buy BitstampUSD from anyone, send them to Bitstamp, and then have Bitstamp honour the IOU by wiring money to my bank account.  

Colored coins open up exciting opportunities for the bitcoin network.  However, colored coins are not a threat to bitcoins themselves.  The reason they are not a threat is that all colored coins are IOUs; they are only worth something as long as the counterparty can honour them.  In other words, colored coins are not completely trustless.  There is only one asset in bitcoin-space that is not also someone else's liability: bitcoins themselves.  

Interesting...

I don't see how colored coins can be pegged to usd while being trustless, bitshares decentralized bank looks alot better.

[clout]

Hahah bitshares is without a doubt better. It doesn't use IOU's, it is a 'trustless' system in the same way that bitcoin is a 'trustless' system. Its the only decentralized exchange that doesn't use IOU's and its the only decentralized bank. It also has a better consensus mechanism for the blockchain than bitcoin, foregoing mining cost and paying stakeholders with dividends from transaction fees. I'm not saying that colored coins isn't a a good idea but dont think for a second that colored coins and bitshares are the same.

[cbeast]

Bitshares vs. Colored Coins vs. Ethereum vs. Mastercoin etc.

They all serve different functions. Only Bitcoin is universal, all the others serve niche markets. As long as the alt coin derivatives don't stray too far from the flock, they should survive and adapt along with Bitcoin.

[clout]

How is bitcoin any more universal than bitshares or ethereum? Bitcoin in and of itself is a niche market. These other two projects are trying to take the technology into the mainstream. Bitcoin serves one functions, while these systems serve many. You are completely misinformed.