Thread title is inaccurate. It's not an alternative to Bitcoin because it's centralized and requires trust in one entity. It's a competitor, however, because it competes on an electronic functionality level.
Exactly. And compete it shall!
I'm not so sure.
One thing this, and Bitcoin too, has shown me is that money is changing -- it no longer needs to be local to gain adoption. People are going to look for whatever is most convenient to exchange and is the best store of value, two key functions of "money". In the past, since people and economies were separated physically, and money was/is physical, the local currency would win by default.
With the Internet this is no longer the case. Now it comes down to the nitty gritty. Currency systems will compete globally. And since software can be the same anywhere, the money that wins will be what people agree has the best value.
Inflated paper currencies are on their way out. They are about to self-destruct anyway, but even if not they represent old technology. Globalized e-currency will be what is next.
However, just as the Internet enables better money systems it will allow people to get better at identifying them. Information is no longer encapsulated and unavailable to the uninformed. It won't be easy or perhaps even possible for currencies to be inflated without being severely devalued. I believe the world will identify gold and silver as a benchmark. These metals have been recognized as valuable as money for thousands of years, and are not inflationary. I doubt that will change.
I think people will maintain a physical store of gold/silver as savings, and convert them to the winning e-currency(ies) as needed. Bitcoin, with its transparent, verifiable cap at 21 million coins, and authority-less features, will have obvious value. The governmental/regulatory environment that springs up around it will determine what role it plays in everyday mainstream use.
On the other hand, currency like this MintChip is novel as the first e-currency sponsored by a government. What they do with it remains to be seen, but it appears they are looking to inflate it. The only clue we have is from the CEO who commented
it would be "backed by a fund". Not backed by gold or silver (which could be surreptitiously inflated anyway), but backed by a fund. That leads me to believe it won't go very far with acceptance.EDIT:
Here is more reading I found on MintChip. It appears there is more in store from them April 17th. http://www.agoracosmopolitan.com/news/canadian_news/2012/03/15/3426.html