My currency would have value for the same reason bitcoin does-- it is limited in supply and has other properties that makes it a candidate medium of exchange.
Being limited in supply is not
what makes bitcoin have value. You seem to have a fundamental misunderstanding of how currency works. And your proposed currency has no other properties that make it a good medium of exchange.
Also, you don't even have "limited in supply" going for you. There is no limit of the supply of your money. Even assuming that you somehow protect 100% against fraud and always give exactly 1000 DumbCoins to any one person, new people are created every day. You can make a new person in 9 months. Sometimes you even get "lucky" and make two or more. Every time someone is born, 1000 (potential) new DumbCoins are created.
Ok, so a was a little sloppy with the exact wording about the supply of the currency. Perhaps I should have said the supply is controlled/constrained. I'll assume you were smart enough to get the point of what I meant and so I'll just take your response as a nit-picking quibble (either that or I'll have to assume that you're rather dumb
However, I will directly challenge you on your comment about my "smartcoin" currency having no other properties that make it a good medium of exchange:
Let's compare our two currencies against your own beloved bitcoin wiki's criteria about what makes a good virtual currency (https://en.bitcoin.it/wiki/Ideal_Properties_of_Digital_Commodities
From the wiki:
1) Decentralized - no single point of failure or issuing authority: wiki gives bitcoin an A : I give smartcoint an A : my comment- personally I feel bitcoin is a B+ because a teleco failure/internet outage can take down bitcoin in a local region whereas you can trade smartcoin over *any* network connection (such a usb/wifi/bluetooth/near field/local ethernet/etc.. )
2) Scarce - required to be a reasonable store of value : wiki gives bitcoin an A : I'll give smartcoin an A : my comment- bitcoin has a strongly deflationary model in that it has a strict upper limit of the number of coins produced. Where-as smartcoin ties the number of coins to the number of people using it thus smartcoin naturally grows the money supply in a controlled proportional way. Overall depending on human population growth patterns, smartcoin would be very close to neutral (possibly slightly deflationary) because of coin attrition due to people dying with password locked devices and the destruction/loss of devices (see http://bitcointalk.org/index.php?topic=6816.0
.). Which model is better is really a political argument. What can't be argued is that both have quite rigid controls on currency supply, you can't just create extra currency on a whim. The supply of money is quite predictable and smooth in both currencies.
3) Storage - actual commodity should be cheap and easy to physically store securely : wiki gives bitcoin an A : I'll give smartcoin a B : my comment- smartcoin can encrypt its coins with the exact same technology as bitcoin and it even has the advantage that it is *mandatory* that coins are stored on devices with anti-tamper mechanisms and trustworthy OSes. However, I should admit that you cannot backup your coins with smartcoin because its not possible to copy them so they are risk of being lost due to forgotten passwords, device failure, device theft/loss. (It should be noted that when you backup your bitcoins it increases your risk to theft-- although overall the it is a wise and advantageous thing to do.)
4) Irreversible Transactions : transactions should be irreversible : wiki gives bitcoin a B and notes that it is irreversible after an hour which is often not acceptable wait time : I'll give smartcoin an A+ : my comment- personally I feel bitcoin is a C. Within smartcoin general everyday transactions are immediately irreversible, ie. for everyday transactions smartcoin has a perfect score. (Although it should be noted that the one-off bootstrap transaction would take about the same time as a bitcoin transation).
5) Anonymous : untraceable transactions (if desired) : wiki gives bitcoin a C and notes that it currently requires some trusted third party to obsfucate transactions : I'll give smartcoin an A+ : my comment- personally I feel bitcoin is an E. It is *very* hard to do anonymous transactions in bitcoin and it will usually cost you money to try whereas for smartcoin *all* transactions are *completely* anonymous (ie. smartcoin has a perfect score here).
6) Unspoofable : should be exceedingly difficult to counterfeit : wiki gives bitcoin an A : I'll give smartcoin an A : my comment- although they rely on completely different technologies and approaches they are both very good.
7) Gratis Transactions : transactions should be gratis, or nearly so, forever : wiki gives bitcoin a D and notes that bitcoin future tx fees are certain, but could remain low : I'll give smartcoin an A+ : my comment - you may be suprised to learn that I actually rate bitcoin higher than the wiki on this and give it a C+. Smartcoin has a perfect score here-- all transactions are completely free!
Offline Transactions : ideally two participants should be able to safely transact without requiring internet access or trust of one another (like normal cash) : wiki gives bitcoin an F and notes that is not securely possible with Bitcoin- double-spending is always possible without Internet access : I'll give smartcoin an A : my comment- any two machines can transact smartcoin over any network connection, even local ones such as usb/wifi/bluetooth/near field/etc..
9) Speed : ideally transactions would be instantaneous : wiki gives bitcoin a D and notes that currently bitcoin is fast enough only for shipments; anything faster than an hour on average requires compromising security : I'll give smartcoin an A+ : my comment- smartcoin has a perfect score here because transctions clear immediately.
10) Scalability : usable for every transaction everywhere in the world : wiki gives bitcoin a C and notes that currently there is a lack of lightweight and offline bitcoin clients (if such a thing is even possible) to replace the need for conventional cash : I'll give smartcoin an A+ : my comment- gee whiz another A+
. Why an A+ you may ask, because smartcoin is infinitely scalable ie. a perfect score.
I've skipped the Unique Use-value property because I don't believe this is necessary or useful for a currency. However, I will admit that the bitcoin concept of block chains is a pretty neat idea-- so neat that I actually use it in smartcoin to store the global user IDs.
I've skipped the verifiable funds property because I can't really see how this is a necessary property. However, you can implement this ontop of either currency using escrow. It should be noted escrow can be achieved more securely with smartcoin because you can insist upon the use open-proof programs and it is madatory that it uses trustworthy computers- this elimanates concerns about the trustworthiness of the third party.
So, summing up my evaluation:
wiki's bitcoin scoring- A, A, A, B, C, A, D, F, D, C
my bitcoin scoring- B+, A, A, C, E, A, D, C+, F, D, C
my smartcoin scoring: A, A, B, A+, A+, A, A+, A, A+, A+
Smartcoin beats (somethimes even thrashes) or equals bitcoin on each point except one. The one and only advantage that bitcoin has over smartcoin is that you can backup your coins.