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Author Topic: Can Bitcoin coexist with other cryptocurrencies?  (Read 4743 times)
Frendizi
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June 06, 2012, 09:13:46 PM
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I was wondering what everyone thought about other cryptocurrencies, and how you think they'll thrive, crash and burn, or cohabitate with Bitcoin. I don't want to mention any other ones specifically, but I've seen a couple that are carbon copies of Bitcoin, and others that are trying to be a lesser value coin. What does everyone think? As online currencies become more popular, do you think people will start picking sides, or transfer funds between a couple if the infrastructure to do so exists? I can see both sides of the coin ( Tongue ), on one hand it would be nice to have a lesser value coin to keep "spending money" stored in, but since Bitcoins are so dividable, it isn't like you can't spend tiny percentages of one Bitcoin. What are your thoughts?
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Vitalik Buterin
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June 06, 2012, 10:00:04 PM
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It depends if the other cryptocurrencies will offer any value of their own, other than just being different. Bitcoin clones will all fail, but an OpenTransactions-style centralized currency with a trusted provider could work (if it doesn't get shut down), and a cryptocurrency-based system which has other uses, like Namecoin, would have a good chance at succeeding.

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June 06, 2012, 10:05:52 PM
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I don't just believe Bitcoin can coexist with other cryptocurrencies, I think if Bitcoin succeeds it's inevitable that other cryptocurrencies (at least one) will follow, and will stand firm beside it. The silver (and possibly copper and platinum and more) to Bitcoin's gold, as it were.

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June 06, 2012, 10:09:41 PM
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I'd imagine a very well designed cryptocurrency could coexist with bitcoin, but there would have to be some significant differences between them. Most of the major ones since bitcoin's release have been so similar in usage that people would prefer to stick with the more proven idea. Most currencies which are "bitcoin, but better" provide features which bitcoin users can implement on the clients themselves, or provide features which are either controversial or could be added through a BIP.

I think a currency which could exist alongside bitcoin is one that serves a different purpose altogether. If someone designed, from the ground up, a cryptocurrency designed for quick transactions in the physical world, perhaps with less anonymity or capability for long-term storage, it would complement the areas bitcoin is struggling with and each would find their niche. That's not the only place for another currency to fit in, though it may take some creativity to really find a place for a new one to excel.

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June 06, 2012, 10:16:28 PM
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I'd imagine a very well designed cryptocurrency could coexist with bitcoin, but there would have to be some significant differences between them. Most of the major ones since bitcoin's release have been so similar in usage that people would prefer to stick with the more proven idea. Most currencies which are "bitcoin, but better" provide features which bitcoin users can implement on the clients themselves, or provide features which are either controversial or could be added through a BIP.

I think it's as simple as shorter confirmation times, easier home mining, and addressing Bitcoin's scaling issues. An alternative that deals with those (and can resist 51% attacks from those already invested in Bitcoin) would probably become nearly as popular, if not more so.

Bitcoin is the ultimate freedom test. It tells you who is giving lip service and who genuinely believes in it.
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In the future, books that summarize the history of money will have a line that says, “and then came bitcoin.” It is the economic singularity. And we are living in it now. - Ryan Dickherber
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ATTENTION BFL MINING NEWBS: Just got your Jalapenos in? Wondering how to get the most value for the least hassle? Give BitMinter a try! It's a smaller pool with a fair & low-fee payment method, lots of statistical feedback, and it's easier than EasyMiner! (Yes, we want your hashing power, but seriously, it IS the easiest pool to use! Sign up in seconds to try it!)
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The idea that deflation causes hoarding (to any problematic degree) is a lie used to justify theft of value from your savings.
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June 06, 2012, 10:18:05 PM
 #6

Complementary crypto-currencies will certainly co-exist.  A centrally issued currency that clears instantly and is backed by bitcoin certainly has a place.  Namecoin or similar that serve a unique purpose will probably survive.  Perhaps other currencies designed to enhance privacy or hedge against a failure or attack on Bitcoin will have a place.  Other currencies that don't offer any compelling advantage over bitcoin might survive, but will basically be irrelevant.  It has already been shown that the upside potential for those currencies is capped by bitcoin, but the downside is basically zero.  Hence, anything beyond short term trading in such a currency would be unwise (and I'd argue pumping such a coin is unethical since any gains would basically come at the expense of other people that may not be aware of the dynamics involved).

The real test will come when some alternative to bitcoin comes along an offers a real advantage over Bitcoin.  If Bitcoin is able to adapt and match that coin's features, then Bitcoin will survive and the new coin will have just been a good testing ground for those new features, but probably won't be consequential in the long run.  Also, it's not just the Bitcoin software itself that a competitor has to match and exceed, it's also the ecosystem of people, companies, software and services around it.

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June 06, 2012, 10:24:29 PM
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I want to see if we can just get Bitcoin to survive the next 5-10 years.   

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June 06, 2012, 10:30:10 PM
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I think it's as simple as shorter confirmation times, easier home mining, and addressing Bitcoin's scaling issues. An alternative that deals with those (and can resist 51% attacks from those already invested in Bitcoin) would probably become nearly as popular, if not more so.
It's a common misconception that block frequency has anything to do with the risk of accepting a transaction.  It's the amount of computing power behind the confirmation that matters.  Increasing the frequency of blocks also increases the chance of momentary splits in the block chain, which actually increases the risk that you accept a transaction that gets reversed in a later block.  To shorten "confirmation times", or more accurately, to reduce the risk associated with accepting a transaction after a given amount of time, it is necessary to increase the amount of computation being performed by the mining network in that time.  It would be far more risky to accept a transaction after 10 confirmations in a currency that issues a block every 3 minutes, but which has 1/100th the level of difficulty as it would be accepting a Bitcoin transaction after just 3 confirmations.

Also, I think home mining is already very easy and getting even easier.  I think we'll soon see boxes that you just plug into a wall and that connect to wifi and start mining right way (you just plug in your bitcoin address or direct deposit info and you're done).  And, Bitcoin does not have any scaling issues that can't be overcome with relatively minor effort.

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Matthew N. Wright
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June 06, 2012, 10:33:57 PM
 #9

Can Bitcoin coexist with other cryptocurrencies?

Of course other currencies will exist regardless of Bitcoin because Bitcoin is still highly impractical in many situations, including ones without electricity or computing power. Try getting a trailer trash family in the deep South to use Bitcoin if you doubt what I say. The obstacles are much more than political and social. It is still not the most practical currency. Paper or coins are STILL quite useful in day to day small transactions (except where high-tech infrastructure and commonly used technology like cell phones are the norm).

Stephen Gornick
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June 06, 2012, 10:49:44 PM
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Will bitcoin coexist with other "proof of work", decentralized cryptocurrencies?   I think there is only one winner there.  Any competing proof of work cryptocurrency that doesn't rely on Bitcoin (e.g., a merged mining side chain) is vulnerable to attack by those trying to protect Bitcoin's value.  

I've been told by people much smarter than me that I'm being naive in that belief though.  We'll see.

As far as coexisting with other centralized cryptocurrencies then I believe it not only will, it already does.  A crypto currency that is non-reversible makes a very good match for trading to and from Bitcoin.  Mint Chip might be one.  Open Transactions will hold and trasnsact new ones that anyone can create. Heck, even GLBSE share issues might be considered a type of digital money that interacts well with Bitcoin.

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June 06, 2012, 11:01:31 PM
 #11

I think it's as simple as shorter confirmation times, easier home mining, and addressing Bitcoin's scaling issues. An alternative that deals with those (and can resist 51% attacks from those already invested in Bitcoin) would probably become nearly as popular, if not more so.
It's a common misconception that block frequency has anything to do with the risk of accepting a transaction.  It's the amount of computing power behind the confirmation that matters.  Increasing the frequency of blocks also increases the chance of momentary splits in the block chain, which actually increases the risk that you accept a transaction that gets reversed in a later block.  To shorten "confirmation times", or more accurately, to reduce the risk associated with accepting a transaction after a given amount of time, it is necessary to increase the amount of computation being performed by the mining network in that time.  It would be far more risky to accept a transaction after 10 confirmations in a currency that issues a block every 3 minutes, but which has 1/100th the level of difficulty as it would be accepting a Bitcoin transaction after just 3 confirmations.

Understood. Still, there are many transactions for which one confirmation is considered sufficient in Bitcoin. For a 4-minute-confirmation cryptocurrency that starts becoming as popular as Bitcoin, that shortened confirmation time is going to be a significant advantage, even if it's still 1 hour or more until the transaction can be considered "99.9% safe" or whatnot.

Bitcoin is the ultimate freedom test. It tells you who is giving lip service and who genuinely believes in it.
...
...
In the future, books that summarize the history of money will have a line that says, “and then came bitcoin.” It is the economic singularity. And we are living in it now. - Ryan Dickherber
...
...
ATTENTION BFL MINING NEWBS: Just got your Jalapenos in? Wondering how to get the most value for the least hassle? Give BitMinter a try! It's a smaller pool with a fair & low-fee payment method, lots of statistical feedback, and it's easier than EasyMiner! (Yes, we want your hashing power, but seriously, it IS the easiest pool to use! Sign up in seconds to try it!)
...
...
The idea that deflation causes hoarding (to any problematic degree) is a lie used to justify theft of value from your savings.
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June 06, 2012, 11:35:01 PM
 #12

Overlay Ripple-like networks using multisignature transactions can act as clearing networks on top of Bitcoin and use Bitcoin as a settlement network, allowing immediate transactions with no reversal risk and no payment delay. No additional cryptocurrency is necessary. This also would greatly reduce blockchain usage for small, simple transactions without losing decentralization.

Additional currencies may be useful for things like tracking name or directory information, which is why Namecoin exists.

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June 07, 2012, 09:46:04 AM
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Merged-mining a whole bunch of other chains alongside bitcoin does seem to be resulting in more return on investment for mining, so it doesn't make much sense to me not to merged-mine as many chains as I practically can. It is all very well to play bitcoin-elitist and turn up one's nose at many of the chains one can merged-mine, but that brings in no knowledge about how many chains it is in fact practical to merged-mine and "leaves on the table" lots of flavours of coin that are basically cheap and easy to obtain given one is already mining at all.

Chains that *are* merged-mine-able alongside bitcoin though *are* vulnerable to attack by bitcoin-elitists, as Luke-Jr showed by using his pool-users' hashing power to attack coiledcoin.

Hopefully in the long run the people who turned up their noses at various altcoins will find they are simply people who missed an early-adopter boat; if they were early-adopters of bitcoin they might be happy with that, but people who feel they came into bitcoin a little late can basically be early adopters of other coin types while also picking up "free" bitcoins on the side due to merged-mining, thus bitcoin effectively becomes for them a subsidy subsidising their entry into mining the various other kinds of coins that can be merged-mined alongside bitcoins.

I currently merged-mine bitcoins, namecoins, devcoins, groupcoins, ixcoinns, i0coins and coiledcoins, all using p2pool. I was mining geistgeld and rucoin alongside those too some tiem ago but had to drop those two from my roster. I think though I could put two others in their places quite practically, as long as they didn't have the ridiculously fast block times that geistgeld uses. I would in fact like to keep adding more and more chains if only to find out what the practical limit on number of chaisn one can merged-mine turns out to be.

I plan soon to open up my merged-mining setup to others by providing access to it as "a devcoin pool", a pool which will merged-mine as many types of coins as it can, turn all except the devcoins into devcoins by trading them (hopefully mostly on my Open Transactions server) and pay out only in devcoins.

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June 07, 2012, 10:01:00 AM
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Merged-mining a whole bunch of other chains alongside bitcoin does seem to be resulting in more return on investment for mining, so it doesn't make much sense to me not to merged-mine as many chains as I practically can.
That depends on how much you invested in mining hardware vs. the amount you invested in a certain coin. I suppose many people mining Bitcoins also hold at least some amount of them as an investment. If they feel that another blockchain might reduce Bitcoins' market share or chance of long-term success then it very much makes sense for them to not merged-mine other chains.
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June 07, 2012, 10:11:24 AM
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Merged-mining a whole bunch of other chains alongside bitcoin does seem to be resulting in more return on investment for mining, so it doesn't make much sense to me not to merged-mine as many chains as I practically can.
That depends on how much you invested in mining hardware vs. the amount you invested in a certain coin. I suppose many people mining Bitcoins also hold at least some amount of them as an investment. If they feel that another blockchain might reduce Bitcoins market share or chance of long-term success then it very much makes sense for them to not merged-mine for them.

I suppose. I don't see more chains as a threat to bitcoin at all, rather they are ads for bitcoin and they give people easier-to-mine coins they can spend instead of spending their bitcoins, so that they can save up their bitcoins, much like the old "bad money drives out good" thing whereby people get rid of their crappy fiat much more willingly than their actual gold. They are maybe like loyalty points systems too since they are a free reward you get on the side for supporting the bitcoin network by mining.

It seems a bit crazy to think they would drive down the value of bitcoin, it seems to me quite the opposite, any increase in perceived value of any of the altcoins would lead to a rise in the market price of bitcoins if only because "everyone knows bitcoins are worth more than any of the altcoins". We want altcoins to go up in value because if they do then obviously the more-valuable bitcoin will too.

A lot of roleplaying game players are long used to so many copper coins per silver coin, so many silver coins per gold coin, so many gold coins per platinum coin and so on; to them it often seems intuitive that if copper coins increase in buying power obviously silver gold and platinum do too because they are simply larger numbers of coppers in effect.

I see this happen already with GRouPcoins... like DeVCoins, GRouPcoins will keep on generating the same number per block forever, but the number per block is only 50 whereas devcoin generates 50000 per block. Many players simply take it for granted that in the long run this means a GRouPcoin is basically a 1000-DeVCoin coin; the fact that GRouPcoin's difficulty is currently much lower just means now is a good time to pick up 1,000-devcoin coins for less than 1000 devcoins, much like someone stumbling on a gold mine could pick up gold for less than the normal amount of copper per amount of gold...

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June 07, 2012, 01:58:02 PM
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I currently merged-mine bitcoins, namecoins, devcoins, groupcoins, ixcoinns, i0coins and coiledcoins, all using p2pool.

Whoa, interesting. That must be fairly difficult to set up. Did you use ThiagoCMC's tutorial to get started? I want to try this myself.

I plan soon to open up my merged-mining setup to others by providing access to it as "a devcoin pool", a pool which will merged-mine as many types of coins as it can, turn all except the devcoins into devcoins by trading them (hopefully mostly on my Open Transactions server) and pay out only in devcoins.

Why pay out only Devcoins? I'm currently mining at Bitparking (http://mmpool.bitparking.com/pool) and they allow you to withdraw all the coins that you mine. I'm not sure if there is even one person other than yourself that wants to have only Devcoins.

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June 07, 2012, 06:02:25 PM
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I've thought about them a fair bit.

I actually see a scenario where a multitude of likely functional alternate crypto-currencies (which I prefer to call 'crypto-accounting systems' these days) are the best hope for Bitcoin.

The reason for this is that it would create a scenario where attack of Bitcoin by governments would simple produce for them an even more intractable problem.  Their only choice would be to really clamp down on the free flow of information generally but that is something of a nuclear option which would have a wide reaching and negative fallout which is hard to predict.

---

Separately, I also see having a single non-inflationary crypto-currency as not much more healthy for humanity than gold.  You know what they say about the 'golden rule': "those who have the gold, make the rules."...and it is human nature to make the rules in one's best interest.  Tragedy of the commons.

(In the interest of full disclosure, I personally hold what would seem to some people as a good bit of both gold and BTC.)


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June 07, 2012, 06:06:13 PM
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A crypto fiat based on Bitcoin could succeed. In fact, it may at some point become necessary. Parallel crypto-currencies identical to Bitcoin? Not so sure.
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June 07, 2012, 06:46:35 PM
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A crypto fiat based on Bitcoin could succeed. In fact, it may at some point become necessary. Parallel crypto-currencies identical to Bitcoin? Not so sure.

To me, 'crypto fiat' is a bit of a nonsense term in the same vein as 'jumbo shrimp.'

Also, "Parallel crypto-currencies identical to Bitcoin" which are joined within a 'backbone network' had some hope of retaining true P2P (where the user's are P's) seems like an idea worth pursuing.  In this sense, they would be more a single Bitcoin though (as I visualize it.)

On the other hand, independent crypto-accounting solutions are more durable in that a failure of one does not impact the others.  A bigger win yet is that they can diverge significantly in the capabilities they offer and provide users with many choices to use the ones which work best for them.


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June 07, 2012, 11:47:32 PM
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Yes and no in my opinion.

Yes, we can have other crypto-currencies, but they would have to be small niche.

No, we cannot have another widely used global crypto-currency that competes with bitcion. The network effect of bitcoin is so powerful that anything technically superior would simply be adopted into bitcoin.

The fact that bitcoin is open-source is precisely what makes me so bullish on it, because it gets better with age Smiley
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