Currency competition, I realized, is actually bad. A system of multiple currencies is always suboptimal, it's a situation where we simply can't agree on an universal currency and we must exchange between different currencies. What all the exchanging is in the end is a business, a middle man that is not needed. Bitcoin has a shot at becoming a universal currency because it has strong features as a medium of exchange and strong features as a store of value.
Exchanging one decentralized digital currency for another is inherently cheaper than with physical/centralized currencies, and with a lower barrier of entry to service providers. What's more, there are protocol features that could allow atomic exchanges without any middleman. I don't see a problem with multiple decentralized digital currencies being employed for different purposes.