I think this whole argument that Bitcoin may be just the first in a range of cryptocurrencies is silly, or even misleading. The network effect determines more than anything which currency will be the winner in the end and this effect is much stronger in a system where the barriers to entry are substantial.
Suppose a new altcoin comes around which has some features Bitcoin doesn't have and is unlikely to adopt (perhaps a GovCoin which is backed by taxpayers, like fiat, but with the speed and low costs of Bitcoin). For existing Bitcoiners the costs of switching from Bitcoin to something else are huge. The have to cash out at least some of their holdings, get them into GovCoin and then hope it succeeds, thereby risking all the assets they have left in Bitcoin once more people start doing the same thing.
Bitcoin is not a fad, like Friendster, MySpace or perhaps Facebook is. It's easy to join one of these sites, create a profile and find out whom of your friends are in the same network. Bitcoin is much more akin to something like the internet, where it is very unlikely that people are willing to try out different versions of the same technology. Reporters and analysts keep making the mistake of comparing Bitcoin to the wrong things.
Suppose a new altcoin comes around which has some features Bitcoin doesn't have and is unlikely to adopt (perhaps a GovCoin which is backed by taxpayers, like fiat, but with the speed and low costs of Bitcoin). For existing Bitcoiners the costs of switching from Bitcoin to something else are huge. The have to cash out at least some of their holdings, get them into GovCoin and then hope it succeeds, thereby risking all the assets they have left in Bitcoin once more people start doing the same thing.
Bitcoin is not a fad, like Friendster, MySpace or perhaps Facebook is. It's easy to join one of these sites, create a profile and find out whom of your friends are in the same network. Bitcoin is much more akin to something like the internet, where it is very unlikely that people are willing to try out different versions of the same technology. Reporters and analysts keep making the mistake of comparing Bitcoin to the wrong things.
Right. Perhaps a more apt analogy is:
Dollar = AOL
Euro = Compuserve
Yuan = MSN Network
Bitcoin = Internet
