EDIT: It's ridiculous at the pillar the LTC community stands on over on Litecointalk. I understand they are proud of their coin but they come across as a bunch of douches automatically disregarding any coin other than their own it seems. DRK has new features that LTC does not. DRK fills a niche that one way or the other would be filled. I'm certainly not going to start attacking those that want to hold LTC, I just want to know where you guys are seeing the value in holding it.
Doesn't Bitcoin and its supporters do the same thing? Why would they continue to hold BTC when new coins with better features are released? Because its more about the stability of the network and how the coin is utilized than how fancy or shiny it is.
People are not selling Litecoin in mass, not even close. Its down about 10%. Darkcoin fell that hard on two separate occasions in the last 2 weeks alone.
What's more ridiculous are the people that think darkcoin is somehow so special it deserves to be on top. Darksend is great and you're right its filling a role. But there are a number of other coins that have anonymous transactions in testing or in the works. What will make or break darkcoin is the people using it, just like the users who made litecoin.
I believe whole heartedly in darkcoin, but its naive to think it should be number 2 simply because it exists.
EDIT: Full disclosure I own a good amount of DRK and LTC.
Bitcoin and its supporters can act the same way (not saying it is the right way to act), but rightfully so, BTC has very much established itself. I've never been one to believe an altcoin will replace BTC. That's my personal opinion, but I do think valuation-wise, DRK can, at some point in the future take the #2 spot. You're right, it only works on the backbone of users deciding to process transactions via darksend and enjoying their privacy, but I don't think it is terribly unreasonable for a percentage of existing BTC users to be attracted to a coin that allows them anonymity. It would take less than 5% of BTC's current market cap value in terms of users that want that feature to overtake LTC's current market cap by a large margin. I'm not one to get ahead of myself... we first need to easily hold the #3 spot, then the $100M area before even thinking about setting sights on anything higher. Back when DRK was 60-65 cents, I always believed that privacy as a niche was worth at least a $50 million market cap. Here we are only months later seeing that as a reality.
I'm also a believer that if by Q3/Q4 we see Wall Street offering a true ETF (one that is structured in the way that the fund has to outright purchase BTC and hold it), BTC will easily set new highs. I see $2-2.5k as a reasonable, logical target. All of 2013 you had the average investor reading about how far and how fast BTC ran up but for most, investing in the coin wasn't easy. Give the Average Joe a chance to easily get exposure and I think new highs will easily be reached.