I originally enjoyed the concept of alternate cryptocurrencies as possibly being feature-competitive with Bitcoin. Now they're just silly; just today I learned about "infinitecoin", "junkcoin", and "BBQcoin". Why?
Because the barrier to entry is extremely low, and because people quite rightly don't see why their pet project can't do the same as someone else's (Bitcoin). Also, people are dumb and easily manipulated by marketing. How long before football teams, or celebrities are on the bandwagon? In fact anyone of significant public repute, especially one with a large social media following, could launch their own cryptocurrency, and quite quickly generate a very significant market cap out of thin air.
Bitcoin cultist don't like cryptocurrencies, they like one cryptocurrency: Bitcoin. Competition reveals how hollow the idea of scarcity really is. All cryptocurrencies are entirely fungible, one Litecoin can replace one Bitcoin. or one fraction of a Bitcoin can replace a Litecoin, or any part of any of them can replace any part of the other.
I suppose that's a fair argument, but don't football teams and celebrities already effectively do this? Do they not already silkscreen the right words on a piece of cloth and mark it up several dozens of times the manufacturing costs? Or any product, for that matter. A cryptocurrency wouldn't be any different, except for arguably the brevity of said production and at the same time the potential volatility.
I don't, however, agree that cryptocurrencies are truely fungible between each other. Simple factors such as the number in existence or number to exist would render fungibility impossible, and even that's assuming that they have identical market caps.
I'm still not crazy about Litecoin
Right, but having their own cryptocurrency pushes the production costs onto the rubes buying into it, and if for example your got a significant discount, or perhaps could only buy this company's goods or services wit their currency, they could create a very significant amount of demand to bootstrap things.
As to fungability, the respective market cap is not relevant as that is not an inherent property, it's a network effect. Transactionally, a Litecoin is the same as Bitcoin, and a Bitcoin is the same as 1000 or 10000 bitcoins. If everyone suddenly decided to switch to Litecoin tomorrow, it could quickly grow to Bitcoin's market gap, and apart from the different name there would be no meaningful difference.
I know what you mean, but I still believe volatility in the network would be an issue. Specially-designed cryptocurrencies than cannot directly piggyback off of larger ones are incredibly susceptible to attacks.
On the note of fungibility, I think I see where you're coming from now, as you're referring more to the network than the economics.