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I conclude that crypto-currencies like bitcoin are unlikely to generate widespread acceptance in the absence of significant monetary instability
Great. This means widespread Bitcoin acceptance is assured. 
Topic: Crypto-Currencies, Network Effects, and Switching Costs (Read 2260 times)
Switching costs may be a factor that slows adoption but it pails in comparison to the other massive flaws such as, hyper-deflation, unstable valuation and lack of any central backing for valuation and irreversibility of transactions. These are all things that real business see as flaws yet the BTC community embraces.
The place to look at switching costs and network effects is BETWEEN Crypto-Currencies as that's really all that distinguishes them. While it might be a big cost to switch from Fiat to crypto its virtually effortless to move from say BTC to LTC or use both at the same time.
The place to look at switching costs and network effects is BETWEEN Crypto-Currencies as that's really all that distinguishes them. While it might be a big cost to switch from Fiat to crypto its virtually effortless to move from say BTC to LTC or use both at the same time.
http://mathieubedard.wordpress.com/2013/08/03/hayek-friedman-on-concurrent-currencies/
Related to discussion of relative costs of network effects and switching currencies also.
Related to discussion of relative costs of network effects and switching currencies also.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2295134
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Crypto-currencies are digital alternatives to traditional government-issued paper monies. Given the current state of technology and skepticism regarding the future purchasing power of existing monies, why have crypto-currencies failed to gain widespread acceptance? I offer an explanation based on network effects and switching costs. In order to articulate the problem agents considering crypto-currencies face, I employ a simple model developed by Dowd and Greenaway (1993). The model demonstrates that agents may fail to adopt an alternative currency when network effects and switching costs are present, even when all agents agree that the prevailing currency is inferior. The limited success of bitcoin — almost certainly the most popular crypto-currency to date — serves to illustrate. After briefly surveying episodes of successful monetary transition, I conclude that crypto-currencies like bitcoin are unlikely to generate widespread acceptance in the absence of significant monetary instability or government support.
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