Topic: Do you believe in cryptocurrency competition? - page 3. (Read 4629 times)

Not really a relevance. It was more of a comment for the timing of this thread. Anyway it seems that litecoin recovered already

No, belief has everything to do with it. The problem is that the FED's belief does not take into account how their policies influence collective belief and how it influences their behaviour. It does not matter what the minority believes. It matters what MOST of the people believe. And sometimes that belief cannot be expressed in words. The shopkeeper raises his prices, because he subconsciously notices that more money is flowing throughout the economy. Little does he know that this money is coming from money printing and is not actual real wealth. But he believes it is wealth nonetheless and he doesn't even think to put this belief in words, but he decides to act on this subconscious belief anyways. Only in the future will this shopkeeper notice how erronous his belief was, but he might never even understand where his error lay or that he made an error at all.

The fact that A belief does not correspond with what is actually taking place and that these beliefs are unable to see the chain reaction caused by their actions does not negate the argument that people's actions are ultimately influenced by what they believe.


Yes, I do think that in THEORY we could inflate BTC to oblivion by forcing people to use more and more altcoins (but only through force). When an altcoin is forced on the people and a new altcoin is introduced consistently with short intervals, the people would notice consistent price inflation and confidence would indeed be shaken. Only under such a scenario do I foresee a collapse of the currencies without printing the traditional way. But in practice, only a few altcoins would be chosen by the market. They would cause only temporary price inflation, but their deflationary nature would soon takeover and we would have overall deflation for each of the succesful coins. The existence of succesful altcoins would indeed steal marketcap away from BTC, but this shouldn't be a problem, because while the added supply of a new currency has actual effects on people's beliefs, ultimately they would still believe that scarcity exists despite this. And THAT belief would lead ultimately that deflation overtakes price inflation with the result of overall deflation.

That's my 2 cents.

Oh yea I saw your other post on that other thread, only I forgot to post on that thread because I was too busy buying Bitcoins. Oh yeah and its also probably due to the fact that people have seen this same reasoning a million times and choose to repeatedly ignore it due to their greed and irrational hope that somehow they can go back in time to 2009 if they 'believe' hard enough.

As for substantiation how about you look at the actual differences between the 'Litecoin protocol' and Bitcoin.

- There are more Litecoins.
- There is faster confirmation time.
- Litecoin uses Scrypt rather than Sha256
- It doesn't use the same coins as Bitcoin.
- It doesn't use the same miners as Bitcoin.

Both of the first two are basically equivalent to changing a constant in the Bitcoin source code. Oooh, how creative.

The first change isn't really a change at all, its equivalent to shifting over the decimal in Bitcoin, so it can safely be disregarded. It makes 0 difference to the economics or the security of the coin.

The faster confirmation time may have been slightly relevant originally, but now we have offchain transactions & ways to predict double-spends. Sure those force people to take on marginally more risk, but a shorter confirmation time increases the risk of a transaction being reversed as well. May as well keep the network secure for those willing to wait a whole 10 minutes.

Scrypt is a SIGNIFICANTLY less-tested encryption scheme than sha, an encryption scheme used almost exclusively for hype-seeking altcoins. Sha on the other hand is used on pretty much every website with a password. There's a reason why. If sha was broken tomorrow (which is ridiculously unlikely) Bitcoin would be the least of our problems. This makes Litecoin vastly inferior to Bitcoin. Also, the supposed advantage of scrypt (no GPU mining) proved an epic fail, showing just how little we know about Scrypt and just how far it is from gold standard that is sha.

The fact that it doesn't use the same coins as Bitcoin makes it inflationary and in fact a concept that has the potential to undermine cryptocurrency as a concept. Litecoiners say "well, Litecoins are more distributed than Bitcoins are." And if Litecoins became hoarded, because people were stupid enough to believe they were worth something, then what, you'd be in favor of dropping Litecoin and building a new unoriginal Bitcoin clone to serve as "the new thing?" Its ridiculous. Then some people say "oh well we're not even going to do anything we just want to be the silver to Bitcoin's gold, etc... etc...". Which is effectively saying "oh yea we just want to make copies of Bitcoin that anybody can make worth at least a fraction of Bitcoin." Seems legit, you criticize the Federal Reserve, but you want to be able to print your own money in whatever quantity you like, only its only "silver" not "gold." Either you're stealing from owners of Bitcoin, or you're inflating the money supply, something which cryptocurrencies are supposed to be able to avoid. If litecoin can do it, then BBQcoin can do it, or anything else, because let me tell you, Litecoin is the most inferior of the bunch for the reason stated above.

Oh yeah and it uses different miners so it can't benefit from the security of the Bitcoin network and has to make due with an inferior network because intelligent Bitcoin miners aren't stupid enough to waste an assload of resources on a coin doomed to fail while simultaneously inflating the currency he himself has been generating thus far.

So yeah, seems like a great idea.

Phew, thanks, I was beginning to think I had got something terribly wrong


People may believe that, but they would be wrong. Paying more for the same thing is what happens with inflation.


In the absence of coercion by a state or other entity, confidence plays a major role in the adoption of a currency, and that in turn effects it's market cap and value. Good money drives out bad, that's a lot of what bitcoin is about. Confidence also has an exaggerated effect of the value of a currency when that value is driven primarily by speculation, as is currently the case with crypto-currencies.

I really do agree that belief plays a major role, money is not real, but the market also prices in fundamentals, regardless of what people believe. A lot of people seem to believe bitcoin is a decentralised PayPal, but regardless of that belief it's acting a lot more like virtual gold. If belief was _all_ that mattered then QE would actually work, rather than just being a way of transferring wealth from the economy as a whole into the banks. QE would be causing massive inflation if the new money was actually being circulated in the economy, but instead it's being used to cancel bad debts, being lent back to the government, and to some extent is being hoarded by the wealthy elite. Belief has little to do with it in this case.

It may very well be the case that the benefits of competition outweigh the dangers of diluting the crypto wealth pool, that's why in my original post in this thread I started by saying competition is good. I'm not arguing the relative merits of specific coins, I don't know enough about all the alts to feel I can do that with any authority.

There was a thread a while back where someone was proposing an altcoin that was backed by bitcoin, conceptually it would exist within bitcoin, and contribute towards it's market cap. I think that was a scam, but it was an interesting idea, and it would be a way to have alts without causing the problems I have outlined.

I'm pedantic, I have a pathological need to define things in unreasonable detail. What I have said may have little importance unless crypto goes mainstream in a ridiculously big way

Bitcoin has crashed plenty of times, so not sure what relevance that has.

Some of us still genuinely believe in Bitcoin's future significance and are here to support and, yes, invest in it.  

Actually litecoin is crashing hard now. Lost half its value already.
Besides that bitcoin and libertarians are two things that are not even remotely connected.
I don't know about the early stages but today there are 2 types of people into bitcoin.
Speculators and speculators.

I'd still love to hear an explanation for that analysis; it's very hard for me to understand its basis.  You might like to do some further research into the differences between the two and the broader implications of those differences.  Without substantiation it's hard not to consider the "Litecoin's just a cheap clone" arguments as anything other than FUD.

I'd love to support an "alt" or service that brought something genuinely new to the table.

Great post! Also I like the name "Bitarchist". I might start describing my political position like that, to confuse everybody even more

Litecoin is just a guy creating an inferior Bitcoin so he can be an early adopter of something, along with a whole bunch of other people hopping on to be early adopters as well. Why would it do anything except go away?

Ah, now I uderstand your viewpoint. If your example were actually played out in the real world, I would agree that price inflation would occur, even if the currencies were seen as essentially being two seperate currencies. However, this would occur, because these two currencies would be seen as having SIMILAR properties. They would still be seen as two different currencies, but their exchange rates would exhibit similar behaviour. They wouldn't neccesarily have the same exchange rate, but they would react to situations similarly.

However, I must add a few caveats to this situation. Even though price inflation would indeed occur, the fact that these would be seen as different currencies would still remain. Having 100 different currencies with the same properties would lead people to believe that there would be more wealth in the economy and would thus lead them to raise their prices. But CONFIDENCE would still remain in these coins, because they are still seen as being seperate coins. A person must actually believe that the supply has been abnormally expanded for a person to lose faith in a currency. Thus having 100 different currencies with the same properties would indeed lead to price inflation, but the slight differences between the coins would be enough for the average person to believe that a single currency's supply has not been abnormally expanded (yes, belief is everything).

In case of BTC and its altcoins, I would say the benefits of competition outweigh the negatives of the inflation. The market tends to have only a few succesful competitors anyways, so even if the market is flooded with altcoins, only a few would actually be moderately succesful, thus limiting the extent of price inflation. Not to mention that BTC and its altcoins are deflationary currencies and are seen as that way. Because of that, any price inflation that occurs will likely be negated by its deflationary aspects. A person must BELIEVE that the supply of a currency has been abnormally expanded, for that currency to collapse. I say such a scenario only occurs if we actually allow BTC and altcoins to be printed like dollars. The existence of altcoins does not create this belief in the people.

And keep in mind that it´s good for the market to have alternatives. There is no one size fits all solution to everything. The market has niches. Not to mention that we need proper backups in case BTC gets hacked. It serves nobody if there´s no proper coin after BTC that can take up the scepter.

Why? I'm not sure you'd be saying that if there were a quadrillion altcoins each with a market cap equal to BTC, which would be next to valueless in that case. I don't understand what's so hard to understand here. If I'm the one doing the misunderstanding then I would really like someone to explain it to me in a way that makes sense.

If person A has never heard of LTC it doesn't change the fact that person B has, bought a billion dollars worth of LTC instead of BTC, so the market cap of BTC is a billion dollars less than it would otherwise have been, making each bitcoin worth a bit less. Inflation. Person A doesn't need to perceive LTC, only person B does. Of course this example assumes person B would buy BTC if LTC didn't exist, but I think that's likely

If a tree falls in the forest then it is only required that someone hear it in order for it to make a sound, not that everyone hears it.

Given that Bitcoins also belong to the set 'crypto-coins' the distinction is moot.

Not the bitcoin pool, but the crypto-currency pool, yes, that is exactly my point.


No, there is a limitless supply of crypto-coins, the supply of bitcoins remains the same.

Read my reply to Kleptoid and try answering the question I posed to him. If people don't even know what the heck LTC is, how can they even perceive reduced scarcity? Because that's essentially what is necessary for price inflation. The person must BELIEVE that the scarcity of BTC is reduced by LTC. That can't happen if they aren't even aware of it.

I agree completely, money isn't real, it's a tool for allocating goods and services, nothing more.

Let's take a very simple example. Let's say there are only two equal sized countries in the world and they both use the same currency (and only that currency) which has a fixed supply of 1 trillion units. Each of those units represents one trillionth of the total wealth of the world. One day one of the two countries decides that it will create it's own currency, also with a fixed supply of one trillion units. There are now twice the amount of currency units in the world, but the real wealth of the world hasn't doubled. Each currency unit now only represents a two-trillionth of the total wealth of the world, the original currency has been devalued by 50%. How this is perceived by people makes no difference, you can't perceive a new loaf of bread into existence when you only have one (without getting lost in metaphysics at least). Having an exchange to barter the two currencies with each other makes no difference, you have still doubled the total number of currency units, and thereby halved their value.

Of course the situation in the real world is infinitely more complex, and while crypto remains a tiny fraction of the world's money it's easy to imagine that there is the capacity for unlimited growth, but in reality the world is finite, the universe is finite, I think my fundamental point stands. If I'm missing something then I'd love to be enlightened.