Topic: Is competition healthy for Bitcoin? - page 4. (Read 11322 times)

Let's first start with your initial argument: 'Anyone who has spent 5 seconds thinking about it realizes that if LTC or whatever scam-coin succeeds then all crypto-currency fails'.

First of all, it contains a contradiction. If all crypto-currency fails, then LTC would fail as well, but that did not happen since your statement poses the element that LTC (or whatever scam-coin) shoud have succeeded for your statement to apply. But let's leave that as it is.

The analogy made with the car industry is to bring forward a though experiment why an industry as a whole would fail if one of the market players provides for the best solution at a given time? That industry collapse is not happening. It is quite the opposite: the industry has developed just fine under heavy competition. Weak companies vanished while strong companies flourished. The current players have to remain improving themselves and their products or lose out to the competition. The beneficiary is the customer. I fail to see why LTC succeeding would mean the end of crypto-currency.

That was the analogy made.

That's also were it stops, because a car is a single object that can be used stand-alone. You are quite right there. Crypto-currencies can be made in thousand variants but in order to be useful, they need to be used by a certain number of people. There is no use sending a McCorvic_Coin if you are running the only client of McCorvic_Coin.

But that still does not explain why the victory of LTC would mean the end of crypto-currency.

Wait, another bad analogy coming up: fiat-currency. We have tons of them, also in different varieties. Did not collapse, although we are getting there   The simple fact that more than one type of currency exists, does not warrant the collapse of currency itself. The only thing that matters is use by people. Probably, sufficient use by people. I won't get into the history of fiat money and the practical matters thereof, but we can safely conclude that there are many types of fiat currency floating around without a collapse of fiat currency. So that does not seem to support your argument either.

Still digging a little deeper, I think that Bitcoin is actually meant to have competition. And that is where the analogy with the car industry, albeith limited; I give you that, comes up again. Competition can make or break Bitcoin. If it breaks Bitcoin, something else will take over. Bitcoin must be subject to competition (and be improved) because its source code is freely available. If Bitcoin cannot survive competition, it would not have lasted until today. The very essence of its existence proves that it can handle competition fine (until now). LTC may take over (although I doubt it; not innovative enough), and if so it will be because the people have chosen so by their actions.

People will chose their crypto-currency of choice with their feet. It could be Bitcoin, but also Litecoin, Namecoin or PPCoin. Many practical matters will influence these choices, as is the case (duck: another analogy...) with me using euro instead of USD, while it is no problem for me to exchange these two currencies if needed. Preferences shift over time: it happens all the time and this will not be different for free market phenomenons like crypto-currency. It is not a given that such shift in preference will lead to the collapse of crypto-currency as a whole (one will be less valued over time and the other valued more).

The important features that Bitcoin as granddaddy gives us (near free, decentralized, uncontrollable and instant payments all over the world) will live on now that the cat is out of the bag. Whether Bitcoin will survive or not is not the question. In my perception it is not which coin will survive that is at stake, but finding a good, wide spread and long lasting use for crypto-currency's unique features. Like in getting your mom to use them (and yes, that is a very long road ahead )

I would very much like Bitcoin to succeed, but if better coins appear, nothing is holding back the public (including me) to jump on another train. The first who can manage to develop a coin that has the additional feature of instant payment (without 6 confirmations needed) while being as secure as Bitcoin, has a real prospect of having a winner within reach. Either Bitcoin assumes this innovation, or is left for dead. It's nature in the digital realms....

The public does not always chose the best solution and may chose LTC's features in the end over Bitcoin. That's not for us to decide but by the one's making a crypto-currency a success: its users as a whole.

If you liked this contribution, you may donate any excess Litecoins to the following address: LcjnwSZHMTASjtR2gNSxwfXueceEm8Ggb2

Video - Bitcoin Report Volume 28 (Trading Crypto-currencies)

http://youtu.be/4RYtXEoZnTE

Gold money James Turk - competing currencies (general)

http://youtu.be/UqXdV5n5db4

Currently the alt-coin variants more or less copy the whole bitcoin idea, that makes them not attractive at all

If some currency will be a powerful competitor to bitcoin, it must solve some main drawbackes of bitcoin:

1. Early adopter problem

Early adopter problem has caused many people think that bitcoin is just a scam designed by those programmers. If one alt-coin will equaly benefit late adopters (e.g. you always get the most benefit when you first join the game), then that coin will immediately attract lots of users

Actually after some thought, I think this is more like an inflative money's character. An inflative money continuously devalue which hurt existing holders, but it does not hurt new money makers, they do not have any money from the beginning, so get money is much more beneficial for them than existing holders

Anyway, try to reduce the benefit of early adopters in the long run is the key here


2. Price stability problem

The fixed supply nature will cause bitcoin price to rise quickly and this caused high risk for merchants and consumers

This issue is closely related to the first problem, if the late adopters could get the same benefit as the early adopters, then the price will not swing that wildly


3. Scalability problem

An increased user base will cause increased memory, bandwidth and storage requirement, in order to scale very well, it should not handle all the local transactions in one network


Due to these 3 limitations (or features) of bitcoin, it will very likely become a store of value, not a medium of exchange. But currently people do not have a real good way to store value, there is a demand for such kind of commodity


For a medium of exchange, I think the best candidate should have a fixed base exchange price pegged to average standard living costs on the planet, and an unlimited but variable supply based on that exchange price (If coin price increase, difficulty goes down so that more coin can be generated per day). And it should be able to scale very well

Actually I am maybe even arguing for having everyone else use Ripple but appending to Ripple the actual gateway functionality.

Basically I am thinking it'd be nice if I could say yes I accept bitcoins, not bitcoin IOUs, please do go ahead and use Ripple to pay me but tell Ripple to pay me bitcoins, not bitcoin IOUs.

Maybe this would be accomplished by having a gateway account that sends me bitcoins, and I tell people my gateway account so they Ripple to it and it automagically cashes in the bitcoin IOUs it receives into actual on the blockchain bitcoins.

(Or devcoins, or litecoins, or whatever crunchy berry coins of the day I happen to like.)

Maybe like "I accept bitcoins, 1mybitcoinaddressvcfdhyj, send care of Ripple account rip22135hkfdjhlmml if you wish".

Or maybe even add to ripple a way to register a bitcoin address with it, so it knows to which gateway account to send any bitcoin IOUs whose destination is my bitcoin address.

-MarkM-

I can't tell, are you still arguing for Ripple?

If so, I consider BTC that payment processor.  I think that Ripple is just trying to add an extra layer of complexity that, frankly, won't work.

A lot of people do still use local currencies though, so you might as well set up to only use one payment processing system and have that be one that just gives you the Crunch Berries you prefer and insulates you from everyone else's cocoa puffs, dollars, yen, francs, or whatever the heck they use.

-MarkM-

That's why I think this analogy breaks down.  While conventional currencies has the limitation of localization and a specific area of use, BTC doesn't.  The fact that when I go to France I would have a hard time using USD and, thus, Euros would have value to me.  The Internet is the Internet.

I know some people will say that different segments of the Internet could use BTC while others LTC and the rest Durpcoin or whatever.  This would actually devalue all the coins.  One, it negates the "no inflation" aspect of bitcoin because, well, these new coins all create de facto inflation.  They are all pumping out infinite digital coins that some people accept.  Second, it negates the "low fees" aspect of bitcoin as you'd have to pay an exchange somewhere down the line to just transfer your BTC to some other coin.  Finally, it negates the "easy to use" as the fact that i just had to explain all this in a tl;dr paragraph proves it thus. 

The final argument is then "Well, you can just accept both!" But why?! Why accept two when I can just accept BTC and get all the same benefits without any of the hassle I mentioned above?

Of course they would, there would be nothing else they could usefully do with such an IOU, giving it back to you, its issuer, would be the only way to get rid of the darn thing. So whenever they want something from you, they fork over their dollars or bitcoins or whatever, it Ripples through the system, and you end up receiving the stale Crunch Berries IOUs your mom and pop or whoever had trusted you for. If your Crunch Berry currency you issue is the only currency you accept its the only darn thing you can end up with when someone tries to buy something from you as you chose it as what you wanted to use as your currency.

-MarkM-

Ripple is a terrible idea for a multitude of reasons.  Even then, it still doesn't do anything to address the issue we're debating.  No one would give me an IOU for a box of stale Crunch Berries even if I claimed it was the currency I wanted to use.

Okay then here's re the fifteen wallets:

Ripple.

No one need care what currencies other people use, they just pay with what they use and get paid with what they use, automagically.

-MarkM-

Wow, you kinda just stop reading and or didn't really think before you posted.  I'll wait for someone to actually respond to what I wrote.

Thats incorrect, it has lots of stuff backing it.

The order books on umpteen exchanges, for one.

That alone adds up to a whole lot of dollars, yen, litecoins, ppcoins, botcoins, britcoins, GBP, etc etc etc.

You might as well say dollars have no value, or GBP has no value.

You might be right, but people go on buying bread, hookers and blow with the stuff regardless of your 'wisdom'.

-MarkM-

I think the advantage in Bitcoin being FOSS isn't that infinite clones can be created, but rather the the public can see how it works and that it cannot have secret changes made to it the can weaken the system.

I can't follow the logic that having a ton of alt-coins somehow make everything even out.  No one will want to try and manage 15 different wallets, on different exchanges, and watch the prices of each as one temporarily becomes more popular.  No one except wanna be day-traders at least.  If you're goal is to just create a trading mini-game for yourself with no RL consequences, then yea, that'd work.  If your goal is for our little digital currency to be actually useful, used, and valued then this game is counter-productive. 

I think an apt analogy is aluminium.  When first used, it was very rare and very very valuable.  That was until a way to create aluminium from aluminum oxide and the value plummeted as the potential supply exploded.  Aluminium only has value now for its actual, practical uses.  BTC does not have the advantage of having a particle use.  LTC, at best, is attempting to prove all the haters right when they say "BTC has no value as there is nothing backing it."

Go GeistGeld! Ten second blocks! Or maybe its 15 seconds. Something like that.

And merged mined, so unlike Litecoin it can share/recycle the same hashing power used by Bitcoin.

If only I had a few more gigs of RAM...

-MarkM-

Well, thus far NO alt-chain has survived.  If you think LTC has already achieved any success level outside of the equivalent of a penny-stock you be crazy.  I'm talking about IF LTC reaches any main stream ears.  People will be able to extrapolate and come to the logical conclusion.

Again, LTC offers nothing new or interesting over BTC.  It is just in the midst of a PR surge by a few people wanting to get the price up a bit so they can swap back to BTC.  If you think the faster-but-less-secure confirmations is the reason to go to LTC, then explain why you won't dump and switch to the next coin that is even faster than ltc. Or dump and switch to the next alt-coin that is even faster than the last?

It takes many ingredients to make a 4-course meal. Those other assets are not as liquid as Bitcoin, but I would not say they are all desireable ingredients, unless you are French.  

The field of alt-chain coins is littered with dead bodies. If one can survive, something must be done right.

You too can create a alt-chain and try to devalue my savings  ...  let's see how that goes.

The Galactic Milieu game has lots of currencies.

Take a look at http://galaxies.mygamesonline.org/digitalisassets.html

Are you suggesting that if the Martians had not given blockchain technology to the Brits, the Canucks, General Mining Corp, General Retirement Funds, whoever is behind bitNicKeLs, and the (galactic) United Nations the Martian BotCoin would be worth seven or more times as much?

The Brits, Canucks, United Nations and so on would have happily driven up the value of the Martians' currency for them instead of promoting their own?

Au contraire, I think the players who play the ministers of finance or whatnot that engaged in all that stuff are correct that it is the very fact that each currency has huge reserves of many other currencies available with which to back their coins that helps them all be valuable.

If no one backed bitcoins with any dollars or yen or botcoins or BBQcoins or Litecoins or gold or platinum or nickel or whatever, bitcoin likely would not be worth as much as it is worth today.

-MarkM-

This is absolutely correct.  No one will want to participate in peer-2-peer currency, or whatever phrase you like, if they know any child can make an "alt-chain" whenever they want that can effectively devalue their savings. 

That's true, but I think promoting the adoption of new bitcoin-like blockchains might reduce interest, because it would undermine interest in holding bitcoin-like-currency in general.


I think it's an open question whether deflation harms its success. Deflation creates speculative interest, which increases the number of bitcoin holders, and increases the market cap, which increases the purchasing power of the bitcoin holding economy (which creates merchant interest).

I also think it's an open question whether price deflation makes a currency less useful due to volatility. If the rate is predictable, it can be planned in.