First of all, I would like to see the source of your statistics here but either way, they are meaningless dude... how is the internet analogy even remotely relevant here? Did the internet beat out some other larger competitor in 1990s? The analogy doesn't work. The Dot.com and Paypal statistics are also irrelevant.
Your point seems to be that because bitcoin has very few users, it can be easily overtaken by a better cryptocurrency. You fail to realize two points here though:
1.) The investment in bitcoin by several multi-billion dollar companies gives it a huge amount of momentum. Furthermore, the fact that you can buy almost anything with bitcoin now on the internet gives it a huge amount of momentum. I had to buy something from Newegg.com the other day and didn't even realize that they take bitcoin until I went to check out, so I ended up just paying in bitcoin. You can't spend alt coins anywhere, and therefore their only purpose at the moment is to trade for a profit.
2.) The reason bitcoin isn't that popular is because cryptocurrencies in general are not that popular. As they start to become more popular, do you think people are going to jump onto the coins that nobody uses? People aren't going to go online and do research and find out what coin has the most robust security protocol or anything like that - they are going to choose the one that is most popular and that they can use the most easily. There are tons of bitcoin companies popping up everywhere and making the currency easy for everyone to use. This is not the case for any other coins.
Like I said, unless bitcoin suddenly fails for some unexpected reason (and by suddenly, I mean over the course of like one day or less), no other cryptocurrency is going to overtake it. This kind of thing doesn't happen slowly - it happens suddenly at once or it doesn't happen at all. Nobody wants to invest in a currency that nobody uses and can't be spent anywhere (except for people trying to turn a quick profit).
One of the problems with Bitcoin might well prove to be a miscalibrated rate of release of mined BTC into Bitcoin wallets. We already have about half of all Bitcoins mined, waaaaayyy before anything like a viable Bitcoin economy has had the chance to establish itself, yet we have had an astronomical price boom which has been based largely upon hoarding. Now the air is coming out of this price boom, and still 95% of all Bitcoins in existence are hoarded and are not in regular circulation.
Anyone with any kind of financial noose can by now hear the air pissing out of the Bitcoin balloon and they will also be aware of the mass of coins out there which have been purchased or mined at a fraction of the cost of even today's greatly diminished spot price. Anyone buying into Bitcoin now, does so with a huge risk of having their investment rendered as a tax to the early adopters.
On the otherhand, the number of ways in which Bitcoin can be used as a means of payment is spreading like wildfire, although the motivation for people to pay with Bitcoin isn't that great. I have been using Bitcoins since 2011. I used them because I needed to use them to buy shit on Silk Road. Thus I had a motivation and therefore I am a part of the tiny percentage of the world's population who has experience of using Bitcoin. Recently, I bought some computer hardware using Bitcoin. I didn't need to use Bitcoin but I done so simply to experience how the process ran. Aside from the inconveniance of having to buy the coins from the exchange and wait over 1 hour for the transaction to clear, which resulted in my order being auto-cancelled, which meant I had to contact Scan.co.uk's customer support to get the order reactivated and matched up with the Bitcoin transaction which was now out of my control, the transaction was 'successful'. I used Bitcoin to get what I wanted and the retailer got what they wanted. Everyone was happy, except things would have just been so much simpler had I just used debit/card payment. For the average punter, Bitcoin offers absolutely no advantages as a means of exchange over conventional banking methods and lots of inconveniences and extra expenses such as the hassle and fees involved with buying the Bitcoins to begin with, bitpay fees (yes, my goods cost me slightly more due to apying with Bitcoin), and then the prospect of the thigns being totally out of the buyers hands should a little 'mishap' occur in the transaction. Once the Bitcoins are gone, they are gone, whilst the goods or services are still to be made good on.
I conclude that outwith black market transactions, the only scenario in which a normal Joe may want to hold a stash of Bitcoins for making purchases with (lets face it, nobody is going to transfer funds to exchange, to buy Bitcoins, to make a transaction which could have been more readily and less expensively made through convential banking), would be if Bitcoin was going to slowly but steadily increse in value. Unfortunately, the opposite is proving to be true and the only thing that can save Bitcoin's market value is an increase in demand. Of course, a decrease in supply could also have the same effect but with something like an estimated 95% of all Bitcoins being classified as 'hoarded', and with the price gradually sliding south, I would suggest that supply is already limited to an extreme. Thus Bitcoin needs to get a large injection of capital from somewhere. I hear everyone pronounce 'the hedge funds will not only save Bitcoin, but propel it into the stratosphere'. Problem with that is that any large volume of capital taking a bite into the Bitcoin market is taking a bite into massive overextended glut of withheld supply. How did things work out for the venture capitalist who bought the Silk Road coins at $800 per pop, for example?
Perhaps the key ingredients for a better Bitcoin 2.0 might be
*Instant transactions
*Requiring far less computational power to support P2P network
*Much better balancing of mining rate, user adoption, and propagation of means of actually spending the damn things (and this is always going to be by far the trickiest factor to get right)
As it stands, the Bitcoin universe has been flooded with more than half of all Bitcoins that will ever exist. Despite an out and out scarcity of places in which Bitcoin adopters can actually spend their coins, we have had an enormous speculative bubble, which relied heavily on hoarding in addition to a manic rush to get on board the 'next big thing before it's too late', and in all likelihood, the price bubble also greatly relied upon fraudulent trading over at Gox, where many many Bitcoiners ended up getting burned. As a result of the precipitious acceleration of Bitcoin spot price, their was also a 'bubble' in the Bitcoin mining race. These miners however, whose computational power is vital to support the Bitcoin p2p network, need prices of around $400 I believe in order for their operations to be profitable and hence worthwhile.
I suspect that the strong likelihood is, that Bitcoin will go down in history as the harbinger of new era of monetary transactions, but will also ultimately fall foul of its own fundemantel miscalibrations in terms of requiring far too much expensive computational power and releasing too many 'units', too quickly, before a viable economy could get a chance to develop, which resulted in Bitcoin becoming a victim of the vampire known as rampant speculation.
If we had the level of Bitcoin adoption that we have today in terms of the amount of retailers willing to accept Bitcoin as a means of payment (albeit with the unit of account being in dollars, pounds, euros, etc), back in early 2012; when Bitcoin was still 'cheap', had bottomed out, and was slowly rising in value; then Bitcoin itself may well have gone on to be 'the one'. I will state again, the only conditions which would be conducive for an actual adoption of Bitcoin into the 'real economy', would be conditions where Bitcoin was
slowly and steadily increasing in value. Only under these conditions would the average Joe (or anyone else for that matter) have a good reason to hold a stash of Bitcoins for making online purchases.
As things stand, I suspect the free market is going to respond to Bitcoin by stating:
"Great idea with a few fundamental flaws that are needing ironed out. Back to the drawing board with you!"
