Well, the primary value of any currency, is in its fungibility. In addition, the more vendors at more locations that accept a currency, the more valuable it becomes. The more liquidity in any given currency, also limits the risk in holding that currency because liquidity provides the ability to sell or buy without the need to search for a buyer or seller.
So which is more important fungibility or liquidity? They are both important in order to reach critical mass.
I don't see an endless stream of crypto currencies flowing in and bubbling like tulips and then the market moving onto the next one. The markets have a short memory, but not that short. If BTC were to dump, there will be few, if any, followers. If Litecoin dumps few alternatives, if any, will follow in a big ramp up then crash.
Competition in currencies is good, but like all commodities that retain fungibility and liquidity, there can be too many. Only the strong will survive. And it these currencies are to really compete, duplicate or in fact replace FIAT currencies, then mass adoption and consolidation will be the key to that success.
The press will THRIVE on the pump and dump scenario of crypto currency after crypto currency rising and falling like bubbles. Just look at this silly article from the New York Times linked here:
http://dealbook.nytimes.com/2013/11/27/a-prediction-bitcoin-is-doomed-to-fail/?_r=0 That NYTimes article is full of classic psyop FUD:
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AUTHOR STATEMENT: "The currency’s issuer is an unknown computer programmer"
FALSE --- The currency has no "issuer" as the currency is issued by computers connected to the internet run by volunteers (i.e.: miners) that are rewarded for their computing power to process transactions in mining proceeds of Bitcoin. There is no central issuing entity. There is no need and actually the system is theoretically impossible for a central control over the currency. The author's statement here is factually, logically and literally incorrect.
AUTHOR STATEMENT: "Right now, bitcoin is tiny; at the current exaggerated exchange rate"
FALSE ---- "Exaggerated exchange rate" should be stated as "market rate", because the current rate is what the market is paying for the currency. Just like any other floating currency. The currency has no central price control. All Bitcoin pricing today is set by the market, by buyers and sellers in 100% market driven exchanges. Note that the term "Exaggerated" in the author's article is very misleading.
AUTHOR: the total projected volume of “coins” is worth less than the gross domestic product of Mongolia
FALSE ---- the existing issued volume of Bitcoins already exceeds Mongolia GDP
FALSE ---- Author refers to "projected volume". "projected" it is defined in the Bitcoin system at 21 million coins by 2030 and then no more new coinage. This market cap at today's market prices far exceeds Mongolia GDP.
AUTHOR: Similarly, truly private money is an inferior alternative to the money that comes with the backing of a political authority.
DEFINITION REQUIRED: What is "political authority". I find it quite bizarre to use this term and not "the state" or "the market" but instead to choose "political authority". How often do you read the term "political authority" when referring to any governmental state?
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There is a real propaganda war about to start with Bitcoin and all crypto currencies. Trust TPTB to step it up a notch real fast. Comments like the original poster to this thread basically saying "fleece the Chinese again and again through issuance after issuance" will only help that propaganda effort.
