What I'm getting at is that I don't understand how the economics will play out. Bitcoin can't "decide" that it is going to be used by the big players and everything else goes to litecoin. You'd want to use the unit with the most liquidity and broadest support if you're going to transfer large amounts of money. Todays BTC value is driven by speculation about its future utility. If that future utility is intentionally bottlenecked, the price will plummet. And any idea of a meaningful and functional fee market with a highly illiquid asset is a joke.
We might think that Bitcoins lead is astronomical, but imagine if it stops working properly, for months, because the number of legitimate fee-paying customers went up much faster than anticipated. Or, it's working, but the rising fees makes whatever made it relevant to mainstream irrelevant again. Litecoin works. And they're not going to close the gates when the plebs come running.
So, the facebook generation or the twitteraty or similar starts using Litecoin, taking with them massive liquidity and a market cap 10 times (or more) that of Bitcoin. Why would you buy a car with Bitcoin instead of Litecoin? Why would you transfer 50 million USD from the US to China using Bitcoin rather than Litecoin?
Because Bitcoin is gold and Litecoin is silver? They're not. They're competing cryptos. And that's why we need to plan for success. Or pray success doesn't come too soon.
I think it is important not to immediately dismiss the fact that cryptocurrencies have value, different market sizes, and different liquidity functions. We already are seeing how the economics are playing out. The big players have ALREADY gone to bitcoin. If you examine the current digital landscape, CoinBase, Circle, Bitpay, Yogabbagabba hey, etc etc etc lol, they use bitcoin not another currency. Large banks are either looking at integrating with Bitcoin or attempting to weaken it. You don't see such similar actions with any of the altcoins to any significant degree as compared to bitcoin. As such I think it is safe to say that bitcoin is being used by big players. This doesn't mean bitcoin has the most liquidity, offers the easiest means of transfering money, or provides currency stability.
If you bought $500k of bitcoin off an exchange, how would that impact the bitcoin market as compared to $500k LTC or $500k Dogecoin, or $500k ethereum. The bigger question is on which exchange is the transaction taking place? An exchange with sufficiently deep orderbooks might have no impact whereas on a different exchange you could see a drastically different effect. So you need to look not only at the liquidity of the single asset but also transferrable assets and slippage. It could be easier to cash out in one coin than another and there seems to be links in market movements between various crypto commodities. I think it's dangerous to only see the competing nature of variable cryptos and not recognize that they also operate hand in hand.
I guess the question would be, whether the market has seen an uptick in litecoin usage given the recent bitcoin block size debacle. If you examine the bitcoin/ltc price ration, the answer, apparently, would be no.
I think an interesting question would be if litecoin had the same hashpower as bitcoin, what would happen to bitcoin usage?
If you can have coke or pepsi but generic cola is 1/5 the price, why do so many people keep drinking coke and pepsi?
Bitcoins market cap is tiny for a money system. And these "big players" in Bitcoin("Coinbase, Circle, Bitpay") are tiny as well. They're startups that can be wiped away in an instant. And the real big players are playing with ripple, private blockchains and ethereum as well. They're not fully invested in crypto yet and are ready for some trial and error. The "danger" with micropayments is that they're not too sensitive when it comes to slippage, so it would be no problem for Litecoin to absorb a fairly huge volume of new users from an economic standpoint.
And. Of course we haven't seen an uptick in litecoin. Bitcoin hasn't hit the wall yet. But Bitcoin isn't Pepsi or Coke, yet.
Mining power? Miners will follow the money.
