So to all the tech savy people in here - what advantages could other cryptocurrencies bring that will give them a crucial edge over BTC, and how fast could something like that come along?
I think the biggest problem with Bitcoin is that the transaction volume can't scale past a certain point. Bitcoin blocks can only support 5-7 transactions per second at max, which is way too low to support a large-scale public adoption. Compare to Visa with 2,000 t/s and Paypal with 40+ t/s (numbers from
https://en.bitcoin.it/wiki/Scalability ). As the transaction volume gets closer to the block limit, the transaction fees go up and it becomes impractical to use Bitcoin for small value transactions. As it stands, Bitcoin transactions are already too expensive for payments in the $1-$2 USD range (transaction fees around $0.20-$0.50).
Altcoins can provide value because they can offload some of that transaction volume and usually have lower transaction fees. For example, Litecoin can support 4x the transaction volume of Bitcoin (with 4x faster blocks) and has transactions fees around $0.03. But a 4x improvement is still nowhere near what we need to get to Visa-level numbers (or even catch up with Paypal).
I see two possible "end games" for Bitcoin:
1. Bitcoin stays as the "gold standard" relative to other altcoins, but altcoins are used for most day-to-day transactions. Bitcoin is only used for high-value transactions. In this way, we solve the scalability limit by adding more coins.
2. Some new cryptocoin comes along that has a whole new transaction/block structure and supports a much higher transaction volume than Bitcoin (e.g. 1000x). None of the existing altcoins do this yet. This is the only case where I can see Bitcoin actually dying.
The number of transactions per second that Bitcoin can handle is limited to 7 per second artificially, and can be changed when needed. Read about it in the white paper - Satoshi was very aware of a figure of 100k per second as being necessary as part of the scale up.
The biggest issue for bitcoin is the fact that it is currently going through the process of becoming legal and respectable. Once it has done this, and all the difficult questions have been answered, the door will be open for governments to introduce their own official version of crypto currency - with the advantage of any losses being covered by government insurance - just in the same way that if you burn cash, it can be replaced if you can prove it happened and have the remains.
When that happens, Bitcoin will die, possibly within a few months. It will never die completely, but it will become the IRC of the currency world!
Think of it like the wrong example given earlier. Google, was not first to market, but actually one of the last. They took every fault in the market, and fixed it. Within months, everyone forgot about Altavista, Dogpile and Yahoo, and to Google became a verb within 2 years.
Bitcoin, the protocol will grow and grow, but Bitcoin, the currency will be replaced, as soon as the mainstream finally understand and trust the process - don't hold your breath though!
The biggest issue for gov coin is the btc/CC protocol itself which enshrines the philosophy/ minium entropy level of capital allocation is antithetical to central gov operation, or non DAC's.
CC's minimize entropy because they can collect many, mnay times more information about what the user wants than a gov can in wealth redistribution. The same as DAC's versus corps.
The gov/coprs models themselves will be thus arbitraged out by CC's and DACS, until they cease to exist in current form, or are forced to adapt to exist.
in more common parlance, who would invest wealth and time into GOV coin that Gov can devalue at will? Conversely how would Gov function as they do without being able to devalue and issue currency at will?
Where mining becomes centralised, a decentralisation needs to occur, wogtami has written on this and donated to the development of the P2P mining. Of course, POS solves this problem, but has the separate problem of distribution. This is where (I see) PeerCoin comes in. It bootstraps mining into POS so bootstraping 1st gen into 2nd gen Cryptos. In the same way as 1st gen cryptos need time and mechanism to boot strap into fiat.
Nxt perhpas misses this as its distribution model forgets to boot strap to gen 1.
PeerCoin also steers clear of the transaction block chain bloat issue bu aiming at high store of value.
Emunie or something similar may be come day to day transactional currency.
the evaluation of Peercoin has been much greater than BTC and LTC over the same period.
