Bitcoin's mining difficulty is calibrated fine for having a fixed limit. It's the fact that Bitcoin and Litecoin both stop at a fixed amount of units that makes them ultimately deflationary currencies that don't reward spending.
BitCoin is unique in that you can get an exact, real time measure of how the 'economy' is doing, whereas with the American economy these measures are extrapolated based on statistical work. Somebody should fork bitcoin and create a monetary policy adjustment algorithm that responds to changes in the transaction rate and prints more money (i.e., adjusts mining difficulty) in response. They should also remove the fixed ceiling.
More specifically, having a number of BTC clones of "varying degrees of 'dilution'" in constant competition might, via emerging floating "exchange rates" (from arbitration traders), "balance" what the missing "monetary overlord" cannot technically pull off. Could that be? Ever-evolving store-of-value versus medium-of-exchange demand in the network may be ever-shifting to the various currencies based on their intrinsic un-changable core "policies" (inflationary Freicoins vs. deflationary Bitcoins) and other market dynamics, no?
I'm no game theorist right now so I can diagram it out but hey, something to think about, no? It just "might" contribute to "easing" the "problem".
Also, I do love me some "quotation marks".
What this talk of the future value of things requires is a full understanding of opportunity cost, etc. If all you ever did was buy food, you'd get more if you didn't buy today and bought tomorrow, assuming food prices remained stable and your BTC increased. But you need food today.
Similarly, you might want to start a business which would be more profitable than waiting for bitcoins to appreciate.
When people start accepting payments in Litecoin, it will be noteworthy.
I remember that the original goal was to encourage CPU mining and Litecoin failed at this.
But that doesn't say anything about Litecoin, it only says something about Litecoin's current state of being. Bitcoin could similarly be said to have a hashrate surmountable by a few wealthy companies working together. Things will improve over time, and certainly if Litecoin proves to be the better, it will have a bigger hash rate than Bitcoin.
It's like saying "Windows is better because more people use Windows". Yeah of course there is more support for the most used platform, but that doesn't say anything about the quality of a newly released OS X. It may well be better, and in ten years it might be biggest. Not saying it will be, but it might. Same goes for Bitcoin vs Litecoin hashrate.
Litecoin however is merely a fork of Bitcoin with changes to a few trivial properties, I can't imagine it ever gaining as much traction as Bitcoin itself.
Check out btc-e.com and vircurex.com
There are about 8 alternative currencies that I track daily at the moment.
>The Litecoin network is therefore scheduled to produce 84 million litecoins, which is 4 times as many currency units as Bitcoin.
This seems like a completely useless and arbitrary statistic for highlighting the advantages of a currency.
Next up: "LiterCoin---will never exceed 168 circulation units!"
LitestCoin---336 max, guaranteed!
Way to dilute this originally neat "digital gold" idea. So turns out, while you can't clone BTC, we can copy ideas infinitely, unlike say some heavy-weight metals rooted firmly in the tangible physical plane :)
Now people will argue "but BTC have all the first-mover network effects!". Yes, for a time but things move lightning fast on this web we all love, and don't the "thoughts of many nations" about "high-value proofed against the elements, politics, technology and time itself" develop over millenia---generations and generations of attempts to cheat, "corner", fake or "resource alternatives" a unit only to always admit defeat in the face of the one superior element?
That is, for those looking for a "hard, deflationary, non-dilutable" asset. Those will, looking harder, easily find a better one of "ancient world-class proportions". Those looking for "soft, inflationary, dilutable" transactional currency of course won't be looking into BTC and its upcoming hundreds of clones anyway.
Let's face it, not every alternative clone will even make it to a major exchange but many do! LiteCoin was scheduled for MtGox, many other multi-currency exchanges let you trade (and thus arbitrage) various BTC clones ad infinitum. "Currency wars" to follow? ;)
And a couple of them will easily see the same early adopter patterns of BTC. Look as LiteCoins are already valued at $3!
Three bucks for the 2nd-in-line digital crypto-currency. And that's just early adopter geeks happy they have a new toy they can still mine with consumer-grade hardware (ha, gonna play with that myself I think!) and cash out when convenient. Nothing wrong with that, mind! It's all shots and giggles until someone giggles and shoots. Or so the saying goes.
And who will defend BTC's "network effect" from such dilution, other than a few temporary DDoS kiddies? Let the next-in-line currencies trade on MtGox for a time, bitspend bitpay etc. will find no problem accommodating them --- perhaps at some point a "basket currency" evolves? Let's call them "eSDR".
The BTC folks wouldn't like it but the other clones would love it. But none have diplomats, soldiers or bureaucrats behind them as we know ;) and it would be the minimum to at least move those crypto-currencies from "highly volatile hot speculation item" to "desired usage in commercial transactions". Arbitrage might do the rest? After all, intrinsically we know a BitCoin is not 4x as "valuable" as a LiteCoin (or 44x as of right now) but roughly equivalent once they're basketed and arbitraged.
But hey, it's late and my thinking is probably by far not as sound as that of crypto-currency aficionados.
I love the idea in principle, but the world knows:
- those who want a truly hard, non-dilutable unit (for long-term preservation) have a better choice available that will survive whatever trends the next years of techies pop out at an ever-increasing pace.
- and those who want a "soft" unit for mid/short-term transactions (before it can possibly devalue substantially) have a unit that is backed by contract law and your usage of it "defended" by, say, "the world" (if begrugdingly).
Don't get me wrong: I love all the buzz and biz around BTCs these last few years. Truly I'm into what all the aficionados pull off, and whatever winnings they "made". But not sure all "desires of human nature" from a either a transactional-currency/medium-of-exchange or a long-range store-of-value are truly reflected by the thing.
That said, it spawned useful technology even outside the realm of payments, such as http://dot-bit.org/Use_cases
One could argue -- "the world has many fiat currencies in competition, why not the same for digital crypto-currencies"? Hey, that's true! Actually that's pretty neat. But as the LiteCoin example shows, dilution can "evolve" easily. Not a problem as every party choose their currency of choice. But also completely unnecessary, as the whole world could trade&exchange on seashells tomorrow and no-one would be worse off. Different prices for the same products exist throughout the Euro-zone depending on I guess a trazillion of unknown factors, for example, and it works, so no biggie. Cool, let's have a hundred competitors as only a handful of choices will likely gain long-term momentum. And then everything changes with the next big crypto-3.0 thing in 2015 but that don't need to phaze us as long as we cash out beforehand ;D
Hey, come to think of it... this LiteCoin could be something, I should invest! This could be the "EUR" to the "USD", this could still be big! ;P
Also as far as I can tell this only helps out people mining coins, which is not at all the purpose of these currencies.
I guess there is the value provided by a decentralized transaction system, but at this point, competition seems like a better idea than picking a winner.
TPB cares about donations.
In the end, neither has any 'intrinsic value' in the modern age. Sure we can 'make things' out of gold/silver, but we can't eat it or shoot it at each other: making it more or less as worthless. Yet people "expect" that neither will be worthless in a breakdown of society.
In the end it's all human emotion. If Bitcoin is what they say it is ... than why would it care about 'competition' - the gold in the ground doesn't.
Or---priceless! Hoarding them historically never (or hardly ever) interfered with anyone's livelihood or industrial endeavours, yet because of their arbitrary ("useless") nature could "absorb" / proxy per-unit any measure of wealth applicable at a given time and place-----which is another valuable property in addition to the usual "scarce, indestructable-but-divisible etc." list of benefits.
Without communication all chains are forked. And when networked, with vastly different computing ability left over it'd be incredibly easy for the leader to manipulate.
edit: removed comment about Litecoin being the only other cryptocurrency with a Wikipedia article
Litecoin, Namecoin, PPCoin, Terrracoin, etc...