Such exchanges can be totally anonymous, including who runs them. They don't deal with people or fiat currency. Just usernames and blockchains. People trust them based on their history, like an ebay seller, and admins realize there's no need to rip off users because it's not worth it to them in the long run (let alone what might happen to them if they are personally outed for doing so.) People can go in and out of them for very short periods of time to lower the risk it should disappear during that time, ie to lower their "exchange risk." They could also have a set lifespan... "we will operate from 2015-2018" this might lower risks as well.. imagine if Silk Road had a fixed shelf life that expired before it was caught.
There is no reason for anyone to prefer altcoins for trade unless they are useful for something bitcoin isn't (which I haven't really seen yet).
Demand for trade is the only difference between bitcoin and a hot potato stock in a company with 0 earnings and 0 capital. In other words, in the long run, absolutely essential.
In summary, altcons have no reason to exist unless they can do something bitcoin can't.
Next year, we'll start seeing altcoins pop up for anything and everything. The marketcap doesn't have to be millions.
A few days ago, I was talking to my co-workers about DOGE, because I'm pretty into it. This morning, when I walked into work:
"Hey, remember how I was saying DOGE had a $2MM market cap the other day and you were laughing? Today it's $12MM. It's now the 8th biggest altcoin (and is almost 7th)."
http://coinmarketcap.com/ has the whole list of altcoins and the numbers and graphs for them, if anyone is interested in this kind of thing.
DOGE specifically has changed my entire perspective on cryptocurrency. It's incredibly interesting.
But every altcoin has a set of pro and cons. They're just like flavours of Linux, and how hard is it to switch over as a miner, user or admin? The real power of altcoins how I see it will come when a second generation of altcoins comes into existence. Perhaps some way of retracting stolen or lost coins would be an interesting feature, perhaps tying coins to an email address for approval of spending or a resending of lost keys.
At first I thought you might really be onto something on this, but you aren't.
To put it simply: BTC->LTC at ex1 and then ex1->ex2 and then LTC->BTC is no more anonymous than BTC->BTC at ex1 and then ex1->ex2 and then BTC->BTC.
In both cases the two exchanges have to collaborate to reveal your identity. But in one case they have two be aware of 2 blockchains instead of 1. No big deal.
I would say that political ideology is another big difference. The early adopters of Bitcoin were largely of a certain ideological bent that made them predisposed to wanting Bitcoin to succeed. When have you ever seen this kind of behaviour around a penny stock?
But the thing you quoted me saying is what ultimately does provide a rational justification for bitcoin having a market price.
So basically what I'm saying is those ideologues got the right answer on their math homework, despite having made some mistakes in the calculations.
However not everybody who invested in bitcoin is a mistaken ideologue. I'm not (though I'm not anyone important, just a guy). Certainly Satoshi was not. He acutally "worked the problem correctly" and got a valid answer.
That's what will be interesting. I'm bullish on scrypt, but which one? I couldn't call it.
Still, I think Bitcoin provides much more value than any altcoin.
true, but expect Gox to introduce ltc soon, and then probably Coinbase and BTC China. The debate will shift from is bitcoin needed/useful to are altcoins needed/useful? Interesting times ahead. The $10,000,000 per bitcoin notion will be gradually diffused into other coins, and there'll be winners and losers, and it'll get ugly as blockchains are attacked, pump and dumps, powerful people takes sides, and misinformation put out. Bitpay and the Winklevoss' have already stood by bitcoin (at least publically.)
And the answer is "no." Though as they say, the market can potentially stay irrational for longer than you (in this case, I) can stay solvent. So what you are describing could happen for a while.
> The $10,000,000 per bitcoin notion will be gradually diffused into other coins, and there'll be winners and losers, and it'll get ugly as blockchains are attacked, pump and dumps, powerful people takes sides, and misinformation put out.
And those are the reasons that bitcoin is literally always going to be better as a means of trade and store of value. Those coins don't have any advantages but they have all the disadvantages you mentioned. The more widley used/mined/liquid bitcoin is, the more advantage it has. And I don't mean social network effects, I mean the things you are talking about.
I read there are only about 3500 setups mining bitcoin. It's too difficult to do on a homemade setup. Then again, I don't know how the pools are operating in this concept. If you're a young guy wanting to get into cryptocurrency, you're not going to get into bitcoin except as a way to get or dispense of another crypto from fiat (that's what makes bitcoin valuable - as a trendsetter and gateway.) Other altcoins may not offer any significant benefits to bitcoin on the whole, but vice versa too... I can think of things I don't like about bitcoin including a massive blockchain (13 gb) that takes days to download. To me the differences in algorithm choice and number of confirmations is a side issue (perhaps I should take them more seriously) to other things including demographics of adoption, regulatory environments, adoption and market perceptions.
It not really about the lines of code: its the way and context the software with its blockchain has been implemented, developed and brought to light.
On a similar note, Litecoins are big in China. If the blockchain were to come under attack, a large group of Chinese people would be pissed off enough to come together to do something about it. Or, more importantly the Chinese government may have high up officials or execs that hold Litecoins, and it could end up the preferred blockchain of the Chinese, and they turn a blind-eye to regulating it.