If the legal issues are not a big deal, one big competitor will be a low fee, price stable, zero coin like system underwritten by a commercial entity.
Commercial backing will be more interesting to many consumers than the network of miners.
Commercial backing will be more interesting to many consumers than the network of miners.
I could also see USGov offering a FedCoin (guaranteed redemption for USD) or TBillCoin (instantly tradable, divisible, interest-bearing USGov debt as currency).
They might even be able to cook up something that's more anonymous than Bitcoin (ZeroCoin-like) most of the time, but deanonymizable sfter some 'CoinCourt' due process legal proceedings. (Think ClipperChip/key-escrow, but for cryptocurrency.)
i highly doubt this will ever occur - the Fed Reserve (or more correctly, the current cohort of "elite" bankers who control the Fed Resesrve) will either fight bitcoin if it threatens the dominance of the US dollar as the world currency, or the public will drag it kicking and screaming to adopt it (without much success i'd presume).
Control of currency is of utmost importance to those who are in power - and i mean really in power, not those who are voted into power like the POTUS.
It is equally false to try to separate money from law. Currencies have their value because of the law -- because of tax laws, and debt laws, and tort laws, and all the other laws that result in people being legally obliged to make certain payments. Control of currency is important to governments in the same way that control of speed is important to someone driving a car. The control is inherent and the issue is really about not completely screwing things up.
Financial institutions buy dollars and sell the others when there is the slightest panic. Chinese buy Argentinean wine with US dollars. The USD holds a unique title, an exorbitant privilege.
Furthermore, money operates outside of the law very often -- even dollars -- just look at criminal activities, both low-brow and complicated, e.g. off-shore accounts.
Fiat currencies have value because their issuing institution has a local monopoly on violence. Your phrasing is much more palatable.
> Control of currency is important to governments in the same way that control of speed is important to someone driving a car.
Citizens are cars to be carefully driven by central bankers? How delightful!
> The control is inherent and the issue is really about not completely screwing things up.
The average age of fiat currency is about 27 years old. I don't understand where your warm tingling sensation is coming from.
It does not have to be violence, you know. It can be non-violent -- like a general agreement by everyone that they will abide by the rulings of courts, even when those rulings work against their personal interests. Most debt disputes are resolved peacefully, even when people are watching their cars being towed away and even when they need to leave their homes. Even here in the USA, where the police are soldiers and more people are in prison than anywhere else, the majority of legal disputes are resolved peacefully and the majority of people at least try to follow the law.
It is also false to claim that non-fiat currencies are not subject to this. A currency backed by, say, gold, is still a currency whose value arises because of the law -- a law that connects the paper money to gold in some way, and that requires some form of mandatory payments in that currency. If the US government decided to return to the gold standard, gold would be currency again -- whereas right now it is nearly impossible to trade gold for anything, even on the black market.
So yes, the government does and will always have tremendous power over currency. Currency and law are inseparable except on the smallest scales.
The fact that it doesn't depend on violence ought to tell you to stop blindly parroting every single libertarian catch phrase you hear. They are not all true.