Hacker News Reader

Comment by AlexanderDhoore | Hacker News Reader

"As Bitcoin becomes more popular, competitors will face higher barriers to entry, making it less likely they will be successful in supplanting Bitcoin’s market share. Several other digital currencies with similar features to Bitcoin have been introduced with limited success."

They think it's a “Winner Takes All” system. I completely disagree. If one cryptocurrency gets accepted, others will be right behind it. It's all automated, it's all decentralised. There's zero reason bitcoin should be the only one.

View on HN

Yeah, except, you know, the infrastructure behind it which is getting harder to replicate by each passing day, the amount of money being invested in Bitcoin companies, the first-mover advantage, the fact that no other alt currency is being accepted by merchants and the fact that most of these alt coins offer 0 advantage over Bitcoin, with the exception of namecoin, for example, which is unique in it's own way.

Maybe, maybe not. I'd like to compare it to social media. Facebook has a massive user base and is very hard to defeat, because there's no way in for competitors. But Bitcoin has no central servers, no one company calling the shots. Someone, somewhere could decide to exchange Bitcoins for Xcoins. Then Xcoins could exist next to Bitcoin, no problemo.

I agree, they could exist. But why would anyone want Xcoins, Ycoins or Zcoins instead of Bitcoins? It's not a choice between meaningless desktop wallpapers or your favourite cheeses - this is a currency. And for that you need faith that other people will accept it.

Why would people want Bitcoins in the first place? Whatever the source of demand for Bitcoin was in 2009 (when it was monopoly money) should be equally applicable to competing systems today.

People started playing around with Bitcoin because it was something new and exciting, it was truly the first of it's kind! Ideas were being thrown around, more and more people started joining the ecosystem, mining was getting really competitive, Bitcoins found their place on Silk Road, etc.

The point I'm trying to make is that Bitcoin was first! And all that excitement and experimentation over time translated into monetary investments and architecture, something the alt coins will have to work really hard to obtain! Not saying it's impossible, just highly unlikely.

You have not actually answered the question. Experimentation and competitive mining do not translate to demand. Why did people ever start exchanging valuable things for Bitcoin?

I did answer your question, read it again. Do you think that the guy who sold a pizza for 10'000 put some sort of actual value on Bitcoins? No, it was all good fun. You can also include in the mix the idea that this technology seemed like it might go somewhere at the time (still does!) so it might not have been the value at the time that people were putting on Bitcoins, but the value in the future. It's not that easy answering those kind of questions to be honest, without polling everyone who was involved in the community from the beginning and asking them what was their reasoning. So I can only speak for myself.

Not necessarily true. Just look at gold - you can say the same thing about competing metals, but gold was the original and is seen by people as the true de facto metal currency. This has been the case for hundreds of years.

Except that gold was not the first metal to be used as currency.

Alt exchanges exist already. Again - why should merchants bother setting up a new payment system if anyone can exchange altcoins for bitcoin easily?

because of all of Bitcoin's black market/early-adopter emotional baggage (the BOA report addresses this as Seigniorage). I'm not saying Litecoin is any better but my best guess is that eventually a solution will emerge with a model that negates the need to mine in order to maintain the integrity of the blockchain. (Maybe something that incorporates such costs into the exchanges, which then form a network that does this processing? Not actually saying that would work, just an example).

Basically a system that is "more professional" will come out, think of it as Bitcoin 2.0. All the vendors will adopt since they can co-opt a lot of the same POS systems they're already using (how hard would it be, really, to accept 2 forms of cryptocurrency instead of 1?)

Other exception: litecoin (or, well, just scrypt in general). Things may change eventually, but for now the scrypt hashing algo has staved off ingress of ASIC miners. This matters because ASICs are not commodity hardware- you need deep pockets to play that game. That takes us right back to more centralized control of the network.

Why does that help end-users? I would argue it is optimizing the wrong thing.

Because it gives a chance for end-users to be miners themselves, which in theory keeps the whole network democratised.

In the Bitcoin network today, two mining pools ( GHash and BTC Guild ) between them have over 60% of the mining capacity. There is no way for end-users to meaningfully nudge the behaviour of those pools, which in turn grants them great power over the future of the protocol and network.

Each of those pools alone has twice the capacity of the next largest ( Elgius at 700 Thash/sec ) which in turn is twice as large as Slush, and so on...

An end-user in the Bitcoin network, not owning sufficient ASIC hardware to grant 'access' to such pools, is dependent upon them.

I've also been quite curious - is it even possible to make modifications the protocol with so much of the current hashing power implemented in application specific hardware?

Yes. Hand waving because I'm not real familiar with the specifics, the hardware implements a very small piece of the protocol and needs a supervising controller to tell it what to do.

Hate to burst the Litecoin != ASIC bubble, but... http://www.coindesk.com/asic-miners-litecoin-soon/

A big misconception I've noticed is that people think ASICs are just for Bitcoin, while the reality is that ASICs are Application Specific Integrated Circuits. While the current ASIC systems being used for Bitcoin mining serve no other purpose, the general concept of an ASIC miner existing for Litecoin mining, or anything really isn't a farfetched idea - you just need new hardware that handles the Litecoin mining and will be single purpose just like the Bitcoin ASICs are.

Except for the fact that Litecoin has been advertised as ASIC-proof for the last year.

What company is doing the advertising? Are they subject to FCC regulation? Seriously though, there being no ASIC hardware for ltc mining yet means it's "ASIC-proof" in the same way that it not raining in New York today means that New York is "rain-proof". There's been no drive to build and (more importantly) sell ltc mining ASIC hardware.

No, Litecoin chose scrypt specifically because they thought it would not run any faster on GPUs or ASICs and thus it would be pointless to ever develop those ASICs. It looks like they may have been wrong twice.

Maybe? https://bitcointalk.org/index.php?topic=359323.0

As long as they are easily interchangable (I can swap my LTC for BTC in liquid markets) it's not so much of an issue. Services could make these transactions seamless.

I'm not a LTC or alt coin fan, but I don't think BTC infrastructure is really an issue.

> As long as they are easily interchangable (I can swap my LTC for BTC in liquid markets) it's not so much of an issue.

I think that will be the exact issue: lack of liquidity for alt currencies.

Quite the contrary. There is zero reason for any other alt currency to become popular unless it is particularly useful in some way that bitcoin isn't.

And the same rule applies to bitcoin itself. It only has succeeded, and will continue to succeed, if it is useful in a way that fiat currency isn't.

> There's zero reason bitcoin should be the only one.

Except for the problem of alt currency liquidity.

Money that is not liquid is not money at all (liquidity is the defining characteristic of money).

Reply on news.ycombinator.com