This has been predicted by Ethereum's founder (and others, I'm sure). There will be millions of crypto-coins in the future. Any company could launch its own crypto-coin, as some sort of "shares" from the company, and a way to fund the company as some sort of mini-IPO. Think of it like Kickstarter for crowdfunding, but you'd actually own part of the company by buying their coins, and your coins will grow in value as the company's value grows. You could also easily sell those coins back into other currencies whenever you want.
Of course, this would be much easier if all of these millions of coins would be built on top of a crypto-coin platform, where you could also have P2P exchanges that can exchange these currencies much more easily and securely than a centralized exchange can. Things could get easier still for doing this, if companies just become Decentralized Autonomous Organizations. That's basically what Ethereum is trying to achieve, among other things.
> There will be millions of crypto-coins in the future
This doesn't make sense. If everyone had their own altcoin, even if they all used Scrypt, nobody would be secure because a 50% attack on your personal blockchain would be trivial. Bitcoins security relies solely on it being one of few significant coins of its kind.
In any case, Bitcoin is huge because its decentralised and nobody has to make decisions. If everyone had to decide what chains to trust then you may as well switch to a superior cryptographic protocol that allows you to mint your own coin without a blockchain. These exist, there's just no incentive for them inside the traditional banking system (too anonymous), or indeed on the inter-personal micro scale (too inconvenient).
Coloured coins make sense, but that's not really the same thing.
So a form of arbitrage against Bitcoin may be to create your own cryptocurrency, mint a few million of them for yourself, hype it on HN, then cash out and profit? Sounds like a classic pump-and-dump junk bond scam, to me.
> Bitcoins security relies solely on it being one of few significant coins of its kind.
So there's no technical security at all then, just the hope that hash power won't switch away to a new currency (which they have incentive to do - get in on the ground floor and cash out, as another poster said) It's all 'trust'. And a guaranteed cartel structure - the rich / powerful control 50% of the hashing power anyway.
There's security... because there's no incentive for most to risk investing in a new currency, especially when it's a minefield. The structure of the mining pools is what you want watch if you want an indicator of how safe Bitcoin is though, the original grassroots appeal of mining on your own own CPU/GPU is gone, and now its all in the hands of commercial outfits with ASICs and enthusiasts in denial.
It wouldn't surprise me if we had a Bitcoin Miners Council at some point in the future.
which they have incentive to do - get in on the ground floor and cash out
So they have savings in Bitcoin, plus an income in the form of mining fees, and they have an incentive to destroy those savings and income because they can invest instead in a completely new coin, of which 99%+ fail without ever getting anywhere? That makes no sense.
Why is hash power required to have 'savings in bitcoin'? I can see mining fees.
Regardless, you haven't refuted the 'no technical security' assertion. It's just a question of incentives, dealing, and collusion, which comes down to human nature. Not very appealing - I'll stick with hard assets, thanks.
Why is hash power required to have 'savings in bitcoin'?
Because without hash power the currency can be manipulated (e.g. double spent), which means that people won't accept Bitcoins, which means their savings would be worth their weight in Zimbabwe dollars.
Everyone holding BTC has an incentive to keep the hash power high.
Regardless, you haven't refuted the 'no technical security' assertion. It's just a question of incentives, dealing, and collusion, which comes down to human nature.
Which is the same thing preventing another Executive Order 6102. You can't escape human nature.
Wow. This really isn't making me very confident of bitcoin. You're saying that people (i.e. joe schmo) who have bitcoin deposits need to constantly make sure that the majority of computer hashing power in the world can't be used against them? So, like, the fastest computers in the world need to be focused solely on bitcoin mining otherwise the system isn't stable/secure? Jay-sus. Lets ignore 'dark pools' of compute power that are suddenly turned on during an attack (or even make a threat of an attack, and extort people into 'protection' money), or collusion between 'pools'... yeah, the double spending attack really is uh..dumb... You know, if a government had proposed this system (bitcoin), people would be all over it pointing out how weak it is.
> You can't escape human nature.
Total agreement there. Just get out of the herd's way. Edit: and right now I see the herd running into bitcoin.
Edit 2: I read some smart people got around that executive order (at the time) by buying foreign currency that had already done the devaluation (timing is everything!). (Which lead to unwanted strengthening of those foreign currencies)
You're saying that people (i.e. joe schmo) who have bitcoin deposits need to constantly make sure that the majority of computer hashing power in the world can't be used against them?
It's not like it can be used against someone personally. It can't steal someone's coins. What the attacker can do is:
- Revert their own transactions (I pay you 10BTC, then I revert that payment and I use the same BTC to pay someone else). This is what is called double-spending.
(Essentially, it's something like a chargeback, which aren't supposed to exist in Bitcoin.)
- Prevent the validations of some or all transactions, for as long as they control the blockchain.
So, if they just do a temporary attack, it'd cause some troubles (as it has in the past already), but not necessarily catastrophic.
You know, if a government had proposed this system (bitcoin), people would be all over it pointing out how weak it is.
I'm sure they would, yet everyone uses Credit Cards despite the $190 billion of losses due to fraud that occur every year.
Just get out of the herd's way. Edit: and right now I see the herd running into bitcoin.
That's completely contradictory with your previous statement. If there's an herd, it has been towards buying gold. Bitcoin is a blip in the radar. HN is far from representative.
> If there's an herd, it has been towards buying gold. Bitcoin is a blip in the radar.
Fair enough. Gold market cap ~$8 trillion, BTC ~$8 billion.
I do find BTC quite intriguing for international movement of assets - particularly if you can do it in small chunks at a time (to limit risk, like the double spending attack, or counter party / exchange risk in general...).
Going even further, a cryptocurrency could be like shares in a company which can earn profit by performing services that couldn't be done except by a distributed autonomous entity.
The founder of Ethereum used to be a founder at Invictus, a company with several DACs in the pipeline (check out http://invictus.io/bitsharesx.php). He was asked to resign for mysterious reasons.
Of course, this would be much easier if all of these millions of coins would be built on top of a crypto-coin platform, where you could also have P2P exchanges that can exchange these currencies much more easily and securely than a centralized exchange can. Things could get easier still for doing this, if companies just become Decentralized Autonomous Organizations. That's basically what Ethereum is trying to achieve, among other things.
http://www.coindesk.com/ethererum-launches-cryptocurrency-2-...
https://www.youtube.com/watch?v=l9dpjN3Mwps