I want to start this by saying I am not a cryptocurrency genius and neither have ties to any altcoin group who would pay me to write this opinion. I am also open to changing my mind as more evidence comes out, and have a lot of respect for more knowledgeable people like Erik Voorhees who have written on the subject. That being said, I am a huge fan of the idea of altcoins. While I don’t have a specific preference and the subtle differences between them are a bit above my technical understanding at this moment, I think altcoins could provide valuable competition and encourage innovation in the market of cryptocurrencies.
My biggest concern is that a weakness could be exposed in bitcoin as technology improves, and also I have concerns about the security in regards to people being able to protect their wallets. The fact that taking the correct privacy precautions (cold storage for example) are intimidating to your average person is a valid concern. Don’t get me wrong—I love bitcoin and it has changed my life and will change the world—but with the trajectory cryptocurrency in general is on I have to expect that something better will come along that can solve some of the security issues around bitcoin. It is the nature of technology to continue to move forward in large leaps, and while we have an excellent model for a cryptocurrency in bitcoin, like all technology it has the potential to become obsolete when something better comes along. This improvement is great news for inventors and cryptocurrency enthusiasts, especially if you believe that a freed market can rise to the demand of its participants. We are seeing a massive experiment taking place with free markets and cryptocurrencies and if we are correct that free markets can efficiently provide for the needs of the people then we should be welcoming of new cryptocurrencies that offer solutions to the problems of bitcoin.
Diversification is also a necessary feature that altcoins offer. Just like with any investment, you don’t want all your eggs in one basket. Since we are still in an experimental stage with cryptocurrencies, there is always the risk of being ripped off, and as Voorhees astutely noted some current altcoins could be the penny stocks of cryptocurrency. Some have appeared to be pump and dump schemes, and I also agree that we should be skeptical about any new idea or coin that comes up until it can be proven that they offer noticeable advantages to others. But for people who think it’s too late to get into bitcoin because they fear they might lose money (despite its fractional capabilities), altcoins provide an alternative. The success one could have increases if you study them and can identify flaws or features. If we believe that cryptocurrencies are the future, there will be multiple ones just like there are multiple currencies today. I hope bitcoin isn’t the end all be all of cryptocurrencies, plus I’d hate to see it become a monopoly in the cryptocurrency world. The monopolic nature of the blood dollar is one of the many reasons I don’t like it, so I’d like to see many options at work. Of course, it is the most widely accepted coin and is a trailblazer in the industry, but its status as a trailblazer means improved altcoins can come it its wake and offer more diversification.
I’m not a purist when it comes to any currency and while I will support bitcoin in its current rightful place at the top, I can’t wait to see how altcoins can improve the nature of private transactions and even aid in charity efforts. I have yet to see any good arguments against competition and acceptance of multiple cryptocurrencies, and while many make the valid claim that bitcoin is the de facto cryptocurrency for businesses and nonprofits, we are seeing some altcoins being accepted at charities like Sean’s Outpost. I believe this number will grow, and the diversification aspect of being invested in multiple cryptocurrencies means people will have more options for which coins they use to support their favorite charity or business. Maybe you want to hold on to bitcoin or use it for certain transactions, and maybe you don’t feel as attached to say litecoin or feathercoin so you want to use those more frequently. The future is filled with endless possibilities when it comes to cryptocurrencies, so I won’t rule out altcoins as inventions that can have a major impact on how we transact.
Original content by Meghan, copyleft, tips welcome