THE FUTURE OF FAILURE ALTCOINS?

 INTRODUCTION

is called altcoin any smaller network that will compete with the function of Bitcoin (BTC) as currency. Thus, litecoin is a altcoin while Bitmessage not, although this is inspired by the Bitcoin technology. The Ripple system is not a altcoin, although there is a ripple altcoin call (XRP) inseparable from it.This article explains why there is a tendency to a single dominant currency for the network effect (network effect) Bitcoin the favors of overwhelming way on any of its competitors, and why should adopt a speech against altcoins instead to let more people be deceived by them.

THE USES OF A COINT   

here are two things you can do with a coin: spare it or spend it. Although a future imagine that most individuals will become so sparing as spender of bitcoins, you can conceptually separate the two uses.It is possible that people with a spare money even if there is no item to buy with the same (N.T .: gold is an example). It is impossible, however, spend a coin (ie use it as a medium of exchange) unless someone wants to keep it. If all those who acquire bitcoin did so with the sole purpose of spending it literally immediately, then it would be impossible for this to have any value. Anyone who kept for any length of time would be willing to get rid of it at any price, even zero. Since the currency develops a little demand, so it can be used as a means of exchange paying those who want in exchange for a good or service.The total value of the currency market should be seen as roughly proportional, ceteris paribus, the liquidity of that currency. This is the amount you can buy or sell the same currency without significantly altering its price. Although it is theoretically possible that a particular currency market value support any trade volume serving as medium of exchange, this requires that people are less and less willing to save it as the turnover grows. In this situation, serious practical difficulties just emerging. If someone wants to buy something more expensive than the full market value of the currency, for example, you will be required to split the payment into multiple transactions.Any imbalance between buyers and sellers more dramatically affect the market value of a currency if its total capitalization is smaller, that is, this would be less liquid.

ON THE TOPA 

more liquid currency has an advantage over the less liquid because it can withstand higher trade. In addition, liquidity in a currency causes a feedback loop: the more people buy a currency, but it becomes liquid. This naturally tends to promote the success of a single currency on the other.Consider the hypothetical example of an economy that just employed two currencies, A and B, which are also preferred by savers. For whatever reason, the coin A develops a slight advantage over the currency B. Some individuals, therefore, exchange B to A, thereby slightly increasing the market value and liquidity of A and reducing the B.Since then, beyond the initial slight advantage over B, currency A has the advantage of having become more liquid. As a result, most people sell B for A. The starting advantage is amplified, and in that the gap between A and B increases, the advantage becomes more and more evident.This process will continue as B continue to exist as currency. This may in the end serve only a marginal way, but not as a means of general trade. Expect this process for any two currencies in a free market, leaving finally one that is absurdly dominant.Thus, a more liquid currency will be preferred by both savers and by whom spend: for savers because of their superiority that feeds back, for those who spend simply because there are more buying opportunities with it.

LIQUIDITY IS IMPOSSIBLE TO PLAN

Liquidity, which it is required for anything to be used as currency, does not fit into a protocol. No matter how brilliant the design of a altcoin or what cool properties it possesses. Its value depends on a factor that is beyond the control of its creator, something more characteristic of "spontaneous order" of the market than an intrinsic attribute of the coin.Bitcoin and dollar have very different properties, so that it is possible to explain the success of BTC in its competition with the dollar despite the fact network (network effect) of this precisely because of these different characteristics. Cryptomoedas not, however, have very different properties from each other, so that there is very little sense to consider a altcoin successfully competing against Bitcoin.In the case of litecoin, e.g., the market value 40 times lower than the Bitcoin outweighs any difference in mining algorithms or commit times. Right now, the BTC is growing as supplants national currencies, but eventually absorb the altcoins also (NT: between the text of the original publication and translation estra, the reason BTC / LTC out of about 20 to over 40). The bitcoin swallow the litecoin at some point, just do not know if as appetizer or dessert.A new altcoin can not survive on just a piece of cake cryptomoedas. She must defeat all the rest to succeed, including bitcoin. As it begins at an extreme disadvantage in relation to the BTC, you can not succeed with a technology that is marginally higher than the same. It must be so much better than the BTC as this is against the dollar.

ANALOGIES WITH SOCIAL NETWORKS

For investors in currencies, the net effect is absolute because it is impossible to buy bitcoins and other altcoin with the same money. So the analogy with other examples of network effect, such as Facebook and Google+, is spurious. It is possible to beneficar Facebook and Twitter at the same time: you can post on both networks at no additional cost.Moreover, there is little long-term investment in the use of a social network. Status updates lose value in hours. Message boards come and go. The network effect to social networks is small compared to coins.

DESERT INTELLECTUAL

So far, many have been able to create and mine altcoins without having to justify clearly. The responses heard in discussions tend to be terribly inadequate, whether with non sequitur ( "Scrypt is resistant to ASIC"), the net effect misunderstanding or a bland, inappropriate skepticism ( "how can you be absolutely sure that the Bitcoin will win? ").

INVESTMENT IN PSYCHOLOGY ALTCOINS

The current popularity of altcoins should be explained in terms of foolishness and intellectual arrogance, it can not be explained rationally.When investors observe a new altcoin that was released, they may think "this cryptomoeda network is innovative, maybe it means she gets along." They can buy at this point, or they may think a little more, "but wait ... the BTC It has a much larger network and is therefore objectively more useful as the currency of this new altcoin, despite its innovative features. If I decide to buy something, I have to sell some bitcoins to do so, so that there is a real opportunity cost. Moreover, the only way to succeed is this altcoin all other investors do the same exchange. They will or not? "At the same time, many other investors think the same way. They also think about what is happening in the rest of the head as well. They will consider that "no one should reasonably expect more than a minimal chance of success. Is that how it (the altcoin) can only win if many people believe, this ensures that it can not succeed because if nobody buys more than a small bet, its failure is virtually guaranteed. "If they discontinue the reasoning here, will remain with Bitcoin.They can, however, think something like "it is possible that this altcoin take a foguetada in price over the next bubble Bitcoin because some people will buy it, whether for lack of intelligence to follow my line of reasoning or because they also like I realize that altcoin can entice some prey. This is, however, a proposition risk because it will be difficult to know if I'm doing someone sucker or sucker me. "The investor then may or may not buy to depend on their own confidence in their ability to predict the subject's behavior fools.In short, investing in altcoins ends up being a dynamic interaction between people who do not think ahead with those who think they are taking advantage over others.

The BURST BUBBLE

The more you ask for reasons valid to altcoiners, the more wonders how their new currency will achieve liquidity, less compelling their arguments become less hype they are able to generate and fewer people buy these coins. To overcome the movement of altcoins, should warn beginners continuously against them and insist on relevant points every time altcoiner try to change the subject.Irrationality inflating prices altcoins is unable to continue indefinitely. As soon as investors learn to think deep enough to know who the sucker in question, prices altcoins begin to fall inexorably. We can do this as soon as possible. I would like to see a more concerted effort within the Bitcoin movement to demand valid responses and report as charlatans those who are not able to offer them.I do not think it's right to leave the bubble altcoins continue without trying to stop it. Altcoins will make many people lose money while others gain without adding any value. Those who already have money invested will suffer loss, but it is preferable that at least there are no more victims.Although it can not be sure, and be subject, as anyone, to autosuggestion, I believe that there is some indication that the altcoin movement is declining: it is no longer possible to create interest in BTC clone as litecoin. It ends up being necessary to add a number of properties more, or simply act absurdly (Dogecoin). Moreover, it is ridiculously easy to create altcoins now: Coingen is a service that automatically creates altcoins with any specification and, curiously, only accepts payment in Bitcoin.

REASONS FOR LEGITIMATE ALTCOINSI

 have no objection to altcoins specifically. My objection is to the lies. There are legitimate reasons for altcoins, but none of them allows you to have real profit with them. Altcoins should have little or no market value, but decentralized system as a whole may have value as an experiment or test a possible upgrade of Bitcoin.If you're telling me that certain altcoin implements an interesting new idea, then fine. But if you tell me it will be "the" currency and that is a big investment, so you're lying. Perhaps even to himself.The only reason for a altcoin has some value is as an extreme speculation about the death of Bitcoin. While it is unlikely that a altcoin defeat the Bitcoin with its own merits, it is theoretically possible that the Bitcoin community destroy the BTC by his own foolishness. The growth of certain altcoin in this situation would alert the Bitcoin community to reverse whatever the problem.

CONCLUSION

Altcoins are not viable because they are unable to reproduce what gives the bitcoin its major competitive advantage: its market value. For this same reason, it is unethical to create a altcoin for the purpose of making profit. It does not take seriously altcoins. The way to defeat them is to require that its proponents explain why their currency makes sense as an investment. The more you demand it, the worse the prospect of altcoins.This argument must be expressed in a variety of forms, several times. This article and a few others that were written are not enough. You have to repeat it to exhaustion until the end of the "altcoin movement."