|The Bitcoin logo|
So, is this just a silly and short-lived flurry of activity? Will Bitcoin and all it's silly ilk die off?
Bitcoin is here to stay for a few simple reasons:
- There is no central organizational structure to Bitcoin or most other cryptocurrencies, so even if most people were to lose interest, the currency itself will continue on.
- Cryptocurrencies are durable. A wallet can be lost, permanently leaving a chunk of the currency unavailable, but it is never actually destroyed.
- There are too many people in the world who want to transact in a currency that isn't centralized.
The real question is: how much value can a cryptocurrency have when anyone can create one? This question is important, not because it spells the end of cryptocurrency, but because it might be the beginning. What if, for example, the US Federal Reserve and Treasury Department announced tomorrow that they were minting their own form of cryptocurrency and that it would enjoy the full faith and credit of the US Federal Government? I think Bitcoin's value in USD would fall through the floor. In this way, cryptocurrency is just a new kind of paper to print money on. Eventually governments will get involved, and how they get involved will be very interesting to watch. I doubt that we'll see any one nation successfully introduce their own cryptocurrency, but I could see one with a very shaky economy decide to pin their physical currency to a cryptocurrency... That would be interesting. There are already some people pointing out that, in these weak economies, the transactional value of BTC (or B⃦) is massive to those parts of the world.
On the side of the lesser currencies, I think that the momentum of Bitcoin will continue to propel it forward, but alternatives like Litecoin and Peercoin will continue to have as much value as they introduce through innovation. Newer currencies will have a harder time getting established, but hat doesn't mean they're valueless. Essentially, we're in the land-grab stage of cryptocurrency development, and the real estate that these other currencies have carved out for themselves will only become more significant over time.