So just how many alternative or digital coins are enough, half a dozen to a dozen, maybe more? The hype and current price run-up of Bitcoin have spurred on an onslaught of copycat coins. There are currently 8 different digital coins being traded on the btc-e.com exchange and different crypto arbitrage app (including Bitcoin) with another half dozen or so waiting in the wings and hoping to be added to the exchange in the near future. What all these coins have in common with Bitcoin is obvious. They are digital coins or an alternative fiat currency with hopes of being used as a consumer to vendor currency, well at least that is what the creators and investors of these other coins will say but I wonder if they simply want to be included in exchange so they can dump a few million coins on unsuspecting day traders in a get rich quick scheme. Perhaps not all the 2nd tier alternative currencies have this in mind but it only takes one bad coin to spoil the whole bunch.
I guess the big question is, do we need a dozen or more digital coins? Do we really expect vendors to not only accept Bitcoin but at the same time, accept any one of a dozen different digital coins? That is going to be a stretch, to say the least. So is this a dog eat dog race to the vendor’s point of sale device or are all these other alternative coins simply looking for a spot on the exchange wheel with little or no concern about vendor acceptance?
Most Alternative coin enthusiasts have already accepted Bitcoin as the gold standard digital coin. Plus a good portion of those same folks have thrown their weight behind Litecoin as a nice alternative to Bitcoin and have even dubbed Litecoin as the Silver standard. The Bronze standard is still up for grabs with any one of a dozen coins in contention. I don’t see a big problem with 3 digital coins in the marketplace nor with a few upstarts now and then trying to knock the lowest hanging fruit from the tree but you have to remember that each and every coin, no matter how irrelevant will have an adverse effect on the top dog, Bitcoin.
Every coin traded is going to take a small piece of the pie and every piece of the pie that Bitcoin doesn’t get hurts its bottom line. Using the current approximate value of Bitcoin at $100 USD and all the other coins combined at less than $5.00 USD, that $5 value is greater from a consumer standpoint. When you consider the resources involved with managing, mining, promoting, and trading alternative coins, all those other coins are likely hurting Bitcoin’s bottom line by 25% or more. What does that mean? That means minus all the other digital coins, Bitcoin’s USD value is closer to $125.00 than $100.00. It doesn’t seem like much but if you were actually using Bitcoin as a currency versus a trading derivative, it could mean a lot. Imagine getting an extra $25 worth of gas or groceries every time you are at the store. That adds up fast.