Why Do We Need More Than One Cryptocoin?

I wrote a bit about the differences between the various currencies here:

http://coin.furuknap.net/bitcoin-litecoin-whatcoin-oh-my/

However, I may not have spent enough time explaining the rationale behind why there is a need for multiple currencies.

Here’s the thing; most of the cryptocurrencies have different characteristics that make them useful in different situations and for different purposes.

At the moment, the primary ‘differences’ (better or worse is yet to be decided) between Litecoins and Bitcoins are the mining algorithms and the speed of block solving and thus transaction.

The actual amount of coins, although different, is rather irrelevant; both LTC and BTC can be divided into 1 billionth of a coin, and they can even be further subdivided if required and approved by the network. Further, they both represent 100% of their respective markets, and fewer coins just mean that each coin is relatively more valuable.

So, why not agree on just one? Why does the world need two, much less multiple currencies at all?

What matters long-term is more important. Having two or more cryptocurrencies means they can evolve in various directions to suit what society needs. If society changes (more/less online trade, more/less demand for physical monetary units, more/less trust, etc) then different coins will be suited differently to those needs, and the market has better options.

Technically, the world doesn’t _need_ more than one currency, whether fiat or crypto, but the problem is that shortcomings in how that money can handle transactions means that society becomes limited in what it can do.

The stock market is an example of this; traditional fiat currencies lack the ability to represent a share of something, so one invents a new ‘currency’ (stocks) to fill that need. Rather han having $100 worth of a company, you may have 10 shares, and these shares independently of what you paid for them represent a certain percentage ownership of the company. It’s a value, although it’s not a physical currency bill that you can go down to the Deli and use to buy a sandwich.

Similar things will happen to cryptocurrencies, where each coin can be technically adapted to suit a rising need. A new idea of colored coins come to mind as a way that cryptocoins can represent stock, showing how the community can think of new and innovative ways to use money and represent value.

Think of how may ways you store value today. You may have a house, some physical currency, a bank account, maybe some shares in a company, a couple of funds through your 401K, and similar.

Each of these measures of value represent different needs and characteristics and you use them for different purposes. You may calculate them into a common denominator (like US Dollars, Euros, or Bitcoins) but that only serves to give a translated representation of the value. You house isn’t an amount of US dollars any more than your US dollars is an amount of Bitcoins.

As such, Litecoins represent evolution and increases the adaptability of cryptocurrencies in general. They are not better or worse than other currencies, any more than fish are better than birds; they are just different.

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