Even today in the world of fiat currency there is a move towards a single currency or if not a single currency market, very limited number of currencies. The euro, issued by the Institutions of the European Union, is the official currency of the members states of the European Union who are part of the eurozone. Eighteen of the twenty-eight member states are part of the eurozone. These members include but are not limited to Austria, France, Germany, Italy, Spain, Finland, and the Netherlands. Lithuania is adopting the euro in 2015. Without arguing the success or failure of the euro, we can agree that there is a desire to move towards a single currency with some larger nations leading.
When I first heard of Bitcoin I immediately thought it could be the new euro. A single currency, transferable and usable in any nation. Fast, resilient to government or independent government agencies – such as the Federal Reserve- and offering the anonymity cash can have. Then I learned about Litecoin, which offered a decrease in block generation time, a larger market cap, and a hashing algorithm that was suppose to be immune to ASIC machines. Then I began learning about hundreds of other altcoins and still I ask the same question now as I did back then – why?
Why do so many different altcoins need to exist? There is no market for using all the cryptocurrencies out there. Bitcoin is just gaining momentum and you will be hard press to find places to spend your Litecoin or Darkcoins. What are miners doing when they mine all these different altcoins? They’re trading them instantly for Bitcoins. These coins exist to make money fast and have no real long term future.
I’m not saying all altcoins exist to get rich quick, nor am I saying that they exist for no good reason. Often altcoins are created to address concerns in the community or improve on the system. However, there just is not a market for all of them. Even though we have thousands of credit cards, most stores only accept a handful of them. Using that logic, as Bitcoin becomes more mainstream we can only hope that a handful of other coins will be adopted outside of their community. At best we can hope large companies will have their own altcoins and accept them, just as large department stores offer customers their own credit cards.
While I see unlimited uses for the Bitcoin system, such as Namecoin or running an API, looking forward I can only envision a world with 3-7 true cryptocurrencies. The market simply can not support the number of altcoins out there.
It’s easy to get caught up in the community and world of cryptocurreny and forget about everything outside of it. The world is littered with examples of instances where companies worked on a product to the extent that they completely lost any practical application for it by the time it hit the market. In a world where people desire simplicity and information given to them in small, easy to digest portions, do you really think that even twenty cryptocurrencies will make it?
Admittedly I could be wrong. To quote Yogi Berra, “It’s tough to make predictions, especially about the future.”