> I’m not fully grasping what you are implying here, mind explaining further?

Bitcoin catches the interest of low time preference people who want to be able to store assets (accumulate capital) in a way that a government could not come and steal their money. Inflation is one form of theft, it's a hidden tax on savers, continually picking small amounts of their stored value. The "blockchain" is interesting technology to achieve this, but if there were an alternative which provided the same security guarantees then it too would be just as good. It's not the "blockchain" which is the interesting development, but the innovation of censorship resistant, permissionless, non-inflationary money. A blockchain is really just an application of a Merkle-Tree, something which has been around for decades and is used in many systems already.

> This world already exists and the value of each should be somewhat independent, “bluejellybeanBucks” may have a feature that creates far more value than “sparkieSterling” for example. I would postulate that the majority of the currencies created will be low value but I don’t really see this as an issue with cryptocurrency in general.

I think it's a mistake to look at a cryptocurrency as "creating value". They do nothing of the kind. Money does not create value. Lending money can create value by allowing enterprises to expand in exchange for some of the profits, but in order to lend money, it needs to be worth something to begin with.

Imagine if I went around lending "Hasbro Monopoly Money" to people and expecting them to "create value" from it. It's absurd. Cryptocurrencies in general are no different from Monopoly money. Printing your own money does not create any value at all, because anyone can do it. Cryptocurrencies have precisely the same problem, that anyone can create one. Nobody has a leading edge, because the ideas can be copied too. Cryptocurrencies are trying to forcibly grab some network effect to make them appear to be more than Monopoly money, but they only attract speculators and gamblers who want to make a few bucks. Nobody is interested in the "technology" behind Dogecoin. It's hype + marketing + memes.

As the hype dies down and reality gets a hold, these cryptocurrencies will all be competing for a share of the declining "dumb money" which comes into the crypto space. Lets say we had some objective measure of value of this value, call it V. If we have one cryptocurrency, then the value of each of its tokens will be a function of V over the total supply of its currency. When you introduce a second cryptocurrency, it doesn't increase "V". It merely increases the number of tokens which V is split among. Each token will therefore hold less of a portion of V than before. Keep adding cryptocurrencies and splitting V further, the only outcome is that they become worth effectively 0.

The mistake cryptocurrency proponents believe is that V will increase due to their "innovation," and not just because they're collecting easy (gambled) money. Far from creating value, they do nothing but extract value from laymen and enrich their creators. There is nothing in economic history which suggests that new value will be created merely by the creation of a new money. Even Bitcoin didn't "create" value in itself, it relied on people exchanging it for other value initially. Bitcoin has created value in industries surrounding it, but this doesn't increase the value of bitcoin itself unless people are willing to exchange some other value for it.

> I don’t actually see an issue with this as market forces can handle this. If I have a street with a single Starbucks (bitcoin) serving the population adequately I can still open 20 more shops. The value will converge towards zero as more stores open, thus the closure of failed stores should occur.

I'm not contesting that the market will deal with it. I'm just telling you the market's outcome in advance, because it is inevitable. Either Bitcoin will come out as the winner, or all decentralized cryptocurrencies will become worthless and we'll end up with digital fiat.

> Do you have a source for this claim? Although a touted difference between fiat and bitcoin, the idea of deflation isn’t limited to bitcoin. I could create bluejellybeanBucks to include the same mechanism that bitcoin does.

It was hinted in the Bitcoin whitepaper (the removal of inflation altogether), and other texts written by Satoshi Nakamoto. However, it was implied to the cypherpunks who were already interested in digital money, because it was a fundamentally unsolved problem. Various digital monies had come and gone before it, but it wasn't until Bitcoin that both the removal of trusted entities and the removal of inflation had been achieved together. This is what made Bitcoin successful, and it's a success that cannot possibly be repeated, because it already happened. You can't invent the wheel a second time, it was already done.

Because their value is measured in terms of Bitcoin (due to bitcoin being the ramp by which alts are obtained), new cryptocurrencies which print their own money (ie, Litecoin) are simply adding inflation to the (overall) digital currency system. There are 21M bitcoins and 84M litecoins. If one Litecoin is worth (via speculation) 0.013BTC, then 84M of them is ~1M BTC of value. In effect, there are now "22M worth of BTC" in tokens, because people who don't understand economics think that LTC has some tangible advantage that Bitcoin doesn't provide.

As above, there is still a finite amount of value being put into cryptocurrency, V. The value of a bitcoin is now V/22M. If we now create XCoin, YCoin and ZCoin, each printing many millions, then you're just increasing the denominator but you're not actually increasing the numerator, V. People are going to stop putting money into bitcoin (or cryptocurrency in general) because it will become a terrible store of value, worse than fiat, because no cryptocurrency can hold value whilst there is no cap on inflation. This means V will acttually decrease rather than increase, and the value of each coin will decrease in response.

The failure of people to understand economics and look at Bitcoin as merely a technical system means that no decentralized currency is going to have any value at all, unless only one of them does (to fix the inflation problem). People would have more faith in centralized shitcoins pushed out by Facebook et al than they'd have with an ecosystem of coins which cannot hold value.

> While true Bitcoin does had the network effects, this does not mean another contender will be unable to rise to the top. Any cryptocurrency that one chooses to create can implement it in a way that mirrors bitcoin or piggyback off of some asset.

If anyone can create a cryptocurrency, then there is nothing that can set one cryptocurrency ahead of the others. If there is some interesting technology, that same technology can be reused by somebody else as a bitcoin sidechain, and then you'd have the same technology, plus the "inflation fix" of Bitoin. It would be superior to the coin which printed its own token. This is why it is extremely unlikely that any "flippening" will occur. Bitcoin has the network effects and the developers who are most focused on the principles behind it (financial autonomy etc). The thousands of others have a few developers who are trying to strike it rich by selling to people like yourself, or themselves, because most of the developers themselves have no grasp of economics.

That isn't to say that there isn't some use in other currencies. Monero is an example of one which has a real tangible use-case, for anonymous payments which Bitcoin doesn't provide yet. It's very likely that Bitcoin will get this functionality at some point, and since Monero is inflationary by design, it will probably not retain value. It's use case will eventually be assimilated by something pegged to Bitcoin. The same is true for other coins, although I'm not aware of any other currency besides Bitcoin or Monero which does offer a real tangible use case.

> Sure, the implementations you described are on bitcoin, but again, solutions of this sort can be applied generally to other cryptocurrencies.

Put this into reverse perspective. If any solutions can be applied generally, then they can be applied to Bitcoin too, and take advantage of Bitcoin's larger network effect. Who is going to win then? The die has already been cast and Bitcoin is leading the charge by a very large margin. Loss of faith in Bitcoin would imply a loss of faith in cryptocurrency as a concept, meaning that if people decide to drop Bitcoin, it's unlikely they'll be replacing it with some snakeoil competitor of it.