Oh I can totally see where this will be going from now on. It does set a useful precedent!

Next up: "LiterCoin---will never exceed 168 circulation units!"

LitestCoin---336 max, guaranteed!

Way to dilute this originally neat "digital gold" idea. So turns out, while you can't clone BTC, we can copy ideas infinitely, unlike say some heavy-weight metals rooted firmly in the tangible physical plane :)

Now people will argue "but BTC have all the first-mover network effects!". Yes, for a time but things move lightning fast on this web we all love, and don't the "thoughts of many nations" about "high-value proofed against the elements, politics, technology and time itself" develop over millenia---generations and generations of attempts to cheat, "corner", fake or "resource alternatives" a unit only to always admit defeat in the face of the one superior element?

That is, for those looking for a "hard, deflationary, non-dilutable" asset. Those will, looking harder, easily find a better one of "ancient world-class proportions". Those looking for "soft, inflationary, dilutable" transactional currency of course won't be looking into BTC and its upcoming hundreds of clones anyway.

Let's face it, not every alternative clone will even make it to a major exchange but many do! LiteCoin was scheduled for MtGox, many other multi-currency exchanges let you trade (and thus arbitrage) various BTC clones ad infinitum. "Currency wars" to follow? ;)

And a couple of them will easily see the same early adopter patterns of BTC. Look as LiteCoins are already valued at $3!

Three bucks for the 2nd-in-line digital crypto-currency. And that's just early adopter geeks happy they have a new toy they can still mine with consumer-grade hardware (ha, gonna play with that myself I think!) and cash out when convenient. Nothing wrong with that, mind! It's all shots and giggles until someone giggles and shoots. Or so the saying goes.

And who will defend BTC's "network effect" from such dilution, other than a few temporary DDoS kiddies? Let the next-in-line currencies trade on MtGox for a time, bitspend bitpay etc. will find no problem accommodating them --- perhaps at some point a "basket currency" evolves? Let's call them "eSDR".

The BTC folks wouldn't like it but the other clones would love it. But none have diplomats, soldiers or bureaucrats behind them as we know ;) and it would be the minimum to at least move those crypto-currencies from "highly volatile hot speculation item" to "desired usage in commercial transactions". Arbitrage might do the rest? After all, intrinsically we know a BitCoin is not 4x as "valuable" as a LiteCoin (or 44x as of right now) but roughly equivalent once they're basketed and arbitraged.

But hey, it's late and my thinking is probably by far not as sound as that of crypto-currency aficionados.

I love the idea in principle, but the world knows:

- those who want a truly hard, non-dilutable unit (for long-term preservation) have a better choice available that will survive whatever trends the next years of techies pop out at an ever-increasing pace.

- and those who want a "soft" unit for mid/short-term transactions (before it can possibly devalue substantially) have a unit that is backed by contract law and your usage of it "defended" by, say, "the world" (if begrugdingly).

Don't get me wrong: I love all the buzz and biz around BTCs these last few years. Truly I'm into what all the aficionados pull off, and whatever winnings they "made". But not sure all "desires of human nature" from a either a transactional-currency/medium-of-exchange or a long-range store-of-value are truly reflected by the thing.

That said, it spawned useful technology even outside the realm of payments, such as http://dot-bit.org/Use_cases

One could argue -- "the world has many fiat currencies in competition, why not the same for digital crypto-currencies"? Hey, that's true! Actually that's pretty neat. But as the LiteCoin example shows, dilution can "evolve" easily. Not a problem as every party choose their currency of choice. But also completely unnecessary, as the whole world could trade&exchange on seashells tomorrow and no-one would be worse off. Different prices for the same products exist throughout the Euro-zone depending on I guess a trazillion of unknown factors, for example, and it works, so no biggie. Cool, let's have a hundred competitors as only a handful of choices will likely gain long-term momentum. And then everything changes with the next big crypto-3.0 thing in 2015 but that don't need to phaze us as long as we cash out beforehand ;D

Hey, come to think of it... this LiteCoin could be something, I should invest! This could be the "EUR" to the "USD", this could still be big! ;P