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Are Altcoins Worthwhile?

A lot of people have recently been interested in Alt-coins myself included. Demand for them has been rising and there is now over 75 Alt-coins with $100,000 market cap or higher and 15 with over $5,000,000 market caps according to coinmarketcap.com. The top 15 coins aside from the one and only leader, Bitcoin (which is not an Altcoin), are as follows as of the writing of this article on 01/25/2014:

  • 1. Ripples - $1,913,286,127
  • 2. Litecoin - $579,637,417
  • 3. Peercoin - $127,446,049
  • 4. Nxt - $74,394,598
  • 5. DogeCoin - $67,803,791
  • 6. MasterCoin - $66,448,975
  • 7. Namecoin - $48,118,264
  • 8. Quark - $20,292,231
  • 9. ProtoShares - $16,199,767
  • 10. WorldCoin - $14,218,848
  • 11. Megacoin - $13,883,129
  • 12. Primecoin - $13,263,269
  • 13. Feathercoin - $9,516,221
  • 14. Infinitecoin - $9,411,836
  • 15. Novacoin - $8,131,214

Ripples I personally don’t consider to be an Altcoin but others do which is why I listed it here. Now as you can see, people seem to be pouring their money into these Altcoins with the hope that they are going to become more widely used and appreciate in value as a currency. What I wonder is, with 75 large crypto currencies out there already and countless being made as I write, which ones will last if any of these, and what are the actual value of these alternate crypto currencies?

The most likely outcomes

I can see it two ways: First, they could all have some value as they do now with Bitcoin having the most or perhaps even another coin if one comes out that somehow (and I find this highly unlikely) has way better features than Bitcoin is capable of accommodating. Bitcoin by the way sits at a whopping $10,483,084,008 market cap as of today. I mean, they could all be accepted and traded openly through cryptsy and other sites, perhaps even directly with vendors or peer to peer in the future, but should they really hold their value or appreciate is the question. I will discuss that a bit further below.

The second option is that Bitcoin blows them all out of the water and people realize there is no need for 100’s of currencies just like there is no need for every person to try and print their own money. Certain other currencies will exist, but most will be more or less worthless since nobody cares if you have a million “Hobo-nickels” (an actual crypto currency) because nobody values them or has a demand for them. Sadly, hobo-nickels have a current market cap of $196,717 which means people do value them to the tune of nearly $200,000 in total.

I personally do not value them, but the fact that others do means I would be willing to get paid in Hobo-nickels at a slightly inflated rate to the going Bitcoin or USD rate. So if someone offered me $3,000 worth of hobo-nickels to do a $2,500 job I would take it obviously as long as I thought I could sell those before they plummeted in value. That is more or less the way I feel about most crypto currencies. I do not trust them to hold value in the future except maybe the really large ones.

Of course option three could just as easily be that Bitcoin and all cryptocurrencies become worthless, but I honestly don’t see that happening anytime in the next 20 years because right now people are holding billions of dollars in Bitcoins. I just don’t see people holding that kind of money in something that would ever completely collapse without a very good reason. Since there are no reasons (at least none that I can think of for it to collapse I will assume it is not going to). Other fiat currencies though will probably devalue over time since they are mostly printed without limits and Bitcoin has a firm $21,000,000 coin limit.

Back to the Altcoin discussion

I am just like the rest of the market when it comes to Altcoins. I am interested in them because I am not sure if they will be successful or not in relation to other currencies or even Bitcoin. I mean a currency is only as strong as the demand for that currency and the demand for Bitcoin is certainly present, as is the demand for Altcoins to some degree. Will this demand move towards Bitcoin like a black hole due to the sheer size of it already? It already is nearly 100x more value than the other top currencies (aside from ripple) and is accepted by many people and businesses as payment which I certainly cannot say the same for Hobo-nickels…

Will people accept Altcoins in the future? How many different Altcoins? Which ones? Why those ones? These are all important questions to ask moving forward. My gut feeling is that the more people start asking these questions the more people realize that only 3-5 or so Altcoins will probably exist in the future with market caps anywhere even within 1% to that of Bitcoin. Currently there are only two (Litecoin and Peercoin). Three if you count ripples which like I said I do not. People I see in the future thinking that Bitcoin is the main coin (the gold standard) and the other large ones deserve some value too, but any other coins are just rubbish just like now, but to a much larger scale because I see Bitcoins value being astronomically higher in the future than it is right now.

So, based on my gut feeling, Bitcoins end up worth a ton, the other top 5 currencies end up worth a lot (Ripple and other not really crypto currencies excluded) and then everything else worth some minuscule amount and basically useless in terms of trading compared to Bitcoin, Litecoin, etc… Yes, Dogecoin might even hold value. I always thought that coin was utter trash, but many, many people support it, and that is all that it takes to make it in the age of modern currencies. Sooner or later, I might even start using it under certain circumstances.

Conclusion

To conclude, I feel that Altcoins are worthwhile as long as people deem them to be worthwhile. This is the same for any currency. Now, because Bitcoin is so large, I feel in the future people will care more about it than Altcoins and so if I had to pick one coin and only one to place my faith or assets in, I would choose Bitcoin and so would most other people which is obvious by the fact that they already have. Pretty much momentum and current standing are the most important with momentum also being a huge risk factor because momentum can change a lot easier than current standing can. As a matter of fact it must change first. So I trust the big coins the most is the bottom line and with that logic applied to others shows (I have asked people) especially those that know nothing about crypto currencies, they mostly say Bitcoin or Litecoin is all they would ever look at.

Altcoins are fun and exciting, but also extremely risky, and so they are what they are, riskier higher potential profit coins, but odds are less likely to succeed so the safest bet is to just go with Bitcoins.

Cryptocurrency


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