For the motley subculture of Altcoins, Bitcoin is the key currency. In the first part of an Altcoin series we explain why.
It is quite easy to underestimate Bitcoin. One could, for example, reduce it to the price. Or that it is a superior means of payment. Both are important, but fall short. Because the essential point is that Bitcoin is a completely new technology: The first digital good that is just as scarce as a real thing.
Everything on the Internet is code and file, and thus, as long as you are in the right place in the system, it can be reproduced as required You can delete, edit and copy everything. A Bitcoin, on the other hand, can only be spent once. Point. Just like you can light a match only once, put a stone in a wall only once and eat a potato only once. All this terribly complicated propanz around Bitcoin, the miners, the blocks, the hashrate, the confirmations – it only serves one purpose: to make sure that a Bitcoin can only be spent once and that there is never more than 21 million. { {1}}
There was nothing like it before: a virtual good that behaves as it is physically. There is no point in worrying about which drawer to put the Bitcoin in. A currency? A protocol? A plant? A database? No matter. Bitcoin is the first purely digital object that has a hard value – not because of the content, like a patent, but because of the shell. Again point.
Around the Bitcoin, a largely functioning infrastructure has now been built, in painstaking and long work, which makes it possible to exchange Bitcoins for euros or dollars or other fiat currencies at any time. This is the second novelty that Bitcoin has given the world: There are (more or less) stable channels through which a virtual currency that has not been prescribed by anyone can be exchanged for “real” money. And that in large sums.
A confusing colorful subculture
In the wake of Bitcoin, a confusing colorful subculture of alternative virtual currencies, the so-called Altcoins, has now formed. Almost all altcoins are based on what the Bitcoin produced. You can imagine it a little like a medieval village with one- or two-story houses grouped around the church. The Bitcoin is the clear reserve currency of the Altcoins. It is the key to acquiring altcoins; their price is usually not given in euros or dollars, but in bitcoins. Bitcoin is the hard currency in virtual space; it gives value to virtual currencies. This triggered a tremendous surge in innovation, which is currently still at the very beginning.
Until mid-2013, altcoins were hardly an issue. Many Bitcoiners have thought conservatively in this regard and feared that the Altcoins would reintroduce the inflation that Bitcoin was supposed to eradicate through the back door.In the meantime, however, a broad rethink has set in, and there is hardly anyone who doubts that Altcoins are useful and, above all, that they make Bitcoin more valuable. Altcoins can be a lifeboat if Bitcoin fails, they can compensate for its weaknesses and creatively develop its architecture. There are altcoins that are faster than bitcoins that can only be mined with the processor, are mined using scientific calculations, are completely anonymous, use even stronger cryptography and much more.
Some believe that sooner or later an Altcoin would replace Bitcoin, which is then expressed in the saying that Bitcoin is the MySpace of virtual currencies. Which altcoin will become the Facebook of virtual currencies has not yet been decided. If at all.
Our assumption is that various Altcoins will circulate as everyday currencies in the distant future. Bitcoin, on the other hand, will remain their key currency and anchor of value. Virtual gold, so to speak.