It's not called dilution, it's called competition, and it's a healthy part of a market that's not regulated by the state.

It's only dilution if one clings to one specific currency with religious fervour and refuse to diversify, and it happens to lose market share to a different currency. Then one's personal portfolio will be 'diluted.'

Currently, most all of the alt-coins are half-assed copy+pastes of the Satoshi client but with some interesting changes. Such as Litecoin with Scrypt, and PPC with scrypt and proof of stake. Namecoin with its nameserver concept. But there's none that really "takes the cake" in terms of having a completely different client, a real protocol specification to start with, etc. So we won't see any real "dilution" too soon - the biggest we have is Litecoin which has been hovering at around $3-5 per coin for a while - other popular alts are $.25-$2/coin.

I give you mad propz yo - by the thread title, I assumed this thread was going to be another tard with the original concept of "I know exactly what other people do with their coins and have looked at the Bitpay and tx stats - so I know that nobody actually spends bitocoins, everyone is an evil hoarder/speculator and that is the problem with bitcoin." Which of course is categorically false, not to mention an occupy-wall-st-esque stereotype, so thanks for not making that be your "problem with bitcoin" ;-D ;-D ;-D