Quote from: d5000 on December 23, 2017, 03:13:21 PM

Quote from: 84AJ on December 23, 2017, 10:36:53 AM

Bitcoin is valuable because of its scarcity. The limited number of coins and the fact that it is controlled by software and agreement of the miners, unable to be manipulated by any government is what makes Bitcoin valuable. Trust in this is what drives Bitcoins value and growth.

[...]the growth in alternate crypto currencies paradoxically dooms all to worthlessness.

Think a bit different about it: A cryptocoin can be viewed as a "share" of the ecosystem surrounding it.

For example, one Bitcoin is a share (1/21000000) of the value generated by all merchants and service providers that accept them, and also, to a lesser extent, "believers" and "HODLERs" - those that simply accept the coin to be a store of value. (Hodlers may not generate real goods or services, but they are essential for marketing).

The consequence of that "cryptocurrencies-are-ecosystems" model is: If there is no ecosystem, then there is no real value. Most altcoins do not really have an ecosystem. They only are used for speculation. They may be "valuable" in terms of price sometimes, but only a few ones really have people behind them that are willing to "back" the coin if it faces problems. So most get pumped, dumped and disappear. They don't affect "scarcity" of other cryptocurrencies.

The real scarcity is the scarcity of coins that are able to build an ecosystem around them.

Yeah exactly. However, the bitcoin share of 1/21000000th is dilluted when other coins 'plug in' via an exchange. The bitcoin is now 1/(21000000+others)

When the total value of the others was low the effect on the value of a bitcoin was negligable. The total size of the ecosystem attached to Bitcoin was growing so was its value. Now that there is considerable interest starting to generate for investment in other coins the 'other' is starting to have a dillution effect. Once investors realise this they will realise it is not as safe a store of wealth as they previously thought, prompting them to withdraw from crypto currency and the value to crash.

Cryptos will still go on as a transaction option but not as strong as an investment option.

I admit that there is a bit of a moat provided by transaction fees and the ability of smart people to develop a viable user base. That is a lot less secure than the limited number of coins.

The developer talent is scarce now and holding back the rate of new coins but as cryptos become more established this will grow.