But the issue of confidence comes into play another way. Nothing backs cryptocurrencies, famously. They gain or lose value and acceptance based on how they are perceived. As I've illustrated it's easy for alternative cryptocurrencies to challenge each other, and no one knows what the market will come up with next. Since it's just as easy for merchants and everyone else to accept one form or another of these all electronic currencies and switch between them, any one could rise or fall at any time.

What I think this means is cryptocurrencies should be used transactionally, rather than as primary stores of value. I see a cryptocurrency version of xe.com showing all alt-coins values relative to gold (or USD to start). Exchange rates would be updated and available to merchants in real time. They could quote product prices in one, two, three or more currencies.