The reactions to my opening post illustrate how easy it is for otherwise intelligent people to start sounding like an echo chamber once they have financial or ideological reasons to promote a certain worldview.

Many of the definitions that people are using are normative rather than descriptive. It is begging the question to say "cryptocurrency can't be issued by a central institution" or "cryptocurrency can't be backed by tangible assets." Obviously, most people posting here are libertarians who strongly favor decentralization. Nobody expects a centrally issued cryptocurrency to appeal to you. But it seems like some of you can't even wrap your mind around the business model.

The point is that right now: (1) all transactions performed using distributed block-chains are done in cryptocurrencies; and (2) existing cryptocurrencies are not issued like fiat currencies. But neither of those two things has to remain the same. Distributed network authentication is a new technological paradigm, just like paper money was. The fact that paper currency became the dominant means of exchange did not mean that the first form of paper money prevailed over all the later ones.

The high price of bitcoins is a giant disincentive for the network to prevail, because it raises the cost of using the network to confirm transactions. (i.e., miners are being paid huge amounts of money, because BTC are so valuable) The major financial institutions will want an opportunity to mine a large percentage of whatever cryptocurrency will take off as the dominant paradigm. Imagine how easily banks like Wells Fargo could create financial incentives for merchants to take their bank-backed crypto-currencies instead of BTC.

When people say that these currencies will be less "free" than Bitcoin, because they can be controlled and manipulated by governments, they simply make the case for why these are the currencies that will prevail in the end. Within their sovereign territory, governments can easily prevent merchants from publicly accepting certain forms of currency, like BTC. Governments use their control over the money supply as one of their primary means of retaining power, and they will not give it up without strong resistance. They will find a way to make public cryptocoin logs their newest tool of panoptic surveillance, by using the legal system to force the adoption of their favored coins. This will be easy to do under the guise of preventing money laundering, combating terrorism, etc.

Crude historical analogies are not helpful, because you can always pick an example whose facts suit your argument. I could claim that BTC is like MySpace and we haven't seen Facebook yet, but that doesn't mean that is a valid take on the facts. What matters is the technical and economic nuances.

Here, the Bitcoin protocol can and has been cloned to allow for alternative coins. It way well continue to be the dominant model for how coins should be tracked. But that doesn't mean that the original denomination will remain relevant. The barriers to entry for alternative coins are just too low. So far, those coins have mostly been weak imitations. But the launch of a GoogleCoin or BOACoin could instantly change that and create a crisis of confidence in BTC.