Quote from: Zer0Sum on May 29, 2014, 12:04:59 AM

Quote from: Peter R on May 28, 2014, 07:54:47 PM

A very credible argument can be made that a new user benefits most strongly by joining the dominant network. The largest network would tend to have the widest acceptance, greatest liquidity, largest market capitalization, and the strongest user base (allowing the new user to benefit as per Metcalfe's Law). If bitcoin tends to appreciate on average at a faster rate than a basket of alt-coins, this only gives more reasons for new users to prefer bitcoin.

The "network effect" argument for Bitcoin... is almost always made in a vacuum, disingenuously.

Bitcoin is a microscopic part of, in order:

(1) the internet

(2) PC/cellphone industry

(3) commodities

(4) commodity/securities exchanges

(5) banking and financial services

GLOBALLY, none of these economic sectors has a strong "network effect"... except for unusual outliers.

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In 6 months...
BTC Cap to ALT Cap ratio has fallen from 20:1 to 11:1...
And there are now 300 functioning Alt Coins totaling $650 million Cap.

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"If bitcoin tends to appreciate on average at a faster rate than a basket of alt-coins..."

This is FALSE... and you pulled this directly out of your ass.

It's only been possible...
To maintain a proper Alt Coin Index with 15-20 Alts since the fall of 2013... one may even argue early 2014.

It also depends whether the POINT of your Alt Index is to:

(a) measure sector performance

OR

(b) outperform BTC

If your goal is to outperform BTC with an Alt basket...
It would have been almost impossible to fail in 2014...
Because every high profile Alt that has crazy spiked would have been an obvious choice for inclusion...
And BTC is down 21% since December 31st ($735 to $580).

Are people simply not aware of basic numbers... or are Bitcoin fetishists wearing blinders?

Alt coin mining is quite profitable at the moment reportedly it has been like this since April 15 of this year. So not a long time.
It is an indication of this sector growing when one looks at the profitability of mining Bitcoin and the relative hardware investment.

The idea of a market cap representing a percentage of value is falce, value is a function of the market liquidity and velocity of the coin. So while the alt market cap has grown I don't know if it has grown in value as it isn't easy to liquidate that value.

So I don't think one can assume alts are growing faster than Bitcoin by looking at the market cap most alts actually trade for Bitcoin thus growing the Bitcoin network.