Are you kidding me? Bitcoin was the first crypto currency, it is innovation at its finest. Sure, money in itself is not innovative, but a decentralized psuedo anonymous currency was certainly innovative. They continue to improve upon Bitcoin and add new features, improving on the original innovation, which is why I would still call it innovative. My grudge with Litecoin is that they simply copy those features.
Are you not aware that a large amount of the improvements to Bitcoin actually COME FROM Litecoin's developers? Warren and Charles have been contributing to Bitcoin development for years. To say that Litecoin merely copies Bitcoin features is erroneous.
Just because difficulty goes up it does not mean that price will follow, and the "all other digital currencies are fighting for table scraps" goes along with the "too big to fail" mantra that I don't believe applies to crypto coins- or anything for that matter.
It isn't about difficulty. It's about investment. The smart money always follows the money...and the amount of money being poured into dedicated hardware for Litecoin infrastructure right now is very significant. There are a lot of reasons for it, from miners hoarding until it's profitable to increased media exposure attracted to growth, venture capital investments, etc...
As for your comment about Bitcoin's network effect...it is Litecoin's network effect that has kept it in the #2 spot for so long and nobody is even close to dethroning it. So you can't have your cake and eat it, too - Bitcoin has a network effect, true...but so does Litecoin.
The money WAS going into Litecoin. It has been on a steady decline for the past 6 months, the same amount of Litecoins today can only buy you half as many Bitcoins s they could 6 months ago. What you are seeing is the result of Litecoin being on top for so long and the natural choice to be the #2 crypto currency. That choice is not so clear cut anymore, and for some like me it is not even a hard decision.
The reason for the sharp decline in Litecoin's price relative to Bitcoin can be marked with a giant flashing neon arrow at the first couple weeks of May, when the Innosilicon A2 Terminator 80Mh/s systems started shipping. This gave a small group of miners an outsized share of the block rewards, due to the huge proportion of hashing power they added to the network. They proceeded to dump their coin (presumably in a mad dash toward ROI before competitors came on the scene) and miners, not always being the most educated on the dynamics of markets, were content to just keep dumping into weakness. This was combined with a strong rally in Bitcoin, which traditionally sees investment capital leave Litecoin into Bitcoin, to take advantage of the move up. Recently the ratio took a jump in Litecoin's favor when the rally petered out.
Once ASIC hardware takes over the network and it reaches a relative equilibrium of hashrate ownership close to what it had when it was GPU-driven, the dumping mentality should not be as pronounced. You are just failing to observe the reasons for the drop and you aren't seeing that the money that's being poured into Litecoin infrastructure (regardless of how much fiat capital is in it) is actually a giant vote of confidence, and people should be following that money.
Mark my words, Satoshi will never dump his coins. This is because for Satoshi, Bitcoin is more of a political and human rights movement in the form of a currency. Satoshi empowered this movement through the one thing most people care about most in this world- money. Bitcoin is just Satoshi's soap box.
I'm not convinced of that. Satoshi cut all ties and disappeared the instant that Gavin Andresen said he was meeting with the CIA about Bitcoin. He hasn't had a thing to do with it since, hasn't been an advocate of it, has not come out of hiding except to say that he is NOT Dorian Nakamoto. A guy like that, who takes such pains to ensure his privacy and who has divested himself of all relationships related to Bitcoin, doesn't strike me as particularly trustworthy. I'm not going to put my faith in the assurances of some random person who cannot possibly know Satoshi's mind or intentions.