On the other hand, with a parallel currency devoted to some task such as processing DNS records or perhaps something else that may even have even more CPU resources thrown at it, I would argue that over time this "alternate" currency may have a substantially stronger currency train.  There are no guarantees here, but certainly I could see some people throwing CPU cycles at some of these alternate application simply because of what they do in terms of say DNS records rather than even as currency.  They will have this "alternate currency" which is then even better protected than Bitcoins, and my argument here is that the currency is thus a stronger currency which will drive Bitcoin out of the market place.

And like a Ronco advertisement, "that's not all"!  Since there are concrete applications for this alternate currency (buying domain records, paying transaction fees on the "Bitcoin stock exchange", buying certification from a document registrar, etc.) there is also built-in demand for this currency simply to have it.  That in turn is something that I think over time may even make this currency more valuable in terms of the overall size of the economy using these coins, further driving value out of the Bitcoin economy in a downward spiral.  Bitcoin will then just be a cryptographically weaker currency with fewer people trading a relatively worthless currency.  Is that really what Bitcoin users really want to see?

I don't think this is going to go away, as there are other application for Bitcion which can use this same principle.  As I've tried to abundantly explain, the method of "attack" here is also a more generalized database for other kinds of data besides DNS records.

The benefit to Bitcoins is in regards to the mining activity needed to produce block chains containing non-financial data:  Either that CPU activity can be applied to the main Bitcoin block chain and thus strengthening Bitcoin as a whole or it can be applied to a "parallel currency".

Nonsense, most people will still buy domain names.

It's important to understand a distinction here. They are making a distributed Domain Name Service, but are planning to depend on a centralized Domain Name Registration Service.

Bitcoin provides a great way to do a decentralized Domain Name Registration Service which would be a great match for their distributed DNS.

And why do you think that is?

I started the bounty pledge drive precisely because I didn't like what the The Pirate Bay is doing.

...unless the use of bitcoin for non-currency purposes discourages currency use.  Some uses of the network can act as an overall disincentive against mainstream use.  If people see that miners care little for currency transactions on the bitcoin network, or all the data spam increases TX fees to annoying levels, currency users will find a new network elsewhere.  If people find out law-enforcement-objectionable data such as "kiddie-pr0n.p2p DNS data" is being managed on this network, that increases the incentive for currency users to go elsewhere.

Maybe that makes some miners happy in the short term, and you happy, but I'm here for the revolutionary new type of digital cash.

And this generalized data timestamping/notary service seems like it has the distinct probability of degrading service for digital cash, if it is even remotely successful.