‘Bitcoin may be with us for a while’: Nobel winning ...

Economist Pete Surda explains why Litecoin and other Bitcoin competitors may not be able to compete long-term

Economist Pete Surda, who completed his master's thesis on Bitcoin last year, explains his view of Bitcoin-competitors:
The future of Bitcoin
First I will formulate a "rule of thumb" for how I think the network effect behaves under competition, and then I'll explain...:
The example Patrik uses are P2P protocols. Let's take a look at the history of the leaders (I'm approximating):
There is nothing unusual here. All this is perfectly reasonable in hindsight. Purists might argue that Napster shut down because it lost a trial and that's not an endogenous failure, but clearly if a leader wants to keep its leading position, it needs to be able to resists the law, i.e. the resistance, or lack of it, is an endogenous property. We can also note that the newer leaders were increasingly less centralised and more resistant to legal action: while Napster was shut down with a single lawsuit, BitTorrent has several unrelated trackers, and also DHT, so a shutdown of one company has little effect on all users.
Furthermore, as the old leaders do not provide an technological advantage against Bittorrent, they are unlikely to take leading position again. What would take a leading position is something with a significant technological advantage over BitTorrent. At the moment there is no visible challenger. We could say that the technology matured...
Now, how do we apply that to Bitcoin? The various altchains are, in my opinion, too similar to Bitcoin . None of them provides a meaningful technological superiourity. Therefore, I expect Bitcoin to remain the leader [OP: emphasis mine]. If something challenges Bitcoin, it would be something with meaningful technological superiourity. Furthermore, the relevant factor that approximates "market share" isn't really the market capitalisation. Rather, it's liquidity. Even if one of the cryptocurrencies bubbles up and overtakes, unit per unit, the price of Bitcoin, it still won't overtake Bitcoin unless it also overtakes its liquidity. And that takes much longer to build up than just one bubble.
Furthermore, while people might multihome different cryptocurrencies (i.e. to use them in parallel, the costs are relatively low, so it's not a big problem), in the end they still use one standard for economic calculation. Nowadays this is typically their national fiat money. Even if then every cryptocurrency user would multihome, as their industry sector moves from fiat to cryptocurrency, they would choose one of them to do economic calculation, and then there would be a convergence on this level, and this would play out as the network effect...
Competition under the network effect does not behave erratically, even if the people involved might. While switches in the leading position can occur, they are, within reasonable limits, predictable. More precisely, we can reasonably predict what won't happen. Altchains are unlikely to displace Bitcoin, due to path dependence.
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Bitcoin: A Bubble According to Economists Buiter Says Bitcoin Is Crazier Than the Tulip Bubble UBS's Donovan on Bitcoin: A Bubble Is a Bubble Bitcoin Is Business Cycle's Defining Bubble, Says Schomer The bubble dynamics of bitcoin

In the end, the Bitcoin bubble may have been a net good for society. The total amount of wealth involved — a few hundred billion dollars, spread out around the globe — was small compared to ... Nobel Prize winner economist Robert Shiller, who, in the past, has regarded bitcoin as a representative of whole cryptocurrency market as a bubble, seems to be going through a change of heart. Bitcoin price CRASH: The MOTHER of all bubble is the BIGGEST in history, economist warns BITCOIN is the “mother” of all bubbles and is coming down “crashing”, a top economist has warned. By late 2013, bitcoin’s chart resembled the biggest bubbles in history. The ensuing 85 per cent crash indicated the bubble had finally burst, bitcoin falling from $1,166 to $170. Of course, it ... Bitcoin is not regulated, but is traded on specialist platforms. It has no legal exchange rate and no central bank backing it. Launched in 2009 as a bit of encrypted software written by someone ...

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Bitcoin: A Bubble According to Economists

The biggest bubble in human history. This video is unavailable. Watch Queue Queue American economist Joseph Stiglitz says Bitcoin should be regularize before it creates a big problem to the system. Dec.08 -- Willem Buiter, Citi global chief economist, discusses bitcoin and why he says the cryptocurrency is socially wasteful. He speaks with Bloomberg's C... Yet despite the hurdles, bitcoin and its underlying technology is seen as a kind of "digital gold." Economics correspondent Paul Solman reports. Economics correspondent Paul Solman reports. Dec.18 -- Bitcoin is the "classic example" of the one "really crazy asset bubble" in each business cycle, says Marcus Schomer, chief economist at PineBridge Investments. He speaks on "Bloomberg ...

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