How Many Coins Do We Need?

Most people agree that Bitcoin will not be the only coin in the long-run, but there will be a few for different niches.  Now, how many niches are there? Will it be 3, 7, or 100? Here is my guess.

We need more coins! Stupid.One coin for micropayments. Tipping is a good use case, but pay-per-view on single blog articles could finally become a reality. This coin requires really really fast transactions. Maybe p2p and block chains is not the best approach and we will see something very different at some point. Could you image transaction with confirmations in less than a second? In a few milliseconds? Dogecoin is probably the best coin in this niche so far.

A “coin” for stocks, futures, real estate, etc. Look into Peershares, Bitshares, Colored Coins, and Ethereum. This is bleeding edge at this point and quite confusing to read about. Ultimately, Bitcoin-like technology is so much more convenient for global ownership tracking than the paper-trail-based approaches we have now. My try to explain the idea: Instead Facebook2 issueing stocks, they create a 100% premine proof-of-stake coins and issues those. The blockchain tells you who owns how much of Facebook2 and where to distribute dividends. Automating and securing the dividends part is the hard problem.

A long-term value storage, e.g. for retirement provision. Maybe Bitcoin will stay with us in this niche. As the oldest coin it has a trust advantage. Maybe Peercoin or something similar will take over due to efficiency reasons. This coin will probably have long transaction times and mandatory fees to keep the blockchain lean and mean. Security and reliability have much more weight in the design of this coin.

These are three niches I can see so far. So three coins it is? Not necessarily. For example, due to regulatory reasons they might be split further. Governments might disagree with each other, so China uses another real estate coin than the US. Maybe stocks and real estate are handled by different coins with different transaction times.

Another factor is branding. Currently there are lots of altcoins, which only distinguish between each other due to branding. At some point there will probably be big brands issuing their own coins, from CocaColaCoin over WarcraftCoin to JenniferLawrenceCoin. Mostly the micropayment niche is subject to branding differentiation, because it is the most public facing niche.

There will be a few cycles of many coins-few coins-many coins until we reach stability. For a trader this is a good outlook, since volatility provides trading opportunities. Even if the altcoin zoo we have today is a graveyard in a few months, another boom cycle will follow.

 

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4 comments

  1. Anonymous

    I betcha one bottle of cold Cooper’s Extra Stout that easily ten times this many will proper.

    One: the work-a-day commercial coin (LTC?)
    Two: hard to believe you didn’t list Tor-friendly coins.
    Three: national coins
    Four: coins for families, etc.

    Mark Blair, Unicup, Western Australia

  2. 0range Crush (@0rangeCru5h)

    This is like asking how many channels you need in your cable package. Note: The average person watches about 17 channels, ultimately because that’s probably about how much the average person can keep up with.
    So my answer is 17

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