<p>That pressure is purely market opinion of each currency as it comes into the public view.</p>

<p>F.A. Hayek argues that competition among currencies is beneficial for the economy and a useful means for fighting inflation of currencies. See <a href="https://mises.org/document/3983" rel="nofollow">Choice in Currencies</a>.</p>

<p>Bitcoin by the very definition of its protocol is, in the long term, a deflationary currency. This is a fundamental quality that the introduction and rise of competing currencies - many of which will be modeled after Bitcoin - cannot change. Bitcoin cannot be diluted, because bitcoins cannot be arbitrarily added to circulation on a whim. Those who may have this power are under tremendous public scrutiny and would have a gargantuan task of persuasion ahead of them, should they choose to attempt to sway Bitcoin users' opinion.</p>

<p>Competition among the various alternative cryptocurrencies remains a topic of considerable debate, but the <a href="http://coinmarketcap.com/" rel="nofollow">market cap chart</a> to which you linked in your question comment indicates that <em>someone</em> finds value in these alternative currencies based on their merits.</p>

CC BY-SA 3.0
2013-11-16T02:19:57.963Z
Now, for some speculation: see my answer to the closed question, [In the end, will there be only one?](http://bitcoin.stackexchange.com/a/14398/1409), in which I reference Garzik's Theory.
Colin Dean
CC BY-SA 3.0
2013-11-16T18:39:24.647Z
Another way to phrase "fighting inflation of currencies" in such a way that it effectively applies to Bitcoin as well would be: "fighting sabotage of currencies through artificial devaluation because of central interference."
Colin Dean
CC BY-SA 3.0
2014-03-09T01:34:32.453Z
The way I see it, several months after this answer, is tha main crypto-currs. will specialize: Bitcoin as a main store of value and main entrance from fiat to the crypto-coins world, Dogecoin for charity donations, Protoshares and kin as shares of the DACs, etc. Any coin not in a niche use enforced by its community will disappear or be used only for speculation.
Joe Pineda
CC BY-SA 3.0
2013-11-16T02:18:58.053Z
2013-11-16T02:18:58.053Z
Colin Dean
<p>Looking into LiteCoin a bit makes me wonder: if LiteCoin were to gain transaction, what's stopping a 3rd, 4th, and 5th currency from gaining traction as well? Wouldn't this effectively eliminate bitcoin's ability of being a "deflationary currency" because other equivalent currencies can be created without end?</p>

<p>The mere fact that nothing else has approached the same popularity as Bitcoin leads me to believe that there <em>is</em> some sort of pressure preventing an explosion of multiple digital currencies.</p>

<p>I know there already are several alternate currencies, so why don't they have the effect of diluting bitcoin as I expect they would?</p>

CC BY-SA 3.0
2013-11-15T19:27:08.267Z
[Here](http://coinmarketcap.com/) is a related chart.
Cory Klein
<litecoin><economic-theory><currencies>
What pressure prevents alternate currencies from completely diluting bitcoin?
Cory Klein
# What pressure prevents alternate currencies from completely diluting bitcoin?

(Asked by: username_0 on 2013-11-15)

Looking into LiteCoin a bit makes me wonder: if LiteCoin were to gain transaction, what's stopping a 3rd, 4th, and 5th currency from gaining traction as well? Wouldn't this effectively eliminate bitcoin's ability of being a "deflationary currency" because other equivalent currencies can be created without end?

The mere fact that nothing else has approached the same popularity as Bitcoin leads me to believe that there *is* some sort of pressure preventing an explosion of multiple digital currencies.

I know there already are several alternate currencies, so why don't they have the effect of diluting bitcoin as I expect they would?

**Tags:** litecoin, economic-theory, currencies

> **Comments:**
> **username_0**: [Here](http://coinmarketcap.com/) is a related chart.  

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## 1 answers

### Answer by username_1 on 2013-11-16. Score: 1

That pressure is purely market opinion of each currency as it comes into the public view.

F.A. Hayek argues that competition among currencies is beneficial for the economy and a useful means for fighting inflation of currencies. See [Choice in Currencies](https://mises.org/document/3983).

Bitcoin by the very definition of its protocol is, in the long term, a deflationary currency. This is a fundamental quality that the introduction and rise of competing currencies - many of which will be modeled after Bitcoin - cannot change. Bitcoin cannot be diluted, because bitcoins cannot be arbitrarily added to circulation on a whim. Those who may have this power are under tremendous public scrutiny and would have a gargantuan task of persuasion ahead of them, should they choose to attempt to sway Bitcoin users' opinion.

Competition among the various alternative cryptocurrencies remains a topic of considerable debate, but the [market cap chart](http://coinmarketcap.com/) to which you linked in your question comment indicates that *someone* finds value in these alternative currencies based on their merits.

> **Comments:**
> **username_1**: Now, for some speculation: see my answer to the closed question, [In the end, will there be only one?](http://bitcoin.stackexchange.com/a/14398/1409), in which I reference Garzik's Theory.  
> **username_1**: Another way to phrase "fighting inflation of currencies" in such a way that it effectively applies to Bitcoin as well would be: "fighting sabotage of currencies through artificial devaluation because of central interference."  
> **username_2**: The way I see it, several months after this answer, is tha main crypto-currs. will specialize: Bitcoin as a main store of value and main entrance from fiat to the crypto-coins world, Dogecoin for charity donations, Protoshares and kin as shares of the DACs, etc. Any coin not in a niche use enforced by its community will disappear or be used only for speculation.  

---

