Charlie Lee, the creator of Litecoin, posted a good write-up on Coindesk that breaks down in plain English the scaling conundrum Bitcoin is currently in. If you find yourself wondering about cryptocurrency’s viability, read his great summary of where things stand and you’ll be enlightened.
While it may come as no surprise that the founder of an alt-coin is advocating an ecosystem populated with many cryptocurrencies as a solution to scalability, I do think he’s on the right track with such an approach. In my Bitcoin primer, I delineated growing pains with the blockchain. I wrote it two years ago, and the Bitcoin authorities are in the middle of dealing with them now. I also mentioned then that multiple currencies could fill different roles, because of their different implementations being better suited to such roles.
I hope that Mr Lee will write another post on how he envisions this plurality of cryptocurrencies working together in the big picture. After all, going from one to another, and in and out of fiat money will be necessary. in our current world, this entails going through exchanges that effectively act as gatekeepers and can tax you as you pass through them. It also means maintaining multiple wallet systems, etc… In short, a pretty big overhead. If this is to be the solution, the best way to get it going is to improve the cryptocoin infrastructure to make trading between systems seamless and cheap from the end user perspective, while not giving up the major advantages of cyber money that Charlie Lee describes in his article. If this can happen, the future will look bright for many alt coins. The key is to make adoption on the fly a possibility. Right now a merchant or web site has a pretty steep hurdle to cross before accepting a crypto currency.
In spite of the fundamental challenges Bitcoin is facing now, there is no doubt that cryptocurrency is the way of the future. One need only take a look at all the patents being filed by major banks right now. It’s clear they took heed of Bitcoin, but are trying to devise their own systems that, presumably, they will be able to monopolize. I hate to break it to them, but, if it didn’t work for music distribution, it won’t work for money.