Crypto-Current (071)

§5.8734 — The earliest alt-coins were Bitcoin project forks (or ‘source code forks’).[1] With the open-source Bitcoin protocol – and its mutant descendants – available as hereditary material, they introduced variations to optimize different parameters, by changing the balance of trade-offs between features such as transaction speed, pseudonymity, resilience, and trustlessness. In this way tokens could be flavored to different preferences, in a process of niche exploration. Within this context, Bitcoin’s very substantial market dominance tends to vindicate the pattern of optimization locked into its protocol. Alternatives are comparatively unattractive. …

§5.87341 — Alt-coins, then, attend Bitcoin. They are part of what Bitcoin has brought about. In keeping with this, alt-coins have promoted themselves, typically, as ‘Bitcoin 2.0’ developments of the crypto space. This can mean supplementing Bitcoin, by directing blockchain-based token systems at a variety of specialized functions, and traits. It can also mean deepening the stack, by layering applications upon the Bitcoin blockchain infrastructure. Between Bitcoin and alt-coins, then, there is general – and often strong – complementarity. That synergy exceeds competition is also the market verdict. Price movements of Bitcoin and alt-coins are positively correlated. They share a fate.[2]

§5.8735 — From the mid-second decade of the new millennium, the complexity of the alt-coin ecology had grown to exceed any convenient oversight. There were already far too many coins, doing too many different things, in too many different ways, to allow accurate summary. Nothing beyond suggestive – though non-random – sampling is realistic here. Due to their remarkable diversity, Namecoin, Ripple, and Ethereum, examined briefly in series, are able to provide a rough sketch map of the alt-coin territories.

[1] A ‘project fork’ is a mutant copy. Source code is repeated, with variation. It thus tends to produce lineages analogous to those resulting from biological evolution. Abstract Darwinian dynamics are then to be expected from it. Forks of any kind are speciation events.

[2] Alt-coins are the worst way to hedge against Bitcoin.