All too often I hear that Bitcoin may or may not be the winner but Cryptocurrencies are definitely coming.

I do not believe this statement is coherent.

I think the choice one actually needs to make is between Fiat as money or Bitcoin as money. No other Cryptocurrencies can become money.

That is to say if Bitcoin fails, we go back to Fiat, not to a different Cryptocurrency (even if it is Bitcoin 2.0 and better than Bitcoin in every way).

My logic goes something like this:

What gives Bitcoin a non-zero value is that there are members of society who are holding onto Bitcoin as a store of value. If every participant only wanted to use Bitcoin as a payment mechanism, Bitcoin would not actually be able to facilitate payments as the network value would be zero. The reason that one holds onto Bitcoin whether speculative or fundamental, is because the holder believes Bitcoin has a chance to become a more expensive currency than it is today. There has to date been no precedent for one digital currency surpassing another as the predominant ‘reserve’ digital currency so this hypothesis that Bitcoin could one day become a valuable form of money greater than its current $5bn market cap could prove correct. It could be wrong no doubt, but there is at least reason for some faction of society to believe it might work.

Now suppose Bitcoin is surpassed by a different Cryptocurrency - one that is funnier, one that is Turing complete, one that is faster, one that does not waste electricity to mine, or one that combines all of these benefits and many more. At that point, will that currency have a value greater than the $5bn dollar market cap of Bitcoin? No.

But it’s way better than Bitcoin!

That doesn’t matter. If precedent is set that a different digital currency can surpass Bitcoin say within the next 5 years, then the total shelf life of Bitcoin as the superior digital currency will have lasted all of 10 years. Those who held Bitcoin believing it had potential to be far more valuable than $5bn will have been proven wrong and will have lost their money.

With that in mind, holders of the new and improved digital currency will be cognizant that it could also be surpassed within say 10 years and will thus aim to use the new currency as a form of payment rather than as a store of value. This will mean that though the new digital currency is superior to Bitcoin, it will not reach the same market cap.

Therefore, if you believe in other math based Cryptocurrencies possibly surpassing the math based currency called Bitcoin, you should just believe in human based currencies like the USD or physical commodity based currencies like Gold. This would be more logical than taking the view that any new Cryptocurrency can surpass today’s market value of Bitcoin. In fact, the sooner a Cryptocurrency surpasses Bitcoin, the less value that new currency will have regardless of its technological features because the replacement speed / risk was that much greater.

That is not to say other decentralized technologies won’t be useful. They can as applications for Bitcoin without monetary value - potentially in the form of Sidechains for the Blockchain.

There you have it. Either Bitcoin is the next big thing or we’re headed back to Fiat or Gold. Your pick. It’s just rather incoherent to believe that another Cryptocurrency can win on a monetary value basis.