There is currently a boom in digital currencies. Since the break through of bitcoin there is so much attention in this field – check it out with google trends. And if you look at the exchange charts one can see that almost all digital currencies follow the trend of bitcoin.

What makes bitcoin to special? You might know there are some other crypto currencies already available. Maybe you have heard of lifecoin or even feathercoin.

Most are based on bitcoin code (fork) and try to improve design flaws or add something special like gridcoin that combines with boinc.

Some others try to take a different approach like Peercoin. While also being more energy efficient.

So a digital currency is nothing special can be made out of thin air – and it has been done many times and will be done in the future… Why is bitcoin so special and is currently gaining so much value?

Some say bitcoin is a waste of energy and while it clearly has its disadvantags by design it’s currently the most succesfull. But maybe it’s not the best from a technical standpoint.

I’m not an expert in markets – but it must have to do something with the acceptance of the people.
People accept what they know and understand (do you understand bitcoin? I doubt). Bitcoin have proven that it can withstand cirsis. So there is more trust in bitcoin than in others. Bit I assume that there is also a focus on bitcoin that it helps so much today.

I wonder why bitcoin was so often in news while other were not even mentioned. Until a few days ago I wasn’t really aware that there were so many of them… So just in case you haven’t heard about the other existing crypto currencies: I tried to give you a list that you can research for…

Alphacoin, Anoncoin, ASICcoin, BBQCoin, Bitbar, Bitcoin, Bitgem, Bottlecaps, Bytecoin, Casinocoin, CHNCoin, Cosmoscoin, Craftcoin, CryptoBuck, CryptogenicBullion, Devcoin, Diamond Crypto Currency, Digitalcoin, eMark, Emerald, Extremecoin, Fastcoin, Feathercoin, Franko Crypto Currency, Freicoin, Galaxycoin, Globalcoin, Goldcoin,, Grandcoin, Gridcoin, HoboNickels, Infinitecoin, Ixcoin, Joulecoin, Krugercoin, Litecoin, Luckycoin, Megacoin, Mincoin, Namecoin, Neocoin, Nibble, Noirbits, Novacoin, OpenSourcecoin, Peercoin, Philosopherstone, Phoenixcoin, Spots, Stablecoin, Starcoin, Tagcoin, TEKcoin, Terracoin, Tigercoin, Unobtanium, Worldcoin and Zetacoin.

Forgot one? Let me know.

Looks like it’s really easy to bake up your own breed of digital currency. It’s like the multiverse theory. Many have bad starting conditions and will fail. I.e. if they don’t attract enough miners the p2p will just not function stable enough.

So – who will win? That’s a multi billion dollar question, right? Nobody knows. Maybe all of them will crash or some of them will survive and make you rich if you have invested early? Maybe the next digital currency that will stay hasn’t been invented yet.

Try to compare with Facebook… It surly has tons of disadvantages – but it was widespread and accepted. To use another social network wasn’t so much rewarding just because all the other were already using facebook. I think the same network effect might be true for bitcoin. It has the largest market capitalization and the most effort has been already invested to build up the required industry around it.
In my opinion bitcoin is the most active community and also has the most innovative open source project that offers so much more than just digital dezentralised money.

The alt-coins are mostly spin offs with some changed parameters and have to catch up. And maybe the first one will win.

Update: Here are some helpful and interesting talks that at least helped me to reveal the potential that’s inside of bitcoin:

http://omegataupodcast.net/2011/03/59-bitcoin-a-digital-decentralized-currency/