What’s the difference between an HD DVD and a Blu-ray Disc? In a nutshell, one is a loser and the other is a winner.
In the late 2000s, the two battled it out on store shelves in what is known as a format war. Which won? Here’s a hint: you won’t be watching Gravity on HD DVD anytime soon.
Any cryptocurrency enthusiast looking back at the HD DVD vs Blu-ray format war is bound to wonder: “Must a single coin similarly emerge a ‘winner’ – whatever that means in the context of cryptocurrency?”.
The argument in favor of war
If you were to view the cryptocurrency format from this perspective, bitcoin would be the clear front-runner. A few other coins – dogecoin, peercoin and litecoin – would be trailing close behind. Additionally, depending on who you ask, there might be other legitimate contenders to add into the fray.
Unfortunately, the wide variety of coins may actually be hindering cryptocurrency rather than helping its cause. When HD DVD and Blu-ray were duking it out to be the industry standard, sales of both were ultimately hurt. Consumers were afraid to buy a player or discs of either one, wary they would commit to the format that eventually lost the fight.
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If this thinking holds true for cryptocurrencies, then the availability of so many coins may deter people (especially non-techies) from buying into any single coin.
As a result, many will simply adopt a wait-and-see approach, especially as one cryptocurrency is bound to emerge on top.
The alternatives are just too risky for them: if they buy into a single coin, there is a chance that they are betting on the wrong one. If they buy into multiple coins, their chances of picking the right coin increases, but so does the likelihood that they are committing time, effort, and money to others that will be worthless in the future.
Thus, the case can be made that altcoins are actually hurting the future of cryptocurrency rather than raising some sort of crucial cultural awareness.
In keeping with this, it could be argued that the current diversity of coins is a stage in our evolution we must overcome. For cryptocurrency to see wider adoption, we must make it as easy as possible for people to adopt it: this means one coin.
Cryptocurrency is not at war
I would not be one of those people.
I don’t see cryptocurrency as a true format war. In a true format war, the competing technologies must be in mutually exclusive competition. In the case of HD DVD and Blu-ray, a person had to choose between the two. If you bought a HD DVD player, you couldn’t play films on Blu-ray, and vice versa. Thus, the consumers who bought HD DVD players and movies ‘lost’, while the consumers who bought Blu-ray players and movies ‘won’.
The case with cryptocurrency is not so cut-and-dry. Even if one coin emerges as dominant – and bitcoin doesn’t look like it will lose its lead anytime soon – there will never be a true ‘winner’. Unlike hardware, there is no real incentive for the stakeholders in cryptocurrency to switch over wholesale to a single coin. Thus, many people can – and do – trade in multiple coins.
What’s more, and this may sound like a bold pronouncement – unless you’re a true believer – the cryptocurrency market is even larger than the one that HD DVD and Blu-ray locked horns over. That market was people that wanted to watch films in high-definition at home.
The market for cryptocurrency involves everyone that uses money. It’s everyone. So in addition to not being in mutually exclusive competition with one another, the various coins are operating in an exponentially larger market. And within that market, the coins tend to cater to different segments, given that each coin has its own strengths and weaknesses, peculiarities and protocols.
Why this comparison matters
So why is it important to invoke the HD DVD vs Blu-ray format war if cryptocurrency is not locked into a similar battle? Too many people treat cryptocurrencies as though the various coins are pitted against one another in a winner-take-all scheme. Thus, they throw their support and enthusiasm behind a single coin, proclaiming it ‘superior’.
The truth is: it’s the superior coin for them. Each has its place in the cryptocurrency landscape, so treating any one of them as above the rest is as silly as a stockbroker only advocating for the purchase of one particular stock.
Just as stockbrokers take it upon themselves to encourage the importance of investment in general, we must promote cryptocurrency as a whole – through whatever coin or coins people wish to use as their cryptocurrency of choice.
Companies in the cryptocurrency space must be similarly open to working with a variety of coins. Yes, it makes sense for them to start with a single coin, which in most cases is bitcoin, but they must view the eventual inclusion of other coins as a boon and not a drain on their business models.
Take, for example, mining equipment companies. Many of them, right now, sell just bitcoin miners, but some are looking to release multi-currency mining devices.
Work of this sort, that seeks to innovate and enlighten across the cryptocurrency space rather than with just a single coin, is crucial to the development of cryptocurrency. The work acknowledges that our future is not tied to a single coin, but to embracing the diversity of coins that the market offers. I hope that we, the early adopters, are among the first to get on board with this idea as well.
Battle image via Shutterstock