A friend writes:
I know some people in the crime commission who say that bitcoin is rife with crime. It seems pretty interesting but be aware that there is an undeniable shady element to it. Personally, I’m eyeballing litecoin and maybe feathercoin, the mining difficulty on those seems much lower at the moment (bitcoin has ramped up too much for me to be interested in it).
It’s a great comment filled with common misconceptions. To say bitcoin is rife with crime is to say cash is rife with crime – yes there are criminal exchanges going on with bitcoin, but they are generally traceable. The concept of paying for crime with money is simply nothing new.
The governments of the worlds understand bitcoin can be used for crime, as can every other currency, and are supportive of bitcoin regardless of the criminal uses. Which is logical. Litecoin and feathercoin don’t solve the problem of criminal usage in the slightest.
To judge a cryptocurrency based on the mining difficulty is backwards because the higher the difficulty, the more secure the currency. You shouldn’t think of “mining” as a way to “get coins”, it’s just transaction processing for which professionals with a lot of infrastructure are rewarded.
The 2.5 minute block speed of both LTC and FTC is too fast, inflating the blockchain 4 times faster than bitcoin, and scrypt is a less proven hashing algorithm than SHA256, and therefore more likely to contain flaws. The limiting co-efficient of feathercoin is disastrous when considering scrypt ASIC’s aren’t far off, and all feathercoins will be mined out in a matter of a few short years because the maximum difficulty increase is limited at the protocol level. So if hashing power quadruples, the difficulty can still only rise by 40%, resulting in a block being produced every minute rather than every 2.5 minutes. This is compounded by further doubling and triplings of hashing speed.
Litecoin is only a refuge for former bitcoin GPU miners and offers no extra feature over bitcoin, and to make things worse, it isn’t widely accepted at all. Both LTC and FTC are merely a copy of bitcoin with a few minor tweaks which actually make both currencies worse than bitcoin, and further, neither has the network effect bitcoin has achieved.
Your interest in bitcoin shouldn’t be based on the mining difficulty, it should be based on the core technology. Mining is a massively hardware, power and labour intensive task which should only be undertaken by a few dedicated professionals, it’s not a way for joe bloggs to get involved. Also on every day in history people have made more profit by simply buying bitcoins rather than buying mining hardware.