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What is to stop the value of cryptocurrencies being diluted by the emergence of other cryptocurrencies? For example, according to Wikipedia, Bitcoin was 80% of the crypto market cap in 2016, but this had been reduced to 40% by 2017 due to the emergence of Ethereum and others. Although during this period the price of Bitcoin kept going up, what's to stop them all eventually cannibalizing each other?

The definition of dilution and cannibalization for these purposes means a significant reduction in market cap of an individual cryptocurrency.

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  • $\begingroup$ I wonder if this question is about economics. $\endgroup$ – Giskard Oct 8 '17 at 12:40
  • $\begingroup$ Also it seems to me that you should very precisely define what you mean by dilution and "cannibalizing". Market share or something like market capitalization...? $\endgroup$ – Giskard Oct 8 '17 at 12:40
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    $\begingroup$ added the definition $\endgroup$ – dm63 Oct 8 '17 at 12:45
  • $\begingroup$ Yes and no. Yes, as many cryptocurrencies will disappear. No, as I think some cryptocurrencies will come out as winners and have fairly large market shares. Currencies need to be widely accepted to be usable. For this reason, it would be reasonable if users gravitated towards a few large currencies. I think a scenario you outline is also possible, where the market becomes so fragmented that it stops working (too many different currencies). But I think someone would come forward and say "the market is too fragmented, it's not working, to solve this, let's all use Currency X." $\endgroup$ – M3RS Oct 9 '17 at 10:13

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