Counterparty posted a list of criticisms other cryptocurrencies and I wanted to examine them in regards to Namecoin.
- they provide no compelling advantages over Bitcoin itself
If this was true, then Satoshi would not have had us create a distinct currency. OP_RETURN is interesting but Bitcoin brings its own baggage.
For example, our UTXO set will always be much smaller than Bitcoin’s. When you need to make aerogel lightweight clients that are secure when used with Tor, it helps to have a small UTXO set.
We are also bullish on adopting Zerocash. Given the additional regulatory heat that going anonymous will bring, I believe that Namecoin will be among the first, non-anonymity specific cryptocurrency to adopt Zerocash.
- they lack a developed software ecosystem
Since Namecoin sticks closely to Bitcoin it’s fairly straightforward to adopt software designed for Bitcoin. Furthermore, it’s not like any other cryptocurrency has the DNS and ID application software we really need. If that were the case, we would be using it!
- they lack name-recognition, community adoption and merchant adoption
Namecoin has great name recognition within the crypocurreny and anti-censorship tech communities. Namecoin and the .bit TLD will gain name recognition after we get things like secure .bit registrars and high-quality, stable backwards compatibility with the existing DNS system.
Although our community organizing needs a lot of work, the core development team has been working very diligently on improving our communication. The current dev team has been in place for less than a year and we are working on rebooting the currency. The problems you see now are a result of years of neglect and much of the work over the past year is just coming to fruition.
In terms of merchant adoption, Namecoin isn’t trying to competing with Bitcoin as a reserve cryptocurrency. We agree that network effects will crush direct Bitcoin competitors and we are focusing on improving Namecoin’s utility as a naming system. Indeed, increased merchant adoption would be bad for Namecoin’s exchange rate because most merchants immediately exchange to their local fiat currency.
- they could be attacked with little effort and low cost, as the security of a blockchain is roughly proportional to its value
This criticism is leveled at altcoins with different mining algorithms, Namecoin shares miners with Bitcoin and is very secure.
Finally, we very much want multiple, decentralized DNS systems. Having 3 or more such backend systems fosters innovation through friendly competition and removes a single point of failure. We would love to work with counterparty on building their own decentralized TLD.