I think cryptocurrencies have a lot of potential, but I also think that Bitcoin will not survive. The leading innovators seldom survive (think of the Ford Model-T) because with open competition competitors learn from the innovators' design mistakes and produce superior products that eventually drive the earlier models out. This is all as it should be in a healthy market economy. In any case, Biticoin has major design flaws, most notably, an innate tendency towards centralisation in the bitcoin mining industry, that undermine its long-term viability.
To clarify: I am not against Bitcoin, I welcome it, both as a major innovation in private money and also for its usefulness in protecting financial privacy against state oppression. But the combination of free entry and Bitcoin's innate centralising tendencies must eventually bring it down. I welcome that too, because it means that Bitcoin will be replaced by superior cryptocurrencies. So where is the problem?
It is interesting to note that Ether/Ethereum is now rapidly catching up in terms of market share, and Ripple is gaining ground in third place. As rivals attain serious market share, I cannot see how the flawed Bitcoin model will survive long term.
I cover Bitcoin in Chapter 4 of New Private Monies and in "Contemporary Private Monetary Systems," pp. 213-253 in L. H. White, V. J. Vanberg and E. A. Köhler (eds), Renewing the Search for a Monetary Constitution, Cato Institute, Washington DC, 2015.
See also “Bitcoin Will Bite the Dust.” (K. Dowd and M. Hutchinson) Cato Journal, Vol. 35, Number 2 (Spring-Summer 2015), pp. 357-382.
"Bitcoin will Bite the Dust," presentation to the 32nd Annual Cato Institute Monetary Conference, November 17th 2014.
Blog Postings and Newspaper Articles on Cryptocurrencies
"Hayek-Style Cybercurrency," Alt-M, May 6th 2015.
"Wanna Invest in a Cryptocurrency? How about LEOcoin?" Cobden Centre blog, 13 April 2015.
"Bitcoin will Bite the Dust," Alt-M, November 18th 2014.
"Bitcoin is bust: Why investors should abandon the doomed cryptocurrency," City AM, November 5th 2014.
"The Future of Bitcoin,"The Cobden Centre, November 6th 2014.