Supply and demand - to have value an asset must be:
1. Scarce; and
2. Have Demand.
Gold coins and savings account are scarce (fiat money less so). However, scarcity alone does not give an asset value (both Picasso’s and my son’s paintings are scarce). Gold has no intrinsic value – it’s a metal w/ limited industrial/commercial application. But, Gold has historic value (i.e., millennia of public confidence that it will maintain its purchasing value). This historic value gives it demand. Either intrinsic value or historic value will yield a store of value, and therefore demand.
Peercoins (and Bitcoins, Ether, etc., etc.,) seem both scarce and non-scarce. Yes, they’re scarce in that I cannot create more Peercoins from thin air, but I can download the code and launch my own clone coin at any time (“Clone Coin”). POS coins seem to have a disadvantage as to scarcity as to POW coins. POW coins have real world, hard resources going into mining – it’s literally amazing the amount of electricity going into BTC mining right now. I can create a POS Clone Coin and a novel manner of distribution and POS nodes w/ very little resources, but I cannot easily create a POW Clone Coin with anywhere near the level of resource consumption as BTC. This does create a question whether POW coin with more resource consumption is more or less scarce than a POW coin with less consumption. Notwithstanding centralization and collusion problems, the security of __________ megawatts going into BTC mining is not easily replicated and does make BTC seem rather scarce. SK’s decision to make a hybrid POW/POS coin is truly brilliant.
As to demand, historic value is out – we’re all speculators (speculative value is fleeting). So, intrinsic value is all we have left. An asset has intrinsic value if it produces returns (e.g., a share of Walmart stock has intrinsic value because it produces dividends). Cryptocurrencies in and of themselves do not produce returns. However, cryptocurrencies tied to blockchain services do produce returns in the form of a consumable tokens or fees paid to the coin holders. Ethereum has Ether required to transact on the Ethereum blockchain. PeerAssets will have Peercoin – the Peercoin protocol requires 0.01 PPC / kb burnt, which will benefit all Peercoin holders. I don’t know what BTC has in terms of blockchain services, but BTC in an of itself has no intrinsic value.
In conclusion, the demand for blockchain services will determine the value of cryptocurrencies. Therefore, it’s a competition between blockchain service providers where we compete in terms of security, stability, portability, costs, ease, etc.