The ringer of a competitor against Federal Reserve notes would be a backed version of currency with encrypted certificates for use on-line. But since what can be held can be confiscated, the backing then becomes its weakness.
The resolve was there to put enough support behind backed currencies that they should have succeeded, but the government smacked those down. Future attempts may not gain traction because participants will be wary of further interference by the government.
Bitcoin has its weaknesses, but the new criterion the government has unintentionally created for a competing currency is that it be un-confiscatable. On the playing field that operates under these rules, a weaker champion such as bitcoin can gain traction.
Bitcoin is not the strongest player, but it's the upstanding underdog that has managed to exist on a policed field. Another currency may emerge yet, but the un-confiscatable hurdle will remain.
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