The problem with an alt blockchain that is too similar to Bitcoin is that bang for the buck in risk diversity just isn't there. It's like trying to protect cheetahs by making identical copies. When a lack of genetic diversity is what is already a primary threat to them in the first place.
I don't see the correlation, but for the record what appears to make cheetahs endangered is as follows:
The cheetah is endangered today largely because human beings have taken over much of the cat's habitat and killed off the small antelope the cheetah hunts for food.
I don't see how genetic diversity would help with that.
But there is another problem with having an alt that is too similar, which is that it is unlikely to thrive well enough to serve as a backup for that place in the ecosystem. LTC may be fine and dandy but because of the choice of inflation rate traction will be very long coming.
Traction is already here. Much of the coin's early life was spent around $.04, and even that was considered traction over the other failed alt-coins which were/are fractions of a penny, which is why I focused on it and not anything else at the time. Today LTC's exchange rate is about $0.50. People around Bitcoin in the early days may remember similar pricing patterns.
I actually think Litecoin's inflation rate makes a stronger case for it gaining market traction because there are already as many litecoins as bitcoins in circulation, more so actually due to a faster inflation rate (about 16M LTC currently).
We probably need a broad spectrum of inflation rates for diversity's sake, but I speculate that a competing alt would need an inflation rate approximately half that of Bitcoin to gain much traction in the early stages of its development.
I think we will eventually end up with such a spectrum to give the decentralized crypto currencies a tiered system as there is in the debt markets. With risk levels tailored to every need in the various arbitrage markets.
I believe inflation rate plays little role. What's more important is that there is a reasonable cap on total amount of coins.
