You’re most welcome
I think here is a flaw in your reasoning, for your statement to be accurate to me this should be: “if we have a pool of coins”
The actual amount doesn’t matter, someone adds another coin to the mix and now we have more coins in the market.
= absolutely correct.
However, if we have a pool of coins called Bitcoin, which is limited to 21 Million existing. And someone adds another coin, called BananaCoin, and there’s only 21 million BananaCoins then you have 21M Bitcoin and 21M BananaCoin. The existence of one does not prevent the existence of the other. Nor, assuming they’re equal, does the existence of one dilute the other.
However, let’s assume that BananaCoin is a far superior product; and as such, users and miners decide to migrate to the use of BananaCoin over Bitcoin. The result of this will be a price increase of BananaCoin and a decrease of Bitcoin; this decrease in price is due to quality of the product, not quantity.
This isn’t dilution but distribution of value. Yes the result of this may be that Bitcoin becomes worthless over time but such is the nature of a free market. The effect on the cryptocurrency space and use of cryptos in general would not suffer, it would migrate to the coins with the best value proposition.
If you look at the past, Bitcoin cash and bitcoin gold created new coins by hard-forking from Bitcoin, the value of these news coins was and is determined by the demand, and neither are anywhere close to Bitcoin; they were not even close at the time of forking but they did start out higher. It is well known that the Bitcoin Cash price has been artificially inflated (pump and dump) at least once, which they can do because of having massive holdings in it.
After forking however, their existence has had little impact on the price of bitcoin (aside a little from when they moved mining to pump, which was more of an effect on transaction speed and as such an indirect effect on price).
Lastly, it isn’t written anywhere, nor law that Bitcoin is to be the only cryptocurrency in existence and the only one that will be used to drive the internet (despite statements); god forbid that such would actually be the case. There are numerous far superior products out there now (obviously thanks to Bitcoin) that could be a replacement to-date. In 10-20 years the end the best coin(s) in terms of quality and quantity will survive, and likely Bitcoin won’t be one of them.