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mrclownworld 1y ago

The economics of hard forks are poorly understood

It’s not about a majority of people choosing one or the other

And it’s not about an intransigent minority refusing to join a fork

It’s about a confident minority being so certain that one fork is dogshit that they immediately sell those coins

And since price is set at the margin, this craters the price of that fork

Which signals to anyone inclined to “wait and see” that they too need to dump while they can

See: Bitcoin Cash

If a hard fork were to happen today and just Michael Saylor were to immediately dump all his holdings in the new coin, that fork would not stand a chance

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Discussion

OgFOMK ArTS 1y ago

Or...

The node runners would not run the new software.

mrclownworld 1y ago

No, it’s all price at the end of the day. Convicted hodlers of one chain rapidly dumping the other fork sets price action in motion that snowballs

While I agree that the number of nodes running each fork would correlate with the winning fork, I don’t think it’s causative. Node count just represents the number of different entities that want to verify the chain, which is downstream of the value of the asset.

OgFOMK ArTS 1y ago

Price in dollars?

mrclownworld 1y ago

Price in meatspace goods and services, popularly measured in dollars

Devin 1y ago

Perfect phrasing, lol

OgFOMK ArTS 1y ago

I measure meat space price in Bitcoin. Just like I measure concrete in Cubic Yards. So far it's deflationary. I don't measure Bitcoin in an arbitrary dollar that has no denominator.

mrclownworld 1y ago

The dollar has nothing to with what I’m saying.

If Bitcoin forks, producing “Bitcoin A” and “Bitcoin B” chains, the victory of one chain or another will be determined by a small number of people confidently and immediately dumping one to buy more of the other. This will dump the price of one relative to the other, and the “wait and see” folks will get the hint and pile on.

The result is determined by the number of die-hard hodlers of one asset vs the other.

mrclownworld 1y ago

The fate of the losing fork will be sealed by those people who go “look at that, free dogshit” and sell it as fast as possible, while still hodling the coins they consider “real bitcoin”

Zach⚡️ 1y ago

It’s not quite that simple, because there have been hundreds of Bitcoin forks and not all of them have had the privilege of getting dumped like BCash

First, a fork would have to have enough momentum or interest in it for there to be a market made for it (listed on exchanges, able to find buyers, etc.)

If there isn’t infrastructure and at least some community, mining, and economic holder support, forks are irrelevant.

We are probably past the point of a successful hard fork being possible.

mrclownworld 1y ago

There are no forks of Bitcoin with a bigger market cap than Bitcoin, they have all been dumped like I am saying

A hard fork would need to be so convincing that more hodlers dumped the non-fork coins to buy more fork coins than vice versa

I agree with you that this sounds very unlikely to ever happen

OgFOMK ArTS 1y ago

Aha! I understand. Thank you for the blond version.

mrclownworld 1y ago

🤝🤝💪