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Comment by ricg | Hacker News Reader

Here's another stupid question: Can anybody start a new fork?

Let's say, I invested in the original Bitcoin. Then somebody who has the marketing resources to build enough interest in a new coin comes along and decides to fork. Because of the hype around the new coin type, enough people are willing to trade it after the fork.

I'm being given the same number of coins of the forked kind and the value of my original coins drops by the difference in value compared to the new coins (or around that).

If I'd rather only invest in the original Bitcoin, I'd have to sell the forked coins immediately and buy the original Bitcoin back just to keep my investment value the same.

If anybody can come along and fork:

That sounds like in the world of stocks, a competitor could come along and decide to split the stocks of MY company from the outside, driving down the price of my stocks (me as the company's owner or investor) and there's nothing I can do about it.

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> That sounds like in the world of stocks, a competitor could come along and decide to split the stocks of MY company from the outside

That's not really a good analogy. Suppose someone decided to offer one of their securities (or pay a dividend, or give some 'thing') to everyone who has one of your company's shares. All investors have to do is show a share certificate, and get a one-off gift proportional to how many they own.

If the new thing has value, your company's shares should all go up in value by roughly its value. Then shares which have already had the thing claimed, should go down by the same amount, leaving them roughly where they were before. If you decide not to claim the thing, you lose out by its value, but your original shares are still the same and you shouldn't have made a loss on them, just as a result of this split.

Of course, if the new thing is something which competes with your company, your company's shares might go down in response. But this isn't directly related to the value of a share in the new thing.

> If the new thing has value, your company's shares should all go up in value by roughly its value.

Should.

Yes, that's the word "should", which I used.

And why would this translate to something like cryptocurrency?

I honestly don't understand the point you're trying to make.

It's the same value argument that was made when bch was created. Didn't work out. Value didn't automatically transfer. Market attributed arbitrary value instantly.

> That sounds like in the world of stocks, a competitor could come along and decide to split the stocks of MY company from the outside, driving down the price of my stocks (me as the company's owner or investor) and there's nothing I can do about it.

It's more like someone saying to all the shareholders of Apple "hey, you like companies that make mobile phones, and I've started a great mobile phone company, and I think it'd be great if you were a shareholder in my company too, so I've sent you some shares in my company too, I hope you like them!"

Is that a thing you could do? Yes.

Does it benefit you in any way? Probably not. There's certainly no reason to think it increases the value of your company.

Does it hurt Apple in any way? Almost certainly not. I mean, if everyone decided your startup was much cooler than Apple, then it might, but it's hard to see how you mailing strangers shares would bring that about.

A bitcoin fork is, in some ways, a little bit like a stock split or a dividend, but it's a lot more like someone randomly mailing strangers scraps of paper which are almost certainly worthless.

Yes, anyone can start a fork. It's hard to get momentum on it though, as it'll likely just be a shitcoin that no one cares about. Witness what happened with Bitcoin Gold.

So far there's only been one successful hardfork of Bitcoin (Bitcoin Cash) in all its history. Anyone can try, but few succeed.

Yes, but it doesn't answer the OP's question. What if government, official bank or other strong entity with virtually unlimited resources starts a fork (something like Ecoin for those who watch Mr. Robot)? I wouldn't call such event improbable.

I strongly assume that a strong entity would prefer to create a new coin from scratch instead of donating huge amounts of value to existing bitcoin owners.

> virtually unlimited resources

Having resources doesn't matter, it's a hype-based economy

Perhaps cryptos simulate "religions" whereas a single idea fragments in tens-of-thousands of variations? Look how many sects Christianity has after the Protestant Reformation "Hard Fork"

It is much too early to judge Bitcoin Gold. The launch has not even taken place yet. They forked a few weeks ago, the developers are currently mining privately, and the public launch will take place in a few days. People criticize the pre-mine, but it's only 0.6% of the total supply of coins. Perfectly reasonable IMHO.

Most people don't think that pre-mines are reasonable at all. That's a good way to know which coins are scams. Why do they deserve 0.6% of a total market that could be worth billions of dollars, exactly? Because they changed a hash algorithm and released a marketing website?

Why did Airbnb founders deserve X% of the shares of their company that could be worth billions of dollars? Because they made a stupid simple website to rent out your apartment? Same question, same answer. We live in a capitalistic world, I think it is reasonable that people try to launch for-profit ventures. Ethereum did something equivalent to a pre-mine + instant sale: they created the initial ETH supply out of thin air, and immediately sold it for BTC to investors.

Startups aren't comparable to cryptocurrencies. There is serious resistance to pre-mining in the cryptocurrency world.

That used to be the prevailing opinion. Pre-mined coins were generally regarded as scams or pump-and-dumps. But after Ethereum which is almost all pre-mined sharply rose in value, there seems to have been a change in public perception. This is what opened the gates for the new generation of altcoins, also known as ICOs. They don't pretend that they're anything else than pre-mined. In fact, the huge sums that the pre-mined coins are sold for is used for marketing as a measure of interest in their coin. It's a strange new world.

> Here's another stupid question: Can anybody start a new fork?

Not a stupid question at all. The answer is: sure, anybody can start a new fork.

From a philosophical point of view, the alternative is that only a few designated somebodies can fork, which goes against the design goal of a having a fully decentralised network with no privileged nodes.

You can also see this as a distributed systems problem. A fork is just a divergence in the consensus layer. These happen all the time as short-lived forks when different miners produce different blocks with different sets of transactions. Typically, one of those forks gets abandoned immediately — only occasionally do you see a second block mined on the losing branch. In this sense, and from a technical perspective, the only thing that's special about the Segwit2X fork was planned for the coming weeks is that it would also change the consensus rules (by enabling larger blocks, up to 2MB from the current 1MB). Because the consensus rules change is a highly politicised issue, there's a distinct probability that whichever side ended up losing would decide to continue building on their own chain anyhow, thus effectively breaking the currency into two.

> the value of my original coins drops by the difference in value compared to the new coins (or around that).

Prices of cryptocurrencies are very unstable even without any forks, so what you are describing doesn't make any sense.

Yes its coming.

When this goldrush started exchanges were the ones who made money so everyone wanted one.

Then came altcoins ...

Then ERC20 /ICOs...

Next up in 2018 - forks...

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