[dtube] Do Hard Forks Dilute the Value of Bitcoin?
BOT JEFFY says "You don't even need to sum up all the reasons why btc is not the virtual gold and will not replace gold. This one reason is enough: hard forks. Every time there's a hard fork it basically makes the 'fact' that there's a finite amount obsolete. It's basic economics.
DISCLAIMER: This is NOT financial advice. I am just offering my opinions. I am not responsible for any investment decisions that you choose to make.
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That is an oversimplification imho. Each fork is a new chain that does not inherit the security of the main chain, and that makes all the difference!
Secondly, the fork does not inherit all of the supporting infrastructure and user-base, therefore, the new coins are not even close to being equal to the coins on the main chain.
So, with forking, the limited supply is not really affected in any meaningful way.
Lets be honest, bitcoin hard forks that don't introduce any new technology and utility respectively are utter bullshit. It's basically the duplication of code and launching of a new main net where the crypto asset in question merely carries a different name. Many large exchanges have spoken out against the rise of such forks and have in fact hinted they will stop supporting them.
I agree... I think most hard forks but not all are just done for a money grab.. and lots of new people that are getting into crypto fall for the new coins.
I guess I'll start off by saying that we can't fault anyone for wanting to create their own implementation of the protocol. Like other altcoins before it, bitcoin vs bitcoin cash will eventually prove once and for all if the rules which differentiate it from one another which could actually prove to be beneficial in the long run. These scaling arguments have gone on for years, with both sides refusing to concede ground. By creating two chains or more, we finally have the chance for each side to 'put your money where your mouth is'. If segwit proves to be an inefficient scaling solution, we will likely see the price of bch rise. As open source software, we can't really stop anyone from copying and modifying the protocol, so why don't we embrace it? Let the market decide which implementations work, and which don't.
Although hard forks can influence the price, it does not seem important to focus on prices but more on their innovations since it is assumed that the price depends on technology and of course on speculation.
I think you can take two points of view in this topic. Either Bitcoin value is diluted because some hard forks actually have better tech than the bitcoin core at this point or that bitcoin value stabilizes and more trust is placed upon it, because fork after fork with better technology, bitcoin is still at the top and eventually all the money goes back to it.
I personally believe bitcoin needs some serious tech upgrades to remain at the top or we could see it being toppled in the next 5 years from top #1.
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Bitcoin hard forks do not automatically dilute the value of Bitcoin because they lack Bitcoin's network effect. So, when a hard fork is created and launched it does not lead to half of the value of Bitcoin being transferred over to the new coin. Hard forks may chip away the value of Bitcoin but very slowly at best. Thanks to some dubious projects the public has become very suspicious of Bitcoin hard forks which acts as additional protection against Bitcoin value dilution. Hard forks may help increase the value of Bitcoin indirectly by spurring development activity in the Bitcoin community and by helping circumvent deadlocks.
I am afraid I have to disagree with you as I think that forks damage BTC in 3 important ways. The first is that they devalue the brand and confuse people as to which is the "real" bitcoin which in itself is extremely destructive especially if we are talking about encouraging mass adoption.
The second is that they encourage the unscrupulous to repeatedly fork BTC in the hope of making a quick buck. Thirdly forks divide the open source developer and mining communities and make them pick a side. The fragmentation of developer resources is extremely negative as these are the guys who create the innovation that will drive mass adoption.
When a hard fork occurs it does definitely diminish the power of the network itself, as miners switch between networks for the highest profit. That being said there will always be a finite amount of btc and that itself is what will always give it value. Even if a better cc is out there it will always have value as the first one.
Spending BTC "on one side of the fork" and BCH on the other cannot be called "double spending". "Money created for free" is a misnomer. Yes, you have twice as many coins after a fork, but the combined value of both coins "right and left of the blockchain" is initially the same as just before the split, namely the coin with the former name has 100% and the one with the new ticker 0%. But from that point on price discovery on the market (exchanges) will determine the value of each strand individually.