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Matt sums it up well in a footnote: Imagine if I announced tomorrow that I had created a new blockchain, called Bitcoin Matt, and that everyone who owned a

Matt sums it up well in a footnote: Imagine if I announced tomorrow that I had created a new blockchain, called Bitcoin Matt, and that everyone who owned a BTC today will tomorrow own both a BTC and a BCM. Fine, great, you all own BCMs, congratulations. But also anyone short a BTC today will be short a BCM tomorrow, and will be forced to go buy in those BCM shorts. Even with no economic support for BCM -- with nobody mining it, or using it, or treating it as a store of value -- I have magically created demand for it, just because BTC short-sellers will be forced to buy it in to cover their shorts. And if no one else is using it, then it will trade very thinly, and it will be very expensive to cover. (And anyone who does sell it will make a lot of free money.) Nothing stops me from just announcing that I've cloned a copy of the bitcoin blockchain for BCM; the only way to avoid this abuse is for people to ignore it -- and that means not forcing short sellers to cover it.

cletus 9y ago
I hate to be That Guy [tm] but can you please not indent quotes like that? It's a PITA to read on mobile.
- contingencies 9y ago
  Asterisks are superior. Quotations with style.
- alttab 9y ago
  Thank you!!!
- endgame 9y ago
  Get a better phone browser?
  - nothrabannosir 9y ago
    Don't post that without an actual recommendation. Which mobile browser renders that legibly? Otherwise it's just noise.
    - Alycia676 9y ago
      Micah . if you think Benjamin `s storry is great... I just purchased a new Subaru Impreza after earning $7445 this-past/month and-even more than, $10k last-munth . this is actually the easiest job I have ever done . I actually started 4 months ago and immediately started making more than $79 p/h . this link, ------>http://cutt.us/7N2sG http://cutt.us/7N2sG
  - deleted 9y ago
    [deleted]
  - mikeash 9y ago
    Indentation is for code blocks. Such blocks are supposed to be rendered monospaced and unwrapped. A browser that didn't render them that way would be broken. The solution is to format quotes in a way that's appropriate for quotes, not using code formatting. (The real solution would be for HN to support an actual quote style, like Markdown's leading > style, but alas....)
andy_wrote 9y ago
I'm not knowledgeable about BTC; this is the part that confused me. If you short a stock, and it distributes dividends or stock or ponies, as Levine says, you have to return that to the borrower. I'm not sure if this is law or just the overwhelming common practice of the markets, but either way we agree on this. You _could_ devise a short agreement where you say "no distributions are owed," but that's not the standard that the big securities-lending market has settled on and I'm not sure why people would demand that instead. If on the other hand you short a stock, and a third party says "Hey, I'm going to give everyone who owns this stock on this date a bag of cash!" I don't think that shorts would be obligated to cover that. This is, I guess, like what happened with Dole, except that there the third party was a judge, who has the force of law at his back. And this strikes me as similar to what happened to BTC/BCH, except without said force of law. Wherein lies the ability of someone to compel a BTC short to now owe BCH too? What exactly is it that shorts have agreed upon to return to the longs that they borrowed from, and if it's just BTC, isn't returning a BTC enough? If not, what stops someone else from making their own fork and compelling shorts to come up with that too?
- smogcutter 9y ago
  This is less like an arbitrary handout from a third party and more like a stock split. If you hold a security, you generally have no idea whether its been lent to a short. The idea of "your" stock being lent doesn't even really mean anything - the shares are fungible. So when the stock splits (or a company is spun off as in the paypal example, etc), you'd be awfully surprised to find the value of your stake halve because the new stock went to the short.
  - an_account 9y ago
    BCH _feels_ like a stock split. Where it's not like a stock split is that literally anybody can create a new blockchain just like BCH and give everyone who owns BTC a coin on this new blockchain. In that regard, it _feels_ more like a handout.
    - lmm 9y ago
tpallarino 9y ago
Except your clone doesn't have miner support, community support, and get listed by major exchanges. I hate that people are acting like anyone can just go and make a fork for free money.
- jmah 9y ago
  The point is, what's the threshold for "enough support"? Already for Bitcoin Cash, different exchanges have come to different conclusions on whether it's sufficiently supported to list on their exchange.
  - tpallarino 9y ago
    There is no threshold, it's clearly a gradient. Some exchanges want to list it, others don't. Certain exchanges listing it gives it more value than others, and if it's impossible to trade/spend, then the coin has 0 value.
  - supermdguy 9y ago
    Enough support that someone's willing to exchange cash for a "coin" from your bitcoin fork.
- kerkeslager 9y ago
  I'm not sure what you're saying here. Are you claiming that Bitcoin Cash doesn't have those things? Or are you saying that those things are important factors which differentiate Bitcoin Cash from other forks?
  - tpallarino 9y ago
    "Nothing stops me from just announcing that I've cloned a copy of the bitcoin blockchain for BCM" You can't just make random forks and have them be worth something. This is the culmination of years worth of debate and has a significant community following.
    - bduerst 9y ago
revmoo 9y ago
Can somebody please fix blockquotes on HN on mobile?
dclowd9901 9y ago
Couldn't you just set the value to 0 and allow a grace period for those who are long-ing or short-ing the currency to trade before "starting" it?
TrickyRick 9y ago
Could a similar trick be used by a company to screw over short sellers? Say by issuing a class of shares which are essentially worthless, forcing short sellers to buy it to cover their shorts? Or would a short seller simply "borrow" those shares as well?
- lmm 9y ago
  I imagine it would be no different from how we handle regular stock splits or rights offerings.
- koliber 9y ago
  I don't think that would work. I'm presenting my understanding of things. Please chime in to correct me where I am off. Let's start with a simple example. A company has a single class of shares. All these shares are fungible. This means that it does not matter that you hold share number 545 our of 1,000,000 or share number 390,056 out of a million. Each of these million shares is identical to the others. Just the same way each $1 bill is identical to each other $1 bill. A stock split happens. Now there are twice as many shares. However, at the moment of the split, each share is worth half as much. The total market value has not changed. Of course, trading continues and the shares will move up or down in value. Short holders will need to come up with 1 additional share for each 1 share that they hold. This is because the stock split affects the exact class of shares that the short holder owe. If a company issues more shares of the same class, short sellers do not need to do anything. Nothing happened to their shares. I would imagine that the value of each outstanding share would drop, and short sellers would actually profit. If the company issued shares of another class, that would not introduce new responsibilities to short holders. Short holders are obliged to do things on shares that they actually own. A dividend affects existing shares, hence short sellers need to pay those dividends. A split affects existing shares, hence short sellers need to find extra shares to make the lender whole. A new stock issue does not affect those existing shares: new shares are being introduced. Another way to think about this is to think what happens if you are long 1 share of a company. If a dividend is paid, then you are paid 1 share's worth of a dividend. If a split happens, your 1 share is now 2 shares (each at half the price of the original). However, if a company issues more stock, you do not get more shares. The same rules govern short sellers. However, they must give instead of receiving.
filmackay 9y ago
I think this is a bit one-sided, that you've created "forced buy in". You've also created a LOT of supply as well, which goes a long way to counter-balance the demand. Besides, the exchanges do not seem to have implemented this as a demerger spin-off (you were short BTC, but you do not need to return BCH - just bTC), and as a consequence NOT created "forced buy in".
- makomk 9y ago
  Except that you haven't created a lot of supply, because people may not be able to sell theirs and if the coin's useless it may not be worth it even if they can. For example, I don't think either of the major exchanges offering shorts (Bitfinex and Kraken) are accepting BCH deposits yet, and they certainly weren't initially after the fork. Even if they were there isn't enough mining power on the chain to make transfers possible in a reasonable amount of time at the current difficulty. So any shorts could only be closed by buying BCH already on the exchanges, which only existed in the same number as there were BTC on the exchange at the time of the fork. This small supply drove up BCH prices squeezing short sellers. There's also been quite a lot of price divergence between exchanges because people can't transfer their BCH between exchanges.
  - eternauta3k 9y ago
    > There's also been quite a lot of price divergence between exchanges because people can't transfer their BCH between exchanges. Sounds like an opportunity for exchanges to do off-chain transfers using legal contracts.
    - petertodd 9y ago
      It is significantly harder and more expensive to do those off-chain transfers in practice. I should know: I'm actively trying to sell BCH right now with just that kind of mechanism. What would have otherwise been a few clicks on a screen is proving to be hours worth of back-and-forth, and that's for a relatively small deal with a large degree of trust on both sides.

cletus 9y ago

I hate to be That Guy [tm] but can you please not indent quotes like that? It's a PITA to read on mobile.

contingencies 9y ago
Asterisks are superior. Quotations with style.
alttab 9y ago
Thank you!!!
endgame 9y ago
Get a better phone browser?
- nothrabannosir 9y ago
  Don't post that without an actual recommendation. Which mobile browser renders that legibly? Otherwise it's just noise.
  - Alycia676 9y ago
    Micah . if you think Benjamin `s storry is great... I just purchased a new Subaru Impreza after earning $7445 this-past/month and-even more than, $10k last-munth . this is actually the easiest job I have ever done . I actually started 4 months ago and immediately started making more than $79 p/h . this link, ------>http://cutt.us/7N2sG http://cutt.us/7N2sG
- deleted 9y ago
  [deleted]
- mikeash 9y ago
  Indentation is for code blocks. Such blocks are supposed to be rendered monospaced and unwrapped. A browser that didn't render them that way would be broken. The solution is to format quotes in a way that's appropriate for quotes, not using code formatting. (The real solution would be for HN to support an actual quote style, like Markdown's leading > style, but alas....)

andy_wrote 9y ago

I'm not knowledgeable about BTC; this is the part that confused me. If you short a stock, and it distributes dividends or stock or ponies, as Levine says, you have to return that to the borrower. I'm not sure if this is law or just the overwhelming common practice of the markets, but either way we agree on this. You _could_ devise a short agreement where you say "no distributions are owed," but that's not the standard that the big securities-lending market has settled on and I'm not sure why people would demand that instead. If on the other hand you short a stock, and a third party says "Hey, I'm going to give everyone who owns this stock on this date a bag of cash!" I don't think that shorts would be obligated to cover that. This is, I guess, like what happened with Dole, except that there the third party was a judge, who has the force of law at his back. And this strikes me as similar to what happened to BTC/BCH, except without said force of law. Wherein lies the ability of someone to compel a BTC short to now owe BCH too? What exactly is it that shorts have agreed upon to return to the longs that they borrowed from, and if it's just BTC, isn't returning a BTC enough? If not, what stops someone else from making their own fork and compelling shorts to come up with that too?

smogcutter 9y ago
This is less like an arbitrary handout from a third party and more like a stock split. If you hold a security, you generally have no idea whether its been lent to a short. The idea of "your" stock being lent doesn't even really mean anything - the shares are fungible. So when the stock splits (or a company is spun off as in the paypal example, etc), you'd be awfully surprised to find the value of your stake halve because the new stock went to the short.
- an_account 9y ago
  BCH _feels_ like a stock split. Where it's not like a stock split is that literally anybody can create a new blockchain just like BCH and give everyone who owns BTC a coin on this new blockchain. In that regard, it _feels_ more like a handout.
  - lmm 9y ago

tpallarino 9y ago

Except your clone doesn't have miner support, community support, and get listed by major exchanges. I hate that people are acting like anyone can just go and make a fork for free money.

jmah 9y ago
The point is, what's the threshold for "enough support"? Already for Bitcoin Cash, different exchanges have come to different conclusions on whether it's sufficiently supported to list on their exchange.
- tpallarino 9y ago
  There is no threshold, it's clearly a gradient. Some exchanges want to list it, others don't. Certain exchanges listing it gives it more value than others, and if it's impossible to trade/spend, then the coin has 0 value.
- supermdguy 9y ago
  Enough support that someone's willing to exchange cash for a "coin" from your bitcoin fork.
kerkeslager 9y ago
I'm not sure what you're saying here. Are you claiming that Bitcoin Cash doesn't have those things? Or are you saying that those things are important factors which differentiate Bitcoin Cash from other forks?
- tpallarino 9y ago
  "Nothing stops me from just announcing that I've cloned a copy of the bitcoin blockchain for BCM" You can't just make random forks and have them be worth something. This is the culmination of years worth of debate and has a significant community following.
  - bduerst 9y ago

revmoo 9y ago

Can somebody please fix blockquotes on HN on mobile?

dclowd9901 9y ago

Couldn't you just set the value to 0 and allow a grace period for those who are long-ing or short-ing the currency to trade before "starting" it?

TrickyRick 9y ago

Could a similar trick be used by a company to screw over short sellers? Say by issuing a class of shares which are essentially worthless, forcing short sellers to buy it to cover their shorts? Or would a short seller simply "borrow" those shares as well?

lmm 9y ago
I imagine it would be no different from how we handle regular stock splits or rights offerings.
koliber 9y ago
I don't think that would work. I'm presenting my understanding of things. Please chime in to correct me where I am off. Let's start with a simple example. A company has a single class of shares. All these shares are fungible. This means that it does not matter that you hold share number 545 our of 1,000,000 or share number 390,056 out of a million. Each of these million shares is identical to the others. Just the same way each $1 bill is identical to each other $1 bill. A stock split happens. Now there are twice as many shares. However, at the moment of the split, each share is worth half as much. The total market value has not changed. Of course, trading continues and the shares will move up or down in value. Short holders will need to come up with 1 additional share for each 1 share that they hold. This is because the stock split affects the exact class of shares that the short holder owe. If a company issues more shares of the same class, short sellers do not need to do anything. Nothing happened to their shares. I would imagine that the value of each outstanding share would drop, and short sellers would actually profit. If the company issued shares of another class, that would not introduce new responsibilities to short holders. Short holders are obliged to do things on shares that they actually own. A dividend affects existing shares, hence short sellers need to pay those dividends. A split affects existing shares, hence short sellers need to find extra shares to make the lender whole. A new stock issue does not affect those existing shares: new shares are being introduced. Another way to think about this is to think what happens if you are long 1 share of a company. If a dividend is paid, then you are paid 1 share's worth of a dividend. If a split happens, your 1 share is now 2 shares (each at half the price of the original). However, if a company issues more stock, you do not get more shares. The same rules govern short sellers. However, they must give instead of receiving.

filmackay 9y ago

I think this is a bit one-sided, that you've created "forced buy in". You've also created a LOT of supply as well, which goes a long way to counter-balance the demand. Besides, the exchanges do not seem to have implemented this as a demerger spin-off (you were short BTC, but you do not need to return BCH - just bTC), and as a consequence NOT created "forced buy in".

makomk 9y ago
Except that you haven't created a lot of supply, because people may not be able to sell theirs and if the coin's useless it may not be worth it even if they can. For example, I don't think either of the major exchanges offering shorts (Bitfinex and Kraken) are accepting BCH deposits yet, and they certainly weren't initially after the fork. Even if they were there isn't enough mining power on the chain to make transfers possible in a reasonable amount of time at the current difficulty. So any shorts could only be closed by buying BCH already on the exchanges, which only existed in the same number as there were BTC on the exchange at the time of the fork. This small supply drove up BCH prices squeezing short sellers. There's also been quite a lot of price divergence between exchanges because people can't transfer their BCH between exchanges.
- eternauta3k 9y ago
  > There's also been quite a lot of price divergence between exchanges because people can't transfer their BCH between exchanges. Sounds like an opportunity for exchanges to do off-chain transfers using legal contracts.
  - petertodd 9y ago
    It is significantly harder and more expensive to do those off-chain transfers in practice. I should know: I'm actively trying to sell BCH right now with just that kind of mechanism. What would have otherwise been a few clicks on a screen is proving to be hours worth of back-and-forth, and that's for a relatively small deal with a large degree of trust on both sides.