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I guess what's weird is the idea that you could split two coins and the two coins price is greater than the original. That doesn't make any sense even though it

I guess what's weird is the idea that you could split two coins and the two coins price is greater than the original. That doesn't make any sense even though it happened with Bitcoin cash.

tpallarino 9y ago
It's not that weird. It's like any exchange of goods, both parties can come out with an advantage by getting something they want. In the case of Bitcoin Cash, 2 sides of the community got what they wanted.
- davidmanescu 9y ago
  The interested parties on either side would have been better off buying pre-fork and selling the one they didn't want, rather than buying after the fork, even though the end result is the same. That is irrational.
  - tpallarino 9y ago
    If people trade based upon information asymmetry, then the fact that Bitcoin Cash actually had miners, didn't crash fatally, and was capable of sending transactions constitutes an enormous change in the information landscape. Pre fork BTC price + risk premium ~ BTC post fork + BCH Pretend like the fork actually taking place and working successfully as comparable to a company's earning reports. The second that news comes in, it prices itself in almost immediately.
    - davidmanescu 9y ago
      Very true - neither the person who wants BTC (but has no opinions on BCH) nor the BCH buyer wants to take the risk that the other coin will drop before he/she can sell it. In other words the risk premium isn't zero. However a rational (impartial?) actor should be willing to take that risk if the premium is big enough. That could mean buying pre-fork or selling pre-fork if there is an obvious opportunity. Which means in an efficient market the risk premium should be zero "on average". It's hard to reason about averages with one sample but that sample was distinctly not zero!
PKop 9y ago
Just like a tree forks into many branches allowing the tree to receive more sunlight and grow taller, Bitcoin forking into Bcash attracted more money into the market for both than original Bitcoin alone. You could view Bitcoin + altcoins = total crypto market cap the same way.. You could also argue that if Bitcoin didn't fork previously, the total price of BTC alone would be higher than both forks now. Who knows?
sobani 9y ago
I guess it's comparable to a company who is being investigated and risks a large fine. Most of the time when the fine is determined, the stock price goes up. The uncertainty keeps the price down. People expect a fine, but not how large it will be. I believe there are even cases where a company got the max possible fine and still their stock price went up.

I guess what's weird is the idea that you could split two coins and the two coins price is greater than the original. That doesn't make any sense even though it happened with Bitcoin cash.

tpallarino 9y ago

It's not that weird. It's like any exchange of goods, both parties can come out with an advantage by getting something they want. In the case of Bitcoin Cash, 2 sides of the community got what they wanted.

davidmanescu 9y ago
The interested parties on either side would have been better off buying pre-fork and selling the one they didn't want, rather than buying after the fork, even though the end result is the same. That is irrational.
- tpallarino 9y ago
  If people trade based upon information asymmetry, then the fact that Bitcoin Cash actually had miners, didn't crash fatally, and was capable of sending transactions constitutes an enormous change in the information landscape. Pre fork BTC price + risk premium ~ BTC post fork + BCH Pretend like the fork actually taking place and working successfully as comparable to a company's earning reports. The second that news comes in, it prices itself in almost immediately.
  - davidmanescu 9y ago
    Very true - neither the person who wants BTC (but has no opinions on BCH) nor the BCH buyer wants to take the risk that the other coin will drop before he/she can sell it. In other words the risk premium isn't zero. However a rational (impartial?) actor should be willing to take that risk if the premium is big enough. That could mean buying pre-fork or selling pre-fork if there is an obvious opportunity. Which means in an efficient market the risk premium should be zero "on average". It's hard to reason about averages with one sample but that sample was distinctly not zero!

PKop 9y ago

Just like a tree forks into many branches allowing the tree to receive more sunlight and grow taller, Bitcoin forking into Bcash attracted more money into the market for both than original Bitcoin alone. You could view Bitcoin + altcoins = total crypto market cap the same way.. You could also argue that if Bitcoin didn't fork previously, the total price of BTC alone would be higher than both forks now. Who knows?

sobani 9y ago

I guess it's comparable to a company who is being investigated and risks a large fine. Most of the time when the fine is determined, the stock price goes up. The uncertainty keeps the price down. People expect a fine, but not how large it will be. I believe there are even cases where a company got the max possible fine and still their stock price went up.