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Has anyone discussed the future of forks with respect to futures? Or indeed to any cryptocurrency denominated debts. The easy case is: Alice owes Bob 1.0 BTC

Has anyone discussed the future of forks with respect to futures? Or indeed to any cryptocurrency denominated debts. The easy case is: Alice owes Bob 1.0 BTC in year 2020. Between then and now, BTC forks into BTC and BTZ -- and so now Alice Owes bob 1.0 "new" BTC and zero BTZ. On net, does this mean that whatever fork retains the legal position of BTC is going to be in more demand than hypthetical BTZs? Given that, will it create a incentive for forkers to fight for legal recognition such that debts can be / have to be payed in their own currency. And if they do this with some success, what happens when instead of having a clear BTC/BTZ split, you have a BTC_forkA and BTC_forkB for paying debts in.

Frogolocalypse 9y ago
That is indeed a hell of a problem. The only thing you could objectively do is to nominate the bitcoin client that you use in order to retrieve coins. That includes the version. "Alice pays Bob 1.0 in year 2020 using bitcoin core node client v0.15.2"
partiallypro 9y ago
Another question (this is just my ignorance) but...if BTC has a fork, does that mean that the new fork has a new entire supply? I thought the "value" in BTC is that there is a limited supply and it can't be degraded like a fiat currency. If you can just keep forking...how is that not immeasurably increasing supply just like the ECB and Fed do?
- tlrobinson 9y ago
  No, the forked coins and the original coins aren’t fungible. It’s more like me saying “show me your dollar bills at the time of the fork and I’ll give you an equivalent amount of Monopoly money”. It’s not going to be worth anything unless you somehow convince a bunch of other people it’s worth something, and even then it’s likely going to be worth far less than the original coins because fewer people will accept it and it will be easily attacked due to lack of hashing power.
  - partiallypro 9y ago
    I'm not saying they'd be 1-to-1 off the bat. I'm asking do forks have their own supply, and are no longer limited by the supply of the previous coin? If so, my question is when BTC runs out of things to mine a) why would miners that needed to process transactions even stick around hashing and not just go to the fork where they could actually make money? b) and doesn't this just mean technically you could create widely accepted fork from a major crypto like BTC, have a 0% transaction cost between each and essentially have them level out using purchasing power parity...basically just extending the initial money supply by making transaction costs 0 between the parent and the fork? Since cryptos aren't based on economic strength, or trade imbalances like fiat currencies, it seems you'd just easily be able to eventually make them hit parity for the mere sake of keeping computers (miners) around to verify transactions. Bitcoin and others like it I feel are going to become far more centralized than people think, otherwise I don't see who the hell is going to use their computing power to verify transactions...which is really what miners are doing. Maybe I'm missing something.
    - dragonwriter 9y ago
      > when BTC runs out of things to mine a) why would miners that needed to process transactions even stick around hashing Bitcoin is designed with transaction fees for miners which in principle can replace block rewards as an incentive for hashing.
    - sebastos 9y ago
      Everything about Bitcoin is driven by emergent consensus. This includes the mining - there is no underlying fundamental mathematical entity that is being discovered or exhausted when people are “mining”. The only reason there is said to be a limited number of Bitcoin available is, well... because everyone says so! All Bitcoin clients agree that it is correct and proper to award yourself 25BTC when you mine a block. Since we all agree that’s ok, we all happily build on top of blocks that do this. We ignore blocks that try to break the rules by awarding themselves more. Eventually we will all suddenly change our mind and only associate with blocks that award the miner 12.5BTC, and then 6.25, etc until it reaches zero. That is the total extent to which the supply of BTC is limited. It’s completely driven by that wide social consensus. If you tried to start a fork built off of older blocks with a bunch of your miner buddies, it would essentially be a 51% attack. You’d have to convince a quorum of miners and users to treat ledger entries in your fork like real Bitcoin transactions. If you have the power to do that, you have successfully attacked the network, and you may as well have just sat your new blocks with mining rewards on top of the extant main chain. It’s not like mining older blocks gives you more BTC in some mathematical sense - you’re always just earning whatever you think the network will let you get away with, based on the schedule that has been agreed upon a priori. Hopefully this makes it clear that the question of whether a fork has a separate supply is confused. Neither the main nor the fork have a true finite supply - just a finite amount people will in practice agree to letting you mine. In the case of the fork, it doesnt’t matter whether you can convince them to let you go back to increased mining reward, because you have a much larger problem - nobody considers any transaction in the fork money in the first place. If at any time they do, you’ve attacked the network. Miners and users both equally dislike a state of the world where there is more than 1 version of history - it calls into question whether any wealth they have in chain A is real now that chain B is more popular. In practice they will quickly coalesce into considering one chain the true one, and changing everybody’s mind, especially long after the transactions have settled, would be a monumental task. Because everybody understands this, nobody would even try it, since it’s a waste of precious mining resources. This is why you didn’t see rogue forks forming when the reward decreased from 50 to 25 BTC. I know that’s a wall of text, but feel free to keep asking questions if you’re interested.
jpmattia 9y ago
> Has anyone discussed the future of forks with respect to futures? The reference bitcoin index for futures is well-defined: http://www.cmegroup.com/trading/files/bitcoin-reference-rate-methodology.pdf http://www.cmegroup.com/trading/files/bitcoin-reference-rate... I would guess that this was done in collaboration with the relevant exchanges. So forks are pretty much a don't-care for the futures that begin trading in the next two weeks.
- tlrobinson 9y ago
  That doesn’t actually address the case where the constituent exchanges disagree on which side of a contentious fork is “Bitcoin”. Exchanges are incentivized to quickly converge on one or the other so it may not be a problem.

Frogolocalypse 9y ago

That is indeed a hell of a problem. The only thing you could objectively do is to nominate the bitcoin client that you use in order to retrieve coins. That includes the version. "Alice pays Bob 1.0 in year 2020 using bitcoin core node client v0.15.2"

partiallypro 9y ago

Another question (this is just my ignorance) but...if BTC has a fork, does that mean that the new fork has a new entire supply? I thought the "value" in BTC is that there is a limited supply and it can't be degraded like a fiat currency. If you can just keep forking...how is that not immeasurably increasing supply just like the ECB and Fed do?

tlrobinson 9y ago
No, the forked coins and the original coins aren’t fungible. It’s more like me saying “show me your dollar bills at the time of the fork and I’ll give you an equivalent amount of Monopoly money”. It’s not going to be worth anything unless you somehow convince a bunch of other people it’s worth something, and even then it’s likely going to be worth far less than the original coins because fewer people will accept it and it will be easily attacked due to lack of hashing power.
- partiallypro 9y ago
  I'm not saying they'd be 1-to-1 off the bat. I'm asking do forks have their own supply, and are no longer limited by the supply of the previous coin? If so, my question is when BTC runs out of things to mine a) why would miners that needed to process transactions even stick around hashing and not just go to the fork where they could actually make money? b) and doesn't this just mean technically you could create widely accepted fork from a major crypto like BTC, have a 0% transaction cost between each and essentially have them level out using purchasing power parity...basically just extending the initial money supply by making transaction costs 0 between the parent and the fork? Since cryptos aren't based on economic strength, or trade imbalances like fiat currencies, it seems you'd just easily be able to eventually make them hit parity for the mere sake of keeping computers (miners) around to verify transactions. Bitcoin and others like it I feel are going to become far more centralized than people think, otherwise I don't see who the hell is going to use their computing power to verify transactions...which is really what miners are doing. Maybe I'm missing something.
  - dragonwriter 9y ago
    > when BTC runs out of things to mine a) why would miners that needed to process transactions even stick around hashing Bitcoin is designed with transaction fees for miners which in principle can replace block rewards as an incentive for hashing.
  - sebastos 9y ago
    Everything about Bitcoin is driven by emergent consensus. This includes the mining - there is no underlying fundamental mathematical entity that is being discovered or exhausted when people are “mining”. The only reason there is said to be a limited number of Bitcoin available is, well... because everyone says so! All Bitcoin clients agree that it is correct and proper to award yourself 25BTC when you mine a block. Since we all agree that’s ok, we all happily build on top of blocks that do this. We ignore blocks that try to break the rules by awarding themselves more. Eventually we will all suddenly change our mind and only associate with blocks that award the miner 12.5BTC, and then 6.25, etc until it reaches zero. That is the total extent to which the supply of BTC is limited. It’s completely driven by that wide social consensus. If you tried to start a fork built off of older blocks with a bunch of your miner buddies, it would essentially be a 51% attack. You’d have to convince a quorum of miners and users to treat ledger entries in your fork like real Bitcoin transactions. If you have the power to do that, you have successfully attacked the network, and you may as well have just sat your new blocks with mining rewards on top of the extant main chain. It’s not like mining older blocks gives you more BTC in some mathematical sense - you’re always just earning whatever you think the network will let you get away with, based on the schedule that has been agreed upon a priori. Hopefully this makes it clear that the question of whether a fork has a separate supply is confused. Neither the main nor the fork have a true finite supply - just a finite amount people will in practice agree to letting you mine. In the case of the fork, it doesnt’t matter whether you can convince them to let you go back to increased mining reward, because you have a much larger problem - nobody considers any transaction in the fork money in the first place. If at any time they do, you’ve attacked the network. Miners and users both equally dislike a state of the world where there is more than 1 version of history - it calls into question whether any wealth they have in chain A is real now that chain B is more popular. In practice they will quickly coalesce into considering one chain the true one, and changing everybody’s mind, especially long after the transactions have settled, would be a monumental task. Because everybody understands this, nobody would even try it, since it’s a waste of precious mining resources. This is why you didn’t see rogue forks forming when the reward decreased from 50 to 25 BTC. I know that’s a wall of text, but feel free to keep asking questions if you’re interested.

jpmattia 9y ago

> Has anyone discussed the future of forks with respect to futures? The reference bitcoin index for futures is well-defined: http://www.cmegroup.com/trading/files/bitcoin-reference-rate-methodology.pdf http://www.cmegroup.com/trading/files/bitcoin-reference-rate... I would guess that this was done in collaboration with the relevant exchanges. So forks are pretty much a don't-care for the futures that begin trading in the next two weeks.

tlrobinson 9y ago
That doesn’t actually address the case where the constituent exchanges disagree on which side of a contentious fork is “Bitcoin”. Exchanges are incentivized to quickly converge on one or the other so it may not be a problem.