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What is the potential impact of Bitcoin forking, given that it's trivial[1]? Q1. We can differentiate between fiat currencies by looking at the qualities of th

What is the potential impact of Bitcoin forking, given that it's trivial[1]? Q1. We can differentiate between fiat currencies by looking at the qualities of the issuing authority, and thus determine that it's better to have savings in Swiss Francs rather than Zimbabwean Dollars. With Bitcoin, Litecoin and other forks, how do we differentiate apart from popularity of the network? Q2. I've heard the argument that Bitcoin is valuable because there is scarcity in the system, a limit to the number of coins, thus it is similar to gold. However, if tomorrow somebody discovered vast amounts of pink gold, with exactly the same chemical and physical properties as gold, except for the colour, it's likely the price of gold would fall. As Bitcoin is facing this exact scenario via forking, what are the potential consequences, and does it even matter? [1] http://litecoin.org http://litecoin.org (changed the hashing algorithm from SHA256 to Scrypt)

erikpukinskis 14y ago
> how do we differentiate apart from popularity of the network? Currencies are all differentiated based on their ability to be spent. Qualities of the "issuing authority" is one measure of that, when there is such an authority. But even for dollars there are other properties: difficulty of counterfit, number of merchants who accept the currency, etc. Merchants in Argentina don't accept dollars because they can pay their taxes in dollars, or because the U.S. government is insuring their accounts. They accept dollars because they can be readily, stably traded for value in their country. Cryptocurrencies can be spent in places where no other currency can (international transactions, politically sensitive transactions, etc). Transactions can never be reversed. You can store them in your brain. You can keep your bitcoins in your brain while you are imprisoned in Iran, and spend them whenever you are released. These are all aspects of a currency's spending power. You may think that government deposit insurance, or promise to accept tax payments in a currency, or promises to stabilize prices by issuing debt are the Be All End All of spendability measures, but that's you. There are lots of other concerns people other have.

erikpukinskis 14y ago

> how do we differentiate apart from popularity of the network? Currencies are all differentiated based on their ability to be spent. Qualities of the "issuing authority" is one measure of that, when there is such an authority. But even for dollars there are other properties: difficulty of counterfit, number of merchants who accept the currency, etc. Merchants in Argentina don't accept dollars because they can pay their taxes in dollars, or because the U.S. government is insuring their accounts. They accept dollars because they can be readily, stably traded for value in their country. Cryptocurrencies can be spent in places where no other currency can (international transactions, politically sensitive transactions, etc). Transactions can never be reversed. You can store them in your brain. You can keep your bitcoins in your brain while you are imprisoned in Iran, and spend them whenever you are released. These are all aspects of a currency's spending power. You may think that government deposit insurance, or promise to accept tax payments in a currency, or promises to stabilize prices by issuing debt are the Be All End All of spendability measures, but that's you. There are lots of other concerns people other have.