How to correctly value forked chains ?

Tuesday, 26 July, Year 8 d.Tr. | Author: Mircea Popescu

Suppose you buy Felippe Berio olive oil, or Liquore Strega, or any other definite item. For whatever reasons - because you like the taste, or the texture, or the end results, or what people think of you when you do, or what you think people think... anything whatsoever, really. The devil himself knoweth not the thought of man, and we have the intelligence to not in the slightest care.

Suppose one day some people - maybe ex employees of the outfit in question, maybe its competitors across the street (which may be the same thing), maybe the true and original inventor of the witch or the older brother Berio named Luigi, anyone whosoever, for it doesn't matter one iota, forks it. So now you have on the market "Liquore Strega"-original and "Liquore Strega"-verdadero ; extra virgin, pure and mild olive oil Felippe Berio and extra virgin, pure and true olive oil Luigi Berio.

There's a catch, though : one set comes in bottles worth a litrei ; the other set comes in bottles worth a quartii. How do you price the bottles ?

Suppose you believe Luigi Berio oil to be exactly equal and equivalent to Felippe Berio oil. In the situation where "a bottle" of Felippe Berio weighs one liter, and costs 1`000 units ; whereas "a bottle" of Luigi Berio weighs one quart, and costs 983 units, it is therefore rational for you to prefer buying Felippe Berio oil, because it is rational to pay 1 per cubic centimetre of the thing you want rather than 1.039. That's a four percent discount, right ?

Suppose you believe Liquore Strega to be exactly sixty-nine times better than Whore Street oops I mean Liquore Strega. If the former comes in litre bottles and the latter comes in quart bottles, for this reason the prices of the two must match so that if every liter bottle of Liquore Strega costs 1`000, then each quart bottle of Liquore Strega must cost exactly 13.71. Should it cost more than that, it's expensive for its contents (according to you). Should it cost less, it's cheap for its contents (also according to you).

Money is exactly the same, a bottle filled with desirable fluid, and so consider the case of Ethereum vs Ethereum : for one "a bottle" takes ~3640 GH/siii to fill and costs 0.0193 per ; for the other the sameiv bottle takes 510 GH/s to fill and costs 0.0028 per. Therefore, if you believe the two chains to be the same thing, the per-CC value of ETH is ~0.000005 whereas the per-CC value of ETC is 0.000005. Shit, let's count zeroes... yeah, same.v

Note that I've not made any mention as to whether the forked chain's some random scamcoin or Bitcoin (nor, for that matter, of the monstrous legal liability MIT's agents have created for MIT, the hedge fund). It was irrelevant to the discussion up to this point, we could just as well have been discussing olive oil juice or sweetened grass tincture.

Nevertheless, as far as the MIT pet project to sink Bitcoin is concernedvi, the market seems to have spoken, and its voice seems to be saying : "each scamcoinvii is just about equal to each other scamcoin, ceteris paribus". This is not altogether a senseless view ; and so always remember : when hiring fortune tellers, never hire the "best". Always hire the cheapest.viii

———
1. Which is to say one cubic decimeter. It has nothing to do with gallons and other orcish crap, these are civilised measuring units, aaaite ? []
2. Arbitrarily ~0.964 litres. []
3. Data via snapshot of fork.ethstats.net. []
4. It is the same bottle, however you define it, seeing how the two chains produce coins in the same exact way. That's one of the important properties of a fork : it produces "same bottle", specifically and deliberately so as to allow this comparison to stand. []
5. If you wish to go into detail it's 0.00000549 vs 0.00000530, but you can not go into so much detail : the numbers that we are using are rounded, to three-four decimals in each case. This means the most precise result you could hope for is maybe two digits, indicating bailout-chain to be slightly more expensive, but probably should settle on a single digit, in which case... []
6. See Bitcoin prices, Bitcoin inflexibility for your own cultivation. Not like the present wasn't predicted years ago by the powers that are and always will be. []
7. Ie, not-Bitcoin. []
8. There is no "best", but even in places where no such thing as best may exist, cheapest can still be established. []
Category: Bitcoin

6 Responses

1. It was 3358.4 GH/s ETH vs 800.0 GH/s ETC a moment ago.

2. 2
Mircea Popescu
Wednesday, 27 July 2016

All this is terribly good for lulz.

3. Doesnt the miners just mine whatever is most profitable of ETC and ETH? So that when ETC price goes up, the hash rate follows. The cost of mining ETH and ETC are exactly the same, so therefore the ratio of price/hashrate should be the same? It has nothing to do with how the market values the two chains.

4. 4
Mircea Popescu
Thursday, 28 July 2016

You mean in reality, or in Stephen Tual's confused mind ?

Show me where on reddit you said "shut the fuck up idiots, miners don't vote, miners just follow and obey". Show me where you told this idiot he's an idiot.

Show me something or shut the fuck up. Fucking webinternets, the definitive "we'll argue everything at the same time" machine.

5. You think numbers of miners voting for ETC will increase? Will ETC win over ETH?

1. [...] detailed explanation of the equal lack of value in all non-Bitcoin forks. [...]

»
If this is your first comment, it will wait to be approved. This usually takes a few hours. Subsequent comments are not delayed.