Why Two Blockchains End Up Being Worth More Than One

There is a theory I have been thinking about recently which really shouldn’t hold true, but I ultimately think it does, which is two blockchains most of the time end up being worth more than one. The reason this shouldn’t be true is because basic economic theory says a second chain will pull direct investment from the primary chain when a fork occurs, but in almost every case we have seen a hard fork, the combined chains end up being worth more almost immediately. The way that we usually explain a fork is like a stock split, but I don’t think that is a fair comparison. In a stock split there aren’t sides that believe in one ideology versus the other.

Many will shrug this off and just say that the chain would have been worth the combined value if the fork didn’t occur, but I have an idea why I think this is wrong. The primary reason I think that the idea that two chains end up being worth more than one is because of money’s value as speech. Money itself has pretty much been shown it can be used as a form of speech. Whether or not it is buying votes, lobbying, ect. it happens. Should money be a form of speech is a topic for another day but I believe that it is regardless.

So if we look at what ends up happening when big forks such as the eth/etc fork and the btc/bch fork, is you have two sides that vehemently fight for what they believe is the future. In the ETC case it was the idea that the blockchain should be immutable and not able to be rolled back and in the BCH camp it was that the block size should be increased. In either camps, people want to persuade those who can be persuaded to one side or another so the way they do this is through an influx of outside money.

Big players like Roger Ver pumped money into BCH in order to sustain a price when people sold off initially. While sustaining the price, he was also increasing the investment into one side which pumped up the price. People are so involved in their factions and wanting one side to succeed that their outside investment is what I believe ultimately makes the combined chains worth more in the short term at least. In the long term anything could happen. Ultimately I would say if there is going to be a fork and there is a large enough side that is willing to bring in outside investment as a form of speech, I would say there is a good chance the combined chains will be worth more. Keep this in mind with bitcoin if something happens in November.

Thanks to @Elyaque for the badges