RE: Cryptocurrency forks: why do they happen and what happens after?
👏 resteem. There is scientific evidence (you probably know) that the value of communication networks like facebook, tencent, ...even Bitcoin, Ethereum and Dash follow network laws like Metcalfes law (Alabi 2017,Peterson 2018, Civitarese 2018). Where the basic utility is dependent on the number of users. (Metcalfe = n²
or at least n log(n)
). So a doubling of the user-base n
quadruppels the value of the network utility. There is also a Facebook internal study, that users only can be retained when they find at least 7 friends in the first 10 days (Palihapitiya). Currency is much more valuable the more people use it with n²
.
Vitalik came to a verry similar conclusion like you. Normaly what we would expect was that after a 50:50 fork both ecosystems lose, since both are smaller. Linear loss of user = exponential loss of possibilities. But when a fork results in a liberation of what users really want, then there is a net growth of value (Buterin 2017: A Note on Metcalfe's Law, Externalities and Ecosystem Splits)