Why Nu and B&C Exchange are exceptionally resistant to forks

The Plaza
#1

Recently, we have seen Bitcoin forks, in the form of Bitcoin Cash (BCH) and Bitcoin Gold (BTG). They are a messy and chaotic way in which Bitcoin is trying to deal with its low transaction capacity, or low block size. It is unsettling and suggests Bitcoin possesses a certain instability.

Both Nu and B&C Exchange do not have the vulnerability to forks that Bitcoin has. Why? In the case of Nu, it has currency liabilities. Right now, these liabilities total about 25% of the NuShare market cap. Imagine a fork of the Nu blockchain along the lines of what Bitcoin Cash did with Bitcoin. The question emerges: will the new fork include Nu’s currency liabilities?

If the architects of the fork answer no, then they are nothing like Nu without Nu’s currencies. This is what Augeas chose to do, which has gone nowhere, and appears to have no market value. Furthermore, a fork of Nu that doesn’t duplicate Nu’s currency liabilities cannot have share buybacks fueled by currency sales as Nu does. It would be radically different from Nu, and we could expect it to be quite unlikely to overtake Nu, because it would not even be in the same line of business: stable currency.

Now imagine a Nu fork does decide to duplicate Nu’s currency liabilities. Bitcoin Cash started with about 10% of Bitcoin’s value, and is currently worth about 15% of Bitcoin. Where NuShares are backing for NuBits, a Nu fork with lower value would be ill equipped to back NuBits. Being ill equipped to back NuBits means they are especially likely to see a quick sale of a very large proportion of NuBits, perhaps even a majority. They would need to attempt to keep the peg with large and sudden sales of NuShares on their fork, which would reduce their market cap even more. This would reduce confidence in their peg, or break it, which would cause more NuBit sales on the fork, destroying their market cap and credibility. The architecture of Nu provides exceptional protection from forks like Bitcoin has seen with Bitcoin Cash and Bitcoin Gold. The economic realities of forking a blockchain with stable currency liabilities are very bad for the challenging fork.

Also, consider Nu’s tier 4 reserves, which currently consist of Bitcoin, Bitcoin Cash, Ether and BlockShares worth about 1.2 million USD, or about 130% of Nu’s currency liabilities. The fork can’t duplicate these reserves. The fork will have exactly $0 in tier 4 reserves to start.

Consider what this looks like for NuBit holders. You pay $1 for a NuBit on the main chain. When a fork occurs that duplicates NuBit liabilities, you now have a pegged currency on two chains: $2 if they keep the peg on the fork. A very good deal indeed. You will probably sell your NuBit on the fork because of the high probability the peg will be lost on the fork. Even if the peg breaks and you can only sell your forked NuBit for $0.50, you are still a very happy NuBit customer: you got a large profit from your stable currency purchase: an unexpected windfall profit. This makes buying NuBits more attractive to you, not less attractive. So you buy more NuBits, hoping for another fork.

Now let’s turn our attention to what a fork of B&C Exchange would look like once it is operational. Recall that the blockchain is associated with multisig deposits of other native blockchain assets: Bitcoin, Ethereum, Litecoin, Dash, etc. These multisig deposits cannot be included or duplicated in the fork. The B&C Exchange BlockShares can be forked and duplicated, but the exchange deposits of Bitcoin, Ethereum, Litecoin and so forth cannot be forked and duplicated with it. So, you have a decentralized exchange with zero deposits and zero volume. The value of B&C Exchange will lie in its deposits and trading volume, so you have no or little value in the fork. It is very unlikely to succeed or threaten B&C Exchange.

We can see that both Nu and B&C Exchange have exceptional resistance to being forked like Bitcoin has been forked in the form of Bitcoin Cash. In the case of Nu, the currency liabilities make it unprofitable to fork. In the case of B&C Exchange, a fork can’t duplicate the exchange deposits and trading volume.

2 Likes
#2

Fork resistance is a terrible thing when there is a fundamental philosophical need to fork. Ideally, two dissonant groups can split, as happened with bch and btc. This is favorable over what happened with Nu, which is a totalitarian takeover.

1 Like
#3

This is a great philosophical discussion perhaps not entirely suitable in this forum. Totalitarian versus democratic systems. What will be more successful in the future?

A totalitarian system is better because:
a. Decisions that can be the difference between life and death of a society are made faster
b. A planned economy (totalitarianism) is better than a free market society
c. Human rights are not necessarily considered correct

B Democratic system is better because:
a. Long term stability
b. Free market democracy leads to freedom and prosperity for the greatest number of people
c. Liberty allows for a happier, more productive and stable society.

May the best one win. They both have their advantages and disadvantages and there are examples of totalitarian companies (e.g. Elon Musk’s) and democratic companies (farming/banking cooperatives) thriving. I believe there is a time and place for both.

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#4

From a viewpoint of economics, both hashrate(BTC) and liquidity(Nu/B&C) are scarce resource which is the foundation of value.

Some Chinese btc miners(boss) control a large portion of BTC’s hashrate, so they decides to fork BTC, the fork is successful because they have much scarce resource(hardware, money).

For Nu/B&C’s fork, should it happens started by some people, the key is whether they control enough scarce resource.

Assume a billionaire decides to fork Nubit, he will build up Mushare and Mubit. If Mubit Liquidity exceeds Nubit’s, he will win. In fact he doesn’’t need to fork, just copy our source code and build a new and HIGH LIQUIDITY project, a successful stable currency.

However if we have already billions of liquidity, our copy cats have to invest much more to become a successful competitor. Liquidity is our “hashrate”.

Nowadays we are not successful, just survival, no need to fork/copy us for potential competitors. :slight_smile: Augeous is just an internal rebellion.

3 Likes
#5

At the point it becomes clear that the “Democratic system” is the solution, it is too late for the “Totalitarian system”. Yet it seems that it’s really hard for humans to grasp that concept, so they continue giving it another test. This is what made Bitcoin so great, and made early Nu into a worthy endeavor. History is not as clear as the totalitarian leader has framed it. The discussion of why Nu is doing well right now has nothing to do with the system of governance in place, but instead with the 1000% increase in Bitcoin’s USD price and some large NBT traders have lost while hedging between BTC/USNBT. I imagine that it is the totalitarians who are the losing traders, and they know they will always be able to recover those losses thanks to the structure of the network.

Why the heck in 2017 is there over a million dollars in a single sig address? How many more thefts/hacks/creative-scamming events will ‘shareholders’ need to endure before we demand common sense immediately?

My reply to a censored discussion with MaVo and Sabreiib
#6

I think you are mixing up the totalitarian system of governance with doing things right. Both democratic and totalitarian systems get it wrong sometimes. Having so much money in a single address is not healthy indeed. But unfortunately Phoenix apparently believes that it is an acceptable risk over putting funds into multisig. Instead of only complaining about that like you I have also proposed a written contract which can be enhanced with escrow of NSR or other cryptofunds like they do with Dash to increase the trust levels of multisig holders. But we are digressing.

This is very true,

#7

5 posts were merged into an existing topic: Conversations removed

#8

I believe you are a bit behind of what is actually happening. Elon is running the show and has no interest in shareholders at least not in the short term. He also got himself into trouble with trade unions lately. I’m not making this up, there are several sources on the internet.
You are little quick to dismiss me in favour or your smart self. Says enough to me.

1 Like