[baobabKoodaa]

Hard forks can not magically create money out of thin air. If the "new" chain has some value post-fork, that value has been siphoned off the "old" chain (technically neither is "new" or "old" relative to each other, but bear with me for a minute).

Suppose the opposite was true. If you could create value out of thin air like that, we could all get rich just by forking cryptos over and over again. I know it _seems like_ this has been happening in past 2 years. It's an example of irrational market behavior. There is no* reason hard fork should create value.

*Sibling comment is also correct. A hard fork may create value by separating two entities which can thrive separately better than they can together. Similar to how a company that is shelling out dividends may be more valuable than a company which hoards cash.

However, in a rational market this information would be incorporated into prices _before_ the hard fork: there is still no rational reason for the total price of assets to magically jump after the event.

[belltaco]

>If the "new" chain has some value post-fork, that value has been siphoned off the "old" chain

Not necessarily. I don't see how that follows at all.

>Suppose the opposite was true. If you could create value out of thin air like that, we could all get rich just by forking cryptos over and over again. I know it _seems like_ this has been happening in past 2 years. It's an example of irrational market behavior. There is no* reason hard fork should create value.

How does that matter to the IRS whether market is being irrational or rational?

>However, in a rational market this information would be incorporated into prices _before_ the hard fork: there is still no rational reason for the total price of assets to magically jump after the event.

The crypto market is full of hype and irrational actors

[baobabKoodaa]

> >If the "new" chain has some value post-fork, that value has been siphoned off the "old" chain

> Not necessarily. I don't see how that follows at all.

If you can make infinite money out of thin air by making infinite hard forks, go ahead. No-one's stopping you.

> >Suppose the opposite was true. If you could create value out of thin air like that, we could all get rich just by forking cryptos over and over again. I know it _seems like_ this has been happening in past 2 years. It's an example of irrational market behavior. There is no* reason hard fork should create value.

> How does that matter to the IRS whether market is being irrational or rational?

I didn't say it matters to the IRS.

> >However, in a rational market this information would be incorporated into prices _before_ the hard fork: there is still no rational reason for the total price of assets to magically jump after the event.

> The crypto market is full of hype and irrational actors

We are in agreement here.

[smallnamespace]

Here's a reason: the market was unsure whether the fork would happen until the moment of voting.

Let's say the chain is worth $100 unforked and the value of forking is $10. The value might be $105 if the market only thinks forking is 50% likely, and can remain uncertain depending on how much voting information leaks out. If the fork succeeds, value jumps to $110.

I'm not making this up out of whole cloth either, merger arbitrage funds make a living on these price jumps in equities.

As a meta comment, it's probably unwise to make such sweeping negative claims in a field as varied and immature as economics/finance. You'll always find broad exceptions, since the definitions are all made up by humans out of convenience.

[baobabKoodaa]

Ah, you're right. The uncertainty surrounding a hard fork can be a rational reason for a price jump after a successful fork.