Re:Stick a Fork in Ethereum
by aidenn0 on Tuesday July 19, 2016 @11:11PM
(#12126613)
I think this is an argument by analogy:
If bad, leveraged, investments in real-estate will not result in large losses, due to government intervention, then the real-estate market gets inflated, as when you have limited downside, your expected returns go up significantly. This also hurts less-leveraged investors (e.g. people who saved a large down-payment) as they get less house for their money, but don't gain any risk-reduction as their risk of negative-equity is much lower to begin with.
If malinvestments in ETH can be rolled-back, then any risks that are reduced by potential future roll-backs[1] will be discounted by investors, which means investors who carefully vet their investments for those risks no longer gain any benefit.
1: I'm not familiar with the fork, so don't know what the roll-back criteria are, but remember, to distort the market a roll-back need not actually happen in the future, just that a significant fraction of investors believe it is likely
If bad, leveraged, investments in real-estate will not result in large losses, due to government intervention, then the real-estate market gets inflated, as when you have limited downside, your expected returns go up significantly. This also hurts less-leveraged investors (e.g. people who saved a large down-payment) as they get less house for their money, but don't gain any risk-reduction as their risk of negative-equity is much lower to begin with.
If malinvestments in ETH can be rolled-back, then any risks that are reduced by potential future roll-backs[1] will be discounted by investors, which means investors who carefully vet their investments for those risks no longer gain any benefit.
1: I'm not familiar with the fork, so don't know what the roll-back criteria are, but remember, to distort the market a roll-back need not actually happen in the future, just that a significant fraction of investors believe it is likely