Bitcoin Forum

I was just thinking this morning, about the reward halving upcoming sometime 2016. Most ppl here are pretty assured that when the halving happens it will guarantee that BTC will increase in value. There have been plenty of guarantees over the last year or so and none have panned out so far. If BTC remains at its current performance level, wouldn't the halving merely drive any miners operating at a thin margin out, make mining not profitable enough for new miners to get in the game and basically slow the network? I understand supply and demand, but demand drives that, not necessarily supply. If no one wants a 200$ btc, it doesn't matter how many there are or how hard they are to mine?

just a shower thought, what's your take? and please, limit your "BTC CAN NEVAR DIE and you sir are a cock!" statements to provable truths, not opinionated speculation please. BTC could die and very well might. I hope not, but that isn't the point of this thread.

What do you think will really happen when the halving comes? anyone thought through any scenarios?

There are miners that mine to secure the network.  I would love to have a weeding out of the miners that are in it for profit alone.  The massive mine farms must die.

The network would weaken heavily but not die.  Coins mined would go to those that are interested in Bitcoin and not profit.

I want to see sub $100 coins for a couple months to cause the collapse of the mining farms.  The purpose of mining should be to secure it not to profit...  Merica and friends will attack it.. will you defend it? 

this is ws always my thought, but many users seem to not agree with this, interest is more importan or in the worst case equal to supply, and having less doesn't mean that bitcoin will worth more, there are chance that the halving will only reduce numbers of miners(and therefore the diff, this could be a good thing actually, small farms could join the network finally) and nothing else

in the end i think that it will stay the same or a little boot will occur nothing crazy, especially if you compare it to the first halving(50 to 25 on november 28 2012), the price didn't change too much(almost x2) there....


you didn't get it, that profit should be seen as a reward for securing the network, the network is actually working as intended by satoshi, there was one of his msg regarding this

No, the network will not slow. It adjusts every 2016 blocks, so any slowdown would be minor and temporary.

If the reward is an incentive and the only reason to mine bitcoin, bitcoin WILL fail no questoins asked.

Bitcoin never should of went below like 1 milibit payout if this is the case.

I mine to secure the network.  MINERS AT ARMS.

It's halved before and did not die. Although a lot of people said it would. But then again some always say that.

Okay. In my opinion,

Take the average number of bitcoin bought in a day for the period of two weeks against. Assume 50% has nothing to do with miners. Then it is easy to assume an increase of at least 10-20%.

Keep also in mind that companies have invested tons of their resources solely for mining bitcoin. It may be true that the miners that do not have the specialized hardware to profit will leave the mining scene, but still we can't deny the fact that the majority of the hashing power of the bitcoin network are distributed to large mining companies. Also, there had been a lot of money that has been invested in btc lately. This might reflect in the future, making bitcoins a valued asset by many people and large companies as well. With it, mining could be profitable--at least for those who have the equipment. Bitcoin would sure end if all the miners shut down their hardware, but I highly doubt that it is possible, as there are still people who sees mining as a profitable business.

The network hashing power in insanely high compared to (for example) 2 or 3 years ago. We could lose half the miners and still have an extremely secure network, so Bitcoin is far from dead/dying/troubled, etc.

Those people are fools.  It might increase in value, it might decrease in value, it might stay the same.  There are far too many influences on the exchange rate to assume that just because the mining subsidy will be cut in half the exchange rate will rise.


Not much of a "guarantee" then, is it?  Perhaps you should put a bit more effort into filtering who you accept advice and information from.  There are a lot of fools on the internet that will say or believe just about anything.


Yes.


Perhaps.  But if so, then the difficulty will drop and it will become profitable again.


Perhaps for a short while, but if the average time between blocks is greater than 10 minutes, then the mining difficulty will be reduced every 2016 blocks until the average time returns to 10 minutes.


Then you don't understand it.  It's the interaction between supply AND demand that influence price.


And if someone wants a BTC and the cheapest one available is $200, it doesn't matter how many people are willing to pay less.


It's unpredictable, literally.  Anyone that tells you otherwise is either lying to you or doesn't know better.

Of course, we have had a halving in the past and we seem to have survived it.  Perhaps we will again.

As usual an awesome reply by Danny. But I contradict over a point and have a Q...

No. Because mining fees may rise as well as miners may start including more Tx in a block to cover their expense.


When we have had a halving in the past, did we experience a price rise ?

chart show x2 in price

https://blockchain.info/en/charts/market-price?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

november 28 2012 the halving, it show about 11-12 dollars, when before that date it was 4-6

Some truth to this, yet everything can be boiled down to two things: Supply and Demand.
We cannot predict the demand, but we know that the halving is cutting the supply of new coins
in half, and that's a big part of the equation.

It would take quite a while for difficulty to adapt

Bitcoin is inflationary, it increases in value by design. The halving is part of the design.

Maybe try reading and learning about something before posting questions that make no sense.

Asset/commodity/currency that increases in value over time, is called Deflationary and it is said that bitcoin is deflationary. OP is a long timer and knows all these basic things.

Mistyped. Deflationary was what I was referring to obviously. Thanks for the correction

It started creeping up in May 2012.  Know what else happened in May of 12'?  The only 'exchange' (bucketshop) that offered leveraged trading was shutdown.  I wonder if the rise in price had more to do with the inability for people to keep shorting BTC on leverage than it did because of a looming reward adjustment.

no it is the best thing to ever happen. 

difficulty will drop by 99.99%, plus save the Earth with less greenhouse gases, etc..

I agree with the OP. I don't know why so many people automatically assume that halving mining rewards would double the price.

Personally I think this is where bitcoin will prove whether it'll succeed or fail. If it doesn't get past the halving, it'll fail. If it does, I think it's very unlikely for bitcoin to fail afterwards. And I'd certainly be willing to take any amount of loan to buy as much bitcoins as possible then, if someone offered to loan me money.

I don't think it will be so black and white. If the price can not support the amount the miner's want after the halving there will be a large falling out. Bitcoin may become even more niche than it already is but there will always be die hards out there that will continue to use bitcoin and mine for free. Who knows maybe it will even spring back stronger than before after bitcoin proves that it can't be killed.

it's simply because they like to see their investment pay off big time. i don't believe bitcoins future depends on the next halving. it will however have an impact on the price. just not as much as people think.

The event itself isn't so significant, but people's reactions, the psychology of what happens after the halving event might be. Will people mass panic because the price didn't go up like expected? Will miners start leaving the game, and people assume (whether with good reason or not) that bitcoins security is suddenly too low, and start panicking? Or will miners stay, giving confidence to the system, proving again that bitcoin can succeed with lower mining rewards?

Survival of the fittest among the miners.

I think that there will always be a market for bitcoin. It could be worth $200, $2000 or $2, (even $0.2) people will exchange goods and services for them. For that reason, I believe it has already succeeded as a currency. It may not be as widespread, stable, etc. as some of the big ones, but it is more successful than some. The fact it's still being used makes it more successful than some currencies.

By 2025, at least one small nation will be using bitcoin and little else as currency.

I think the difficulty will drop by a lot. Who knows what that will do to the price though. Things will get interesting whenever the block halving happens though.

If y = 5x (where x is, for example, a random number between 0 and 1) then we can say that the "5" is a big part of the equation.  This does not however make the output any more predictable than the input.

I disagree.  They will develop better asics.

The people mining on that scale won't be surprised by the halving, and their current hardware will likely be obsolete by that day.

Difficulty will stay the same (rising slightly) due to better asics.  But some miners who can't adapt fast enough have to close shop.  So those rewards that supposedly go to them will go to the better mining farms. 

As for BTC's price.  Who knows.  But one thing is for sure...  BTC minng farms will have to spend more for equipment to maintain enough power to mine the same amount of BTC.

well i don't know, you was here since 2012  :), you should tell us what happened, and what caused that small rise, probably a combination of both

Exit scam.

http://arstechnica.com/tech-policy/2012/08/bitcoinica-users-sue-for-460k-in-lost-bitcoins/ (http://arstechnica.com/tech-policy/2012/08/bitcoinica-users-sue-for-460k-in-lost-bitcoins/)

How else? Das ist bitcoin.

This, mining pool operation didn't just invest millions in infrastructure to takes long term losses. They calculated the halving and all other aspects before they invested in mining rigs, electricity etc.

Or the price decreases or stays the same killing the weaker miners.

This is a great question. It's amazing there has been so little discussion of this topic.

not completely predictable, no...but then again, we have no reason to suspect the demand will change.  and if it does change, a reasonable theory is that the demand will increase as an effect of the decreasing supply rate. 

I'm really looking forward to seeing what effect the halving will have on bitcoin's price. I think most people are expecting it to rise but I guess it only will if the demand for coins is higher then. Given that its not till next year I think we'll have a lot more mainstream adoption by then so hopefully it will happen.

This is certainly not an unreasonable theory.

However, it seems just as plausible to me that demand will actually decrease with the halving.  It could easily be that for all the bitcoins being produced by miners today, most of them are being bought up by wealthy speculators.  These speculators might agree with your theory and so intend to make a profit by buying now and selling after the halving (or even later).  Such speculators increase the demand today and dampen it in the future.  If this practice is sufficiently common then overall demand could fall at the halving.

There are many factors which influence the market rate and a reasonable theory needs only select one and assert its dominance over the others.  This is particularly visible when people argue whether increased merchant adoption (using services such as BitPay) creates upward or downward pressure on the price.

For myself, I do suspect that the price will rise following the halving.  I simply claim that one cannot argue this logically; one has to weigh different factors and make a judgment.

I will always use the term higher probability and to say that it's absolute guarantee sounds odd to say the least. If there is such a thing, that person would not even be here posting. Probably the guy would be somewhere in the Caribbean enjoying his life since he'll be hitting bull's eye with every shot that he takes. There are a lot of scenarios and many more that even some of us could not imagine. But somehow I would still go back to the supply and demand basic that we learn from the start. Note that my opinion might sound a bit bullish when talk about halving and how it could impact the price.

We are now seeing some form of demand for btc right? If it's not, I'm sure every coin that ends up in the market would push the price lower since sellers would undercut each other in order to sell. Yeah, you might argue that certain miners would rather hold on to their coins and sell at the right time, but generally whatever reason you can come up with, these miners need to get the coins out to cover operating cost. Right now what we are seeing is mostly supply outnumbering demands and that is why we are on the downtrend. From time to time, price will shoot up (due to some buying) but as far as this goes, we have to acknowledge that it can never sustain itself and eventually price will go down. Somehow, what we are seeing here is still some form of demand that is reflected to support the price of bitcoin.

Now imagine, if we take that same demand that we are seeing today and apply it after the halving. Note that I'm not saying demanding is increasing because to say that it is, means basically a wild assumption. It might even be lower than what it is today. So assuming the demand is close to or almost similar as it is today by June/July next year and miner's reward has been cut from 25 bitcoins to 12.5 bitcoins per block. For price to go up, demand has to overcome supply and since now we have taken the assumption that demand maintains and supply has been reduced by half, shouldn't we see price going up? Unless, the factor of decrease in demand is more than half, then it's the opposite. So here, I would say there's every chance with better prospect.

Oh and talking about the miners, I think we all underestimated the actual cost of mining. It's far lower than that. Even when halving occurs, miners will still stand the chance to make profit. Never mind about some of them shutting down because eventually there will be others who knows how to mine efficiently will appear and fill the gap. So another aspect to watch out after that halving period is whether hash rate is dropping, if it's not, then we know they are okay.

Nothing to worry about

The chip developers have a new generation of super chips ready to go

they have been holding them back and as halving arrives the hash will double  ;D

(emphasis mine)

I find this assumption especially interesting here.  If no traders give a thought to block subsidy then it may be valid.  However, if sufficiently many traders make this assumption and follow the logic, they will have a strong incentive to demand more bitcoins today and fewer bitcoins in the future, hence corrupting the assumption.

This reminds me of "Guess 2/3 of the average" (https://en.wikipedia.org/wiki/Guess_2/3_of_the_average).  A number of players each secretly write down a number from 0 to 100 (inclusive).  The numbers are then collected, and 2/3 of the average is calculated.  The player with the number closest to 2/3 of the average wins.

Your logic puts in mind the strategy "choose 100/3" which calculates this to be the best value based on the assumption that most other people are not giving any thought to their goal and are simply selecting numbers at random.

To clarify, I don't claim that this is a bad assumption (indeed, assuming all bitcoin traders are hopelessly incompotent is far more accurate than assuming they are all perfectly rational) but I do find it interesting.

Actually, good thinking.  The chip developers have the power to control bitcoin mining.

Just look at the history: reward halved once already and the price did not react immediately. Did bitcoin die?

this could explain some of them don't pay the bill, cough gawminer cough, they are investing in new asic generation


the price reacted before the halving happened, and then after the halving the price continued to climb