Bitcoin Forum

And blocks become 25 coins per, instead of 50.

What do you think will happen?  Will you stop mining?  Do you think the value will go up?  I am curious what you guys think.

Discuss.

just a guess here but when you limit supply demand goes up so in theory once the count
goes down to 25 price should increase possibly up to 2x the current amount.
then again the market can be a strange thing.

I hope you are right.  I have a feeling something along those lines will happen as well... but i what do i know lol

Except it is well known, so the market will price it in well before it actually happens.  You won't see a "halving day" gap up.

I do think a shit ton of miners will stop mining and sell all their stuff on eBay.

it all depends on the price and when.  if we end up with a $10 exchange rate, that would support the exact same amount of mining at 25 btc as we have today trading at $5 with 50 btc  -- all assuming the difficulty remains at this level. 

the wildcard is fpgas.  they could make the difficulty rate go up without the price going up.

The law of supply and demand.

When the amount of coins halves the price will _____.

Fill in the blank.

the upcoming drop in the daily mining production is already something well known and speculators are probably pricing that in already.

what isn't known is how many more people will be using bitcoin for payments a year from now.  that will have a much much bigger impact on the demand for bitcoins at some point than the what the amount produced by mining has.

But the price ?

at first it will be over priced like ebay usually is, then after a few months of holding stuff they don't want to anymore they will start selling it for more reasonable prices.

no i mean the price of bitcoin

If my economy classes taught me well, you're likely to see a rapid increase in BTC prices just before the block payout decrease. When supply goes down, demand will increase. Both speculators and hoarders are likely to buy large quantities

It's a little more complex than that.

First off, there will not suddenly be half as many Bitcoins available. There will simply be fewer bitcoins being made. If demand for Bitcoins continues to increase at the same rate as it does now (that is, the Bitcoin market keeps growing), but production is slowing down, then we will see an increase in the value of Bitcoins.

This is called deflation; the total value of trade with Bitcoins increases faster than the number of Bitcoins, and the value of a Bitcoin goes up.

So, assuming Bitcoin continues to grow, that 25BTC will eventually be worth more Dollars/Euros/Labor than it is now, which will increase the incentive to keep mining.


If I'm thinking straight, the value of a bitcoin is basically based off of this equation:

Value=Trade Value/Units of Currency (or, using variables I just made up, V=T/U)

So, if U increases slowly (low ∆U, e.g. the BTC created per block is only 25 instead of 50) and T increases quickly (high ∆T), then V will go up. The thing is, both T and U are already rather large, so any changes in ∆T or ∆U will take a while to have a significant effect on V.


This is made much more complex by speculation and other factors, but this is the basic idea.

The market should have already priced in all future increases in difficulty and decreases in rewards.

I'm very curious to see what will happen when it goes to 25BTC per block.. be interesting to see if the FPGA miners become more or less viable.

Are there any web pages / graphs / etc that offer a "countdown" to this moment?

bitcoin survives by people using it, when the rewards are halved for mining, many miners will lose interest.

instead of thinking of hoarding and profiteering start more using and promoting, and finding ways to decrease the barriers to entry.

As the current economy - the coins which already do exist - aren't affected, people will get their demand satisfied by all the suppliers which already have coins at first.
If the Bitcoin user-base increases suppliers will most likely adapt to the increased demand thus the value will slowly raise.
But as it is with my guess a rather slow process, with no change at first, many miners will be put off for having their profits essentially halved. Which then in turn makes it more profitable for remaining miners again - as difficulty drops.

+1

The gold rush won’t end when the reward halves because mining was never intended to be a gold rush in the first place. It’s simply an incentive system to secure the network, not a get rich quick scheme.

you weren't around last april or may, were you?  new rigs were paying for themselves in like six to eight weeks, including the electricity costs: http://blockchain.info/charts/miners-operating-profit-margin

Obviously you don't understand the intent behind mining and I've been around a lot longer than you think.

Too bad those figures are simplistic.  Can you acquire equipment and start mining instantly?  Didn't think so.  Is there any guarantee that the price will hold up in the week it takes to acquire the equipment, let alone the 6-8 weeks you expect to pay it off in?  Don't get me wrong, mining was profitable during that time frame, but that was far from certain at the time.  If you timed it exactly right, you might have had a 6-8 week payout, but hindsight is 20/20.  In reality, any profit is commendable, and profit is still available with arguably more certainty now than back then.

well, to bootstrap a currency bits of it need to find their way into the hands of as many as possible.  since a 51% attack is enormously disruptive, if not fatal, to bitcoin it makes sense that new currency is issued to those who can help lessen the risks of that happening -- the miners.

now since there is no guarantee that mining is profitable, engaging in mining is a risk-taking activity.  for some, mining is a hobby or a side interest.  they don't see it as a gold rush.   some others though, are still using hardware they might already have had (e.g., gaming rig) and benefiting from a fortunate situation regarding electricity (either included in rent, parents, dorm, etc.).  to them, this is a gold rush -- in exchange for a little bit of effort some bits of money keep coming in without the having to "work" (in the traditional sense of the word) to obtain them.

and that will likely end as the daily block reward drops by half.

http://bitcoin.org/bitcoin.pdf
Let me direct your attention to page 3.

allow me to direct your attention to the dictionary: http://dictionary.reference.com/browse/gold+rush

"a large-scale migration of people to a territory where gold has been found"

next i show a chart:

http://bitcoin.sipa.be/speed-lin-ever.png

see that little jump from may to july?  that happened because those mining from april to june were making money like crazy, and others rushed in as they wanted a piece of it too.  that's the bitcoin gold rush era.

it matters not to a miner that block rewards occur at a fixed, predetermined rate and doesn't change (at least not significantly) regardless of how many miners there are.  to a miner it matters only that the price is high enough and the difficulty is low enough so that buying electrons and sending them through the gpu gauntlet results in profit.

when that profit is large, a gold rush follows.
when that profit is small, or cannot be obtained, the boom goes bust.

the block reward concept serves two purposes. it bootstraps the currency and also is the incentive to get miners participating so that attaining 51% would be something very difficult.   the fact that some miners who happen to have been lucky on their timing gained a nice bit of wealth as a result is not a concern, or flaw, for bitcoin.

but there's a 50% drop in daily btc generation coming -- that's a fact.   whether or not we are still in a boom is depends on individual factors but the squeeze from the upcoming drop to 25 btc will cause many miners to see it as a bust.

Did you understand my original post? Here it is again just in case you missed it. If you really consider bitcoins gold then there will be many “gold rushes” yet to come because what you are attempting to describe is market trends unrelated to mining.  

Usage spiked because of a Gawker article posted about the use of bitcoin to purchase drugs online in June 2011.

There will be many other temporary investment spectacles that follow and I believe any one of them can cause the spike in the user base you observed.  

How long have you been here anyway? Obviously, I’ve been here longer.

 

Delete your posts in this thread and you won’t have to see it anymore. This version of Simple Forum doesn’t allow for that.

I don't really mine, since my electric bill gets too high - but I do hope this will spread mining out a bit. A few huge pools controlling all the mining makes Bitcoin centralized and insecure, as opposed to... well, the opposite, as it was supposed to be.

I'm simply going to save my bitcoins because I can't manage to save my dollars.  $_$

That's an interesting theory. Do you have any proof other than post hoc ergo propter hoc?

JennyHill

You offer nothing of value to this discussion.  Please stop.  This is not an argument of your opinion on the phrase 'gold rush'  -- you god damned n00b woman.

Thanks,

Men everywhere.

http://gawker.com/5805928/the-underground-website-where-you-can-buy-any-drug-imaginable

http://thinkd2c.wordpress.com/2011/06/02/bitcoins-silk-road/

http://www.hyperink.com/Criticisms-Of-Bitcoin-b96a267

Why does every man with a tiny penis need someone else to do his research? Is it because you’re used to women washing your clothes and cooking you dinner? Is it too tiring to research for yourself after spending an hour or two looking for your tiny dick?
 
Just because I decided not to hang out with you trolls until now doesn’t mean I haven’t been using bitcoin for the last year.

Dumb Ass (can I call you by your first name) there is no gold rush and never was. There was a temporary spike in usage which caused a bunch of other people named Dumb Ass to buy a bunch of video cards that require months to pay off thinking they could pay them off in only a short time mining and buy drugs with the profit. Except this system wasn't designed to buy drugs with mining. Then the bubble burst and reality set in they realized this isn’t a gold rush it’s a welfare line and subsidies are hard to come by because it will take months of mining at any rate to pay off any video card or buy good drugs. It will take just as long to pay off a $600 FPGA miner when it can produce roughly 18BTC a month at 800mhash or $90 before electricity cost given the current difficulty.

Stupid small dicked nOOb!

The Gawker article was on June 1st. The hash rate run up began in the beginning of May as clearly shown in the graph above. But even if the run up happened after the Gawker article, you still haven't proved cause and effect. Luckily we have a nice little time capsule here:

https://bitcointalk.org/index.php?topic=1958.180

From that we can see approximately what articles came out and when. We can see that the run up coincided with mentions in big places such as Forbes and NPR. Did the Gawker article contribute? Probably. Was it just one of many mainstream articles and mentions that came out about Bitcoin around May and June, all of which had an effect? More likely.

I know. Much of it was the effect from many areas of combined initial awareness. I was just trying to get under his skin because he's such a prick and let him know that only fools would have considered bitcoin mining a gold mine.  ;D