ruski (OP)
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August 18, 2012, 06:21:46 AM Last edit: August 18, 2012, 06:34:12 AM by ruski |
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I have a very, very hard time believing the halving of the block reward is going to double the price. Whatever that price is supposed to be.
With 9M coins already generated, mining brings around 6500 new coins a day into the market. That's absolutely nothing against the volume that already exists. Assuming the worst case of every single miner selling their coins, on Mt Gox, that means we'll lose about 1.5% of trade volume. 1.5% does not 50% make.
What's more likely to happen, if ASICs aren't out yet, is the BTC network will lose a lot of hashing power and possibly implode. I hope it doesn't happen, but miners are not in control of the price anymore. Hasn't anyone else thought of this? Someone did think of this. My bad.
Disclaimer: I'm still long.
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ralree
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August 18, 2012, 06:26:51 AM |
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I think the difficulty and price will adjust such that GPU mining will still be profitable (unless ASIC). We will see though!
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MaxSan
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August 18, 2012, 06:31:00 AM |
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I think a more reasonable number is 25-35% increase, not double.
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scintill
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August 18, 2012, 06:31:08 AM Last edit: August 18, 2012, 06:43:00 AM by scintill |
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No, it won't have any effect I think it will have some effect, but no, not doubling instantaneously. It depends on what people mean when they say it: what prices do you sample to see if it doubled, how long will it take to double, etc. Edit: P.S. Panic about the halving and ASICs could cause a big sell-off before the halving, then after the halving it could recover and then gain a bit on top, possibly causing a "doubling" depending on how big the trends were and what the actual price is. Also, the halving may be a bit more involved than people think (or at least I had considered) -- what if auxiliary services like pools mess up on the halving and give out too many (or too few?) coins, or GLBSE, etc. stocks' forecast is based on current block reward in ways people don't realize? Situations like that might cause indirect effects on the market and price.
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ruski (OP)
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August 18, 2012, 06:32:17 AM |
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I think the difficulty and price will adjust such that GPU mining will still be profitable (unless ASIC). We will see though!
Of course. One too many beers today. Please disregard my insane ramblings. I love Bitcoin ![Grin](https://bitcointalk.org/Smileys/default/grin.gif)
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VelvetLeaf
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August 18, 2012, 06:39:44 AM |
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Stephen Gornick
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August 18, 2012, 06:51:34 AM |
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I have a very, very hard time believing the halving of the block reward is going to double the price. Some believe that block reward drop is already baked into the current price. What's more likely to happen, if ASICs aren't out yet, is the BTC network will lose a lot of hashing power and possibly implode.
Nobody knows the minimum level of mining capacity and its distribution that would still protect against an attack. It has been estimated, however, that if an attack was done for financial benefit (i.e., using the attack to carry out a successful double spend) then it is more than 10X more powerful than is needed to protect against that threat. (i.e. it would cost millions of dollars to carry out an attack that would yield, at best, well under a million dollars worth of financial gain. The reason the amount of hashing is so high is not that bitcoin needs such levels, but that the block rewards provides an incentive for this level of mining. There's a big difference. If hashing power drops in half after the block reward drops in half, we're still probably just fine.
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Stephen Gornick
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August 18, 2012, 06:54:39 AM |
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what if auxiliary services like pools mess up on the halving and give out too many (or too few?) coins,
each and every node verifies each block to ensure it complies with the protocol, or it rejects the block. This has been coded (and tested) long ago.
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sapoleon
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August 18, 2012, 06:58:57 AM |
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I agree to MaxSan, the cost to mine are not irrelevant, but if many miner quit/stop the difficulty will go down as happened after the last big bubble exploded. i sold my horded coins in the last days. big mining profit converted into fiat $.
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mp420
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August 18, 2012, 07:01:51 AM |
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The block reward halving will have a long term effect that will cause (and has already caused) some upward pressure. The only immediate effects it may have are psychological.
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P4man
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August 18, 2012, 07:07:30 AM |
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Whoever said it would double because of it, is an idiot. You might expect price to double if the total amount of bitcoins where to be halved somehow. But thats not whats happening at all; in fact the total amount of bitcoins is going up quite rapidly now and will continue to go up after december. Currently there is a ~20% per year inflation, when the reward is halved, it will still be ~10% per year. The only reason price is going up instead of down is that demand grows even faster, but just to maintain a given BTC price, demand will have to keep increasing for the foreseeable future.
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Lumpy
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August 18, 2012, 07:21:31 AM |
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There should be some other option in the poll other than double or nothing... as others have posted, I think the price will likely increase but not by that much.
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odolvlobo
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August 18, 2012, 07:32:46 AM |
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Whoever said it would double because of it, is an idiot. You might expect price to double if the total amount of bitcoins where to be halved somehow. But thats not whats happening at all; in fact the total amount of bitcoins is going up quite rapidly now and will continue to go up after december. Currently there is a ~20% per year inflation, when the reward is halved, it will still be ~10% per year. The only reason price is going up instead of down is that demand grows even faster, but just to maintain a given BTC price, demand will have to keep increasing for the foreseeable future.
Good explanation. Assuming demand (or increase in demand) remains constant, halving the reward will cause the price to go up faster, but it won't immediately double it. The 30% drop today shows that the current demand is a little frothy, and I think the price will increase more slowly going forward -- until the reward halves.
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finkleshnorts
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August 18, 2012, 07:35:31 AM |
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The 30% drop today shows that the current demand is a little frothy
No it doesn't. It shows that someone did a surprise dump of 38,000 bitcoins. That the market rebounded so quickly shows that the demand is anything but frothy. That was quite a rebound.
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ruski (OP)
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August 18, 2012, 08:07:48 AM |
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The 30% drop today shows that the current demand is a little frothy
No it doesn't. It shows that someone did a surprise dump of 38,000 bitcoins. That the market rebounded so quickly shows that the demand is anything but frothy. That was quite a rebound. +1
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FreeMoney
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August 18, 2012, 08:09:39 AM |
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What would happen to the price if it turned out we all misread the code and the halving won't be happening?
Point being that we've all always known. The halving is a part of bitcoin and has been influencing the value since the beginning. In my opinion, without halvings no one ever adopts bitcoin and the value is 0. So the halving does way more than double the price, but it doesn't do it when the halving happens.
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odolvlobo
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August 18, 2012, 08:13:23 AM |
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The 30% drop today shows that the current demand is a little frothy
No it doesn't. It shows that someone did a surprise dump of 38,000 bitcoins. That the market rebounded so quickly shows that the demand is anything but frothy. That was quite a rebound. The sell-off happened over a period of 2 hours and consisted of hundreds of trades of 80,000 or so shares. I don't think it was a 38,000 dump by one person (but I could be wrong). I am assuming that most of it was panic trading, so that it why I consider the rise and this selloff frothy. Now that the weak hands are out, I think that prices will continue to rise from this lower point, but at a more reasonable rate.
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finkleshnorts
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August 18, 2012, 08:15:19 AM |
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The 30% drop today shows that the current demand is a little frothy
No it doesn't. It shows that someone did a surprise dump of 38,000 bitcoins. That the market rebounded so quickly shows that the demand is anything but frothy. That was quite a rebound. The sell-off happened over a period of 2 hours and consisted of hundreds of trades of 80,000 or so shares. I don't think it was a 38,000 dump by one person (but I could be wrong). I am assuming that most of it was panic trading by "speculators", so that it why I consider the rise and this selloff frothy. Now that the weak hands are out, I think that prices will continue to rise, but at a more reasonable rate. I could be wrong too. I'm too lazy to check the stats myself, but I remember reading that a 38,000 dump set it all off, and the panic selling ensued thereafter.
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byronbb
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August 18, 2012, 09:04:04 AM |
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Already built into the price. I'd fade any rally at the block halving.
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makomk
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August 18, 2012, 09:06:28 AM |
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I think the difficulty and price will adjust such that GPU mining will still be profitable (unless ASIC). We will see though!
Well, in order for the difficulty to adjust by much a large proportion of the miners by hashrate would have to stop mining, which they'd presumably only do if it became unprofitable for them. So whilst the difficulty would adjust it'd probably still leave mining unprofitable for most GPU miners.
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