Halving Bitcoin Reward Unlikely to Cause Price Surge

[BTC-Joe]

Will bitcoins ever sell for $1,000 USD or more again? Possibly, but it's not likely to happen as a reaction to halving. The supply of bitcoins in circulation is not changing, and if miners jump ship that is a strike against bitcoins not something that would warrant a price increase.

The only thing that halving the reward to btc miners will do is make mining half as appealing. In fact, if you think about it, it's not a very good system because the more people using bitcoin, the more you need miners...but the miners get paid less and less as time progresses.

At the very least, as compensation from mining decreases, a minimum network transaction fee should be imposed and it should increase proportionally to difficulty to ensure that all miners receive a predictable and steady flow of bitcoins for the resources they provide.

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[odolvlobo]

At the very least, as compensation from mining decreases, a minimum network transaction fee should be imposed and it should increase proportionally to difficulty to ensure that all miners receive a predictable and steady flow of bitcoins for the resources they provide.

Each miner is free to decide on their own minimum acceptable fee and reject those transactions that don't meet the minimum. No enforcement of a uniform minimum is necessary.

[Cashew]

The fact that the miners are paid less while you need more is what make them sell their bitcoins at an higher price and thus lead to a price rise.

[odolvlobo]

The fact that the miners are paid less while you need more is what make them sell their bitcoins at an higher price and thus lead to a price rise.

That's not how it works. Sellers (including miners) are free to ask for higher prices, but if buyers won't pay those prices (typically because others ask for less), then prices don't rise.

[Divinespark]

I think whatever price rise is due will happen over the next couple of months. The actual halving will be a damp squib for price.

[countryfree]

The supply of bitcoins in circulation is not changing,

Yes, it will. This is very precisely what the halving means. Actually, more than 3,200 BTC are mined every single day, after the halving, it will be down to about 1,600 new BTC per day. That's a huge difference!

[Amph]

The fact that the miners are paid less while you need more is what make them sell their bitcoins at an higher price and thus lead to a price rise.

they don't need more they are currently earning 4 times their consumption, they are safe at the current price even afte the halving

[European Central Bank]

At the very least, as compensation from mining decreases, a minimum network transaction fee should be imposed and it should increase proportionally to difficulty to ensure that all miners receive a predictable and steady flow of bitcoins for the resources they provide.

Well, yeah. That's pretty much been the intended plan since minute one.

[franky1]

At the very least, as compensation from mining decreases, a minimum network transaction fee should be imposed and it should increase proportionally to difficulty to ensure that all miners receive a predictable and steady flow of bitcoins for the resources they provide.

Each miner is free to decide on their own minimum acceptable fee and reject those transactions that don't meet the minimum. No enforcement of a uniform minimum is necessary.

first of all its been a long long time since "miners" were solo, these days they are in pools and treated as workers.. so these workers do not decide the transactions that get into a block.. the pool does. instead the workers just hash out a small piece of data (header) handed to them from the pool, to get a valid hash/nonce that fits the rules of a block solution. so try to use the word pool next time when talking about the mechanics of transaction selection

The fact that the miners are paid less while you need more is what make them sell their bitcoins at an higher price and thus lead to a price rise.

That's not how it works. Sellers (including miners) are free to ask for higher prices, but if buyers won't pay those prices (typically because others ask for less), then prices don't rise.

ok some numbers for you, each day 3600 coins are created, and at the time of posting. here is some numbers of coins the top 3 pools made in a day
1000btc  F2Pool (40 blocks)
1000btc  AntPool (40 blocks)
675btc    BTCC Pool (27 blocks)

i will concentrate on antpool for the details,

you may think that this 1k coins is small volume per day.
but remember.. they day trade. so when they sell the coins thats 1k volume, when they buy a few hours later, thats 2k volume(still 1k hoard), when they sell a few hours later thats 3k volume(still 1k hoard)

so 1k coins can be 3k volume on an exchange just by day trading one cycle and then back to sell again.

then you add in their play money they decided to keep(profits) from previous days, which also adds to their day trade capabilities

so say it is a mere 5% of days income(50btc).. over a year thats 18250btc

so now because of the last 365days fun.. they have 20k+(day trade profits add a little extra) of coins to play with on any one day.. so day trading just 3 trades a day can be as much as 60k+ coin volume a day.

1. at this point you can ask yourself if they kept 10% a day for 1 year(40k coin hoard / 120k sell-buy-sell trade volume), it would easily explain why the chinese exchange volumes are soo soo high on day trade volume compared to the west

2. at this point you can ask yourself if they done 4, 5, 6 trades a day that can be 120k, 160k, 200k volume a day

hopefully by now you can see that the pools have a huge sway and power of the markets.

but if you think that pools such as antpool (majority owners of their solves) have no weight when it comes to playing the markets, then its time you re-evaluate the real life scenario of the bitcoin economy.

we are no longer in the solo mining era where all coins are split between thousands of people.. the main pools like antpool and btcc have ALOT of reserves purely because they themselves own the majority of rigs and manage the pools, etc.

think about it.. take an imaginary 20,000-40,000 btc.. and see (theoretically) by looking at the exchanges what kind of price movements you could cause with that amount, if you were motivated to move the price

[calkob]

I would agree i think that most of the price rise has already been priced in.  there my still be a few more, maybe around $500.

[BitcoinSupremo]

The fact that the miners are paid less while you need more is what make them sell their bitcoins at an higher price and thus lead to a price rise.

they don't need more they are currently earning 4 times their consumption, they are safe at the current price even afte the halving

Thats a good thing then as mining will continue undisturbed but earnings from mining will decrease a bit, still they can make it up by asking higher transaction fees. We should have a realistic view and price increase will not be huge after the halving.

[Jasad]

Will bitcoins ever sell for $1,000 USD or more again? Possibly, but it's not likely to happen as a reaction to halving. The supply of bitcoins in circulation is not changing, and if miners jump ship that is a strike against bitcoins not something that would warrant a price increase.

The only thing that halving the reward to btc miners will do is make mining half as appealing. In fact, if you think about it, it's not a very good system because the more people using bitcoin, the more you need miners...but the miners get paid less and less as time progresses.

At the very least, as compensation from mining decreases, a minimum network transaction fee should be imposed and it should increase proportionally to difficulty to ensure that all miners receive a predictable and steady flow of bitcoins for the resources they provide.

okay,i'm agree with this

Possibly, but it's not likely to happen as a reaction to halving. The supply of bitcoins in circulation is not changing, and if miners jump ship that is a strike against bitcoins not something that would warrant a price increase.

but how about bitcoin circulation being more decrease because people morehard to get reward and its cause bitcoin price more high than now,its better if you give us some good source for your statement.

[Jemzx00]

Will bitcoins ever sell for $1,000 USD or more again? Possibly, but it's not likely to happen as a reaction to halving. The supply of bitcoins in circulation is not changing, and if miners jump ship that is a strike against bitcoins not something that would warrant a price increase.

The only thing that halving the reward to btc miners will do is make mining half as appealing. In fact, if you think about it, it's not a very good system because the more people using bitcoin, the more you need miners...but the miners get paid less and less as time progresses.

At the very least, as compensation from mining decreases, a minimum network transaction fee should be imposed and it should increase proportionally to difficulty to ensure that all miners receive a predictable and steady flow of bitcoins for the resources they provide.

It might happen that the price of bitcoin will go high like that but im not saying that it will happen. The price of bitcoin will definitely will go up on the halving event.

[Snail2]

To OP. This is a way too mechanical view, what ignores the psychological impact of the halving.

[thejaytiesto]

To OP. This is a way too mechanical view, what ignores the psychological impact of the halving.

In fct, the psychological impact is way bigger than any technical explanations you want to give it. The having is a celebration of Bitcoin every 4 years, and if it happens during a time where we are making solid progress technologically (segwit, schnorr sig, sidechains, lightning...) then you add in the inherent hype of halving, and the price rise is guaranteed.

[franky1]

To OP. This is a way too mechanical view, what ignores the psychological impact of the halving.

exactly.. some naively think that because some pools are making 100% profit due to the fact that the last years price rise is already (falsely) been counted in. means that pools will happily take a cut in todays profits to remain break even. purely because they can break even.

its psychology.. once you have become accustum to a certain level of luxury living. your not going to just go with the flow if your income halves..
ofcourse you are going to try what you can to remain at the $10k+ per block reward

think of it like your own household. (divide the btc cost by 10 to treat as weekly household income)
last year your income was $625 a week(25btc @$250=$6250). and you had $500 in bills(80%cost).. you thought you were ok.
then suddenly it become more difficult to pay the bills because they rose by 10% every fortnight.

then something magical happened. you got a pay rise to $1125 a week(25btc @$450=$1125), so you start adding more gear to your bachelor pad, that has costs. but you are smart because you manufactured the gadgets, so you stuck to a weekly cost of $563 leaving you at a 50% bills 50% disposable income

and then you are told that in a few months your income is going to drop to an estimated $563 a week.(12.5btc @$250=$5625)

are you going to just sit on your hands and smile. or will you push the jobs market to make it appear that your job is worth double to ensure you get atleast $1000 a week again (12.8btc@$800=$10k) or hopefully better than $1250 weekly income (12.5btc@$1k)

of course you are going to push to get a nicer income. especially because you know you do have power to manipulate the market (read my last post)

anyone naively thinking that the halving re-valuation is already included, obviously was not around before during or after the last reward halving..

here is the history..

November 2012(pre halving) $10/btc
February 2013 (post halving)$20/btc
March 2013 (post halving)$35/btc
April 2013 (post halving)$100/btc

[BitconAssociation]

...
here is the history..

November 2012(pre halving) $10/btc
February 2013 (post halving)$20/btc
March 2013 (post halving)$35/btc
April 2013 (post halving)$100/btc

On June 21, 1941, Mashka Kobilova got so drunk she didn't show up for work and got fired.
On June 22, 1941, Hitler invaded Russia.
From this we can infer many things, not least of which is that
1. Mashka Kobilova caused The Great Patriotic War, and
2. If Mashka Kobilova gets drunk again, expect WW3; kiss your butt goodbye.

[Kprawn]

The miners jumping ship, will just cause the difficulty to decline, and then they will come back again or other people will take their place... worst case scenario... the remaining miners will get a bigger

share than what they would have got, was it not for the Halving happening. This will cause more centralization of the mining scene, and it might give China more control. The logic behind the whole

Halving event is that the reward will be halved and less coins will be available ...because less coins will be released. Less Supply in theory, will increase demand... BUT the higher the demand, the

higher the price and more people will start to sell, and this will increase the supply, so everything will return to normal... As I said.. In theory. 

[franky1]

lol i am starting to laugh at everyone trying and failing so hard to deny that the bitcoin price is going to go up.

.. but when they brought hitler into the debate.. then it becomes apparent they have no more rational options left to persuade people to their way of thinking.

"bitcoin Association"

you would have had much a better point if you mentioned the inception of ASICS around a year later as the reason why the price went over $400 in late 2013.. but can you explain the cause of the price movement from november 2012-spring 2013.. without a hitler reference

[franky1]

The miners jumping ship, will just cause the difficulty to decline, and then they will come back again or other people will take their place... worst case scenario... the remaining miners will get a bigger share than what they would have got, was it not for the Halving happening.

the majority of mining rigs are already owned by the big pools themselves (rather than individuals) so the amount of 'jumping ship' wont be as massive because there are less individuals.

This will cause more centralization of the mining scene, and it might give China more control. The logic behind the whole

not much will change.. there will still be the 18 main pools, it wont suddenly become 3-10.. i think 15-17 will remain

Halving event is that the reward will be halved and less coins will be available ...because less coins will be released. Less Supply in theory, will increase demand... BUT the higher the demand, the higher the price and more people will start to sell, and this will increase the supply, so everything will return to normal... As I said.. In theory.  

knowing that alot of the 'volume' on the highest volume exchanges is caused by the pools.. if they were to remove their large hoards. they can easily play the supply-demand game.

the "more people will start to sell" is small compared to what the pools reserves are. and if they do it smart like 5% a day increase it wont trigger a massive sell off. as oppose to the mad insane rush to $1000 in a short period a couple years ago when china first entered the market(i think they have learned that lesson)

[DimensionZ]

The fact that the miners are paid less while you need more is what make them sell their bitcoins at an higher price and thus lead to a price rise.

they don't need more they are currently earning 4 times their consumption, they are safe at the current price even afte the halving

Do you mean the big Chinese farms are making 4 times what they are paying in electric bills? But is this in a year or they can pull such a profit every month? I thought only people doing alt coin mining can earn such profits by targeting pumped coins before the bubble bursts. I wonder if we could achieve similar results if we tried to do a mining operation in Europe for Bitcoin or we will break even at most?

[raphma]

it's not only psychological... it's about mining costs too.
Basically, if the hashpower doesnt change the difficulty wont change. If the difficulty doesnt change, the mining costs will remain the same.

Nobody want to do the same job for half salary.... the way to balance that is simple(half reward? doble price).

If you dont belive the price will double, then you're blind.... it's already pumping, it will keep rising till the halving and then might have a little dump.

The fact that the miners are paid less while you need more is what make them sell their bitcoins at an higher price and thus lead to a price rise.

they don't need more they are currently earning 4 times their consumption, they are safe at the current price even afte the halving

and who doesnt need more money? dont be naive... doesnt matter if they need or not, they are receing some money now and they PROBABLY wont to do for half price after the halving.

[franky1]

Do you mean the big Chinese farms are making 4 times what they are paying in electric bills? But is this in a year or they can pull such a profit every month? I thought only people doing alt coin mining can earn such profits by targeting pumped coins before the bubble bursts. I wonder if we could achieve similar results if we tried to do a mining operation in Europe for Bitcoin or we will break even at most?

when antpool manufactures a ASIC. it costs them $200 but they RETAIL it for $1000.
for every 1 asic they sell for retail price to their competition, they are literally getting 4 rigs for free themselves..

imagine that. no ASIC cost and 4x more profitable then the competition

[Amph]

The fact that the miners are paid less while you need more is what make them sell their bitcoins at an higher price and thus lead to a price rise.

they don't need more they are currently earning 4 times their consumption, they are safe at the current price even afte the halving

Do you mean the big Chinese farms are making 4 times what they are paying in electric bills? But is this in a year or they can pull such a profit every month? I thought only people doing alt coin mining can earn such profits by targeting pumped coins before the bubble bursts. I wonder if we could achieve similar results if we tried to do a mining operation in Europe for Bitcoin or we will break even at most?

yes it's what i mean, hell some chinese farm are paying less than 5 cent per hour for their electricity

go in the calcualtor and you can see that 1 single anminer produce 0.013 around $6, and consume only 1200w, which is $0.06 per hour = 1.44 per day vs 6 per day = 4:1 ratio

[franky1]

If you dont belive the price will double, then you're blind.... it's already pumping, it will keep rising till the halving and then might have a little dump.

the price rises currently happening before the halving are just speculative.. wait until after the halving.. then you will see the real prices rises due to the impact of pool income change

[raphma]

If you dont belive the price will double, then you're blind.... it's already pumping, it will keep rising till the halving and then might have a little dump.

the price rises currently happening before the halving are just speculative.. wait until after the halving.. then you will see the real prices rises due to the impact of pool income change

Well... im pretty sure of one thing. Bitcoin wont stay the same.
Or it will double the price, or it will die...

The scenario, in my opinion, will be like that:
https://www.youtube.com/watch?v=_NgFIj9dBkQ

Im not promoting this, i just have the same opinion as said in there.

[BitconAssociation]

lol i am starting to laugh at everyone trying and failing so hard to deny that the bitcoin price is going to go up.

.. but when they brought hitler into the debate.. then it becomes apparent they have no more rational options left to persuade people to their way of thinking.

"bitcoin Association"

you would have had much a better point if you mentioned the inception of ASICS around a year later as the reason why the price went over $400 in late 2013.. but can you explain the cause of the price movement from november 2012-spring 2013.. without a hitler reference

It's difficult for me to relate to your mindset, so it's hard for me to offer you analogies you'd find compelling.

You seem to think that correlation is causation, and that "if A happened after B (price went up sometime after the halvening), A is causally linked to B (the price went up because of the halvening).

This is not the case, just like it is not the case that Mashka Kobilova started the Great Patriotic War by getting drunk.

November 2012(pre halving) $10/btc
February 2013 (post halving)$20/btc

On June 21, 1941, Mashka Kobilova got so drunk she didn't show up for work and got fired.
On June 22, 1941, Hitler invaded Russia.
From this we can infer many things, not least of which is that
1. Mashka Kobilova caused The Great Patriotic War, and
2. If Mashka Kobilova gets drunk again, expect WW3; kiss your butt goodbye.

Even though she did get drunk, as you can see above. And right before the war started .
Yeah, blind drunk on samagon, and BLAMO! War starts the next day.
Teh Halvening, tho, the causal link is nowhere as obvious. Can't even be seen on the price chart without someone drawing a line
http://s32.postimg.org/3xfvgpcdh/Capture.png

So yeah, my Mashka Kobilova analogy works just fine for many, though not for everyone.
Not for my cat, who feels he's transcended mundane logic, and not for you, with your nutty idee fixe that you're "a little teapot/short and stout"  BTC price is guaranteed to go up after Teh Halvening

[franky1]

Teh Halvening, tho, the causal link is nowhere as obvious. Can't even be seen on the price chart without someone drawing a line

it is obvious..

when you solve a block. you cannot spend it instantly.. firstly there is the 100 confirmation period for coins that are freshly minted. so thats 1 day (november 29th).
then people dont withdraw their costs by the minute. most farms pay salaries/bills monthly.. not the hour. so ofcourse you are not going to see a sudden rise the very minute the reward halved in 2012.(though there was a small rise)

but there are alot of correlations and relationships..

unlike your hitler analogy where one event has no connection to the other (i know thats the subtle point you were making)

but if you think about the fact that the funds were not spendable until nearly december.. we didnt see a price drop due to a sudden scare of needing to grab fiat .. so the price did not tank on the first says of december..

what did happen was when their bills were due the following month(after christmas). they realised they needed to push the market value up.. and so thats what happened.

here ill show u a chart and colour it in


blue block: december lull.. people concentrating more on christmas and new year. with funds they already cashed out in november
green block: bills have arrived and its time to pay them.. now they start to act

once you see that there are many factors to think about. such as salaries paid early in november to cover the christmas newyear period so people dont need to worry about loss of earnings/bonus over christmas..

knowing that bills wont start coming in until after christmas,

you will start to see the correlation. of why there was a Lull (stangnant delay) in december.

but hey, lets hear another analogy of yours that has no correlation and no background information that makes common sense..

[BitconAssociation]

^^TL;DR: ♫ Here is my handle/here is my spout ♫

I can't possibly convince you, that's the very essence of idee fixe: everything else must be reconciled with it, and everything appears to you as proof of your correctness re. you being a short & stout teapot.

If reality fails to comply, it won't be due to your *not* being a teapot, but the willful blindness/ignorance of others, and possibly nefarious forces (see: banksters & their lapdogs, the statist jackboots) brainwashing the sheeple into not accepting your teapotty essence.

[franky1]

^ i think you need to go sober up.. come back to this debate after a good 12 hours rest and relaxation. and stay away from the alcohol or drugs.

then tomorrow try again using rational thought.

have a nice peaceful day

[BitconAssociation]

You like good pictures, kid?  See the little red box at the bottom left?

http://s32.postimg.org/6ga62sijp/Capture.png

yeah, that's where your Halvening pitcha below fits, that's the scale. Weird when you zoom out, huh?

https://i.imgur.com/RlL1Mdo.png

Hope (against hope) I've helped you put things into perspective
To reasonable people: Bitcoin is a purely speculative commodity. It's not like oil, which is consumed at a roughly predictable rate, so that cutting supply sends prices skyrocketing.

Bitcoin is different. Bitcoin demand is like demand for potato in a game of hot potato, or for seats in a musical chairs game, or for an ace in a game of Black Jack: People don't need to buy btc like they do oil and food -- they can simply *not buy* BTC & walk away when the game stops being fun. And move on to Ether, or BBQ coin, or whatever looks fun at the moment

[richkellj]

The supply of bitcoins in circulation is not changing,

Yes, it will. This is very precisely what the halving means. Actually, more than 3,200 BTC are mined every single day, after the halving, it will be down to about 1,600 new BTC per day. That's a huge difference!

So it means price will increase more as less  Coins can be mined

[odolvlobo]

The supply of bitcoins in circulation is not changing,

Yes, it will. This is very precisely what the halving means. Actually, more than 3,200 BTC are mined every single day, after the halving, it will be down to about 1,600 new BTC per day. That's a huge difference!

It is not a huge difference. Before the halving, the number of bitcoins increases by 0.024% each day. After the halving, the number of bitcoins will increase by 0.012% per day. A difference of 0.012% cannot be considered huge.

People that believe that the supply will decrease as a result of the halving are confusing supply with production. Supply and demand is a thing. Production and demand is not.

[Amph]

The supply of bitcoins in circulation is not changing,

Yes, it will. This is very precisely what the halving means. Actually, more than 3,200 BTC are mined every single day, after the halving, it will be down to about 1,600 new BTC per day. That's a huge difference!

It is not a huge difference. Before the halving, the number of bitcoins increases by 0.024% each day. After the halving, the number of bitcoins will increase by 0.012% per day. A difference of 0.012% cannot be considered huge.

People that believe that the supply will decrease as a result of the halving are confusing supply with production. Supply and demand is a thing. Production and demand is not.

$800k(1600, 1800 actually x 450) less dumping each day is not to underestimate either, it mean less pressure on the market, every 30 days $24M in bitcoin will not be dumped to pay electricity and new equipment for mining...

[Enotche]

Well, maybe it is. Past Halving caused the price increase, but because of panic future Halving the price of Bitcoin is growing right now. I think it all depends on the interest of people in Bitcoins.

[actmyname]

To OP. This is a way too mechanical view, what ignores the psychological impact of the halving.

In fct, the psychological impact is way bigger than any technical explanations you want to give it. The having is a celebration of Bitcoin every 4 years, and if it happens during a time where we are making solid progress technologically (segwit, schnorr sig, sidechains, lightning...) then you add in the inherent hype of halving, and the price rise is guaranteed.

The price rise is guaranteed... maybe. A price surge, up to the levels of doubling the price is unlikely to happen. Though the halving will affect day-to-day mining, let us remember that even halving the intake every day would not double the price instantly. That's not necessarily how coins are circulated. They aren't circulated directly from the blocks mined directly the day of.

[odolvlobo]

blue block: december lull.. people concentrating more on christmas and new year. with funds they already cashed out in november [/color]

franky1, your explanations are pure fantasy and speculation. You have no evidence to back up your claims. You say that the reason that there was no immediate rise at the first halving is due to people focused on Christmas. LOL. Good luck supporting that claim.

Here is evidence against your claim of the existence of a "december lull".

12/2010 - Price falls from $0.25 to $0.20, then rises to $0.30: +50% (preceded by -20%)
12/2011 - Price rises from $3.20 to $5.00: +56%
12/2012 - Price rises from $12.40 to $13.20: +6%  (post-halving) <---
12/2013 - Price drops from $1150 to $750: -35%
12/2014 - Price drops from $380 to $310: -18%
12/2015 - Price rises from $360 to $470, then falls to $430: +31% (followed by -9% )

There is no "december lull". If anything, the halving appears to have prevented a change in price instead of causing one.

[MingLee]

The supply of bitcoins in circulation is not changing,

Yes, it will. This is very precisely what the halving means. Actually, more than 3,200 BTC are mined every single day, after the halving, it will be down to about 1,600 new BTC per day. That's a huge difference!

It is not a huge difference. Before the halving, the number of bitcoins increases by 0.024% each day. After the halving, the number of bitcoins will increase by 0.012% per day. A difference of 0.012% cannot be considered huge.

People that believe that the supply will decrease as a result of the halving are confusing supply with production. Supply and demand is a thing. Production and demand is not.

It all comes down to how much it costs the miners to operate right now. If they need to start charging more to cover their costs, they'll start charging more. If the price is allowing for them to make pure profit right now, they might not change their selling cost at all.

[BitconAssociation]

It all comes down to how much it costs the miners to operate right now. If they need to start charging more to cover their costs, they'll start charging more. If the price is allowing for them to make pure profit right now, they might not change their selling cost at all.

How does a miner go about charging more? If they could charge more, why wouldn't they charge more now? Because charitable & pro bono?

[Amph]

blue block: december lull.. people concentrating more on christmas and new year. with funds they already cashed out in november [/color]

franky1, your explanations are pure fantasy and speculation. You have no evidence to back up your claims. You say that the reason that there was no immediate rise at the first halving is due to people focused on Christmas. LOL. Good luck supporting that claim.

Here is evidence against your claim of the existence of a "december lull".

12/2010 - Price falls from $0.25 to $0.20, then rises to $0.30: +50% (preceded by -20%)
12/2011 - Price rises from $3.20 to $5.00: +56%
12/2012 - Price rises from $12.40 to $13.20: +6%  (post-halving) <---
12/2013 - Price drops from $1150 to $750: -35%
12/2014 - Price drops from $380 to $310: -18%
12/2015 - Price rises from $360 to $470, then falls to $430: +31% (followed by -9% )

There is no "december lull". If anything, the halving appears to have prevented a change in price instead of causing one.

again none said that the increase must be on the same date of the halving, this is your assumption, which is wrong btw, the increase was there, around the halving, from 4 to 12, 3x increase

[sdp]

It all comes down to how much it costs the miners to operate right now. If they need to start charging more to cover their costs, they'll start charging more. If the price is allowing for them to make pure profit right now, they might not change their selling cost at all.

How does a miner go about charging more? If they could charge more, why wouldn't they charge more now? Because charitable & pro bono?

The question is why don't YOU charge more now?   If I offer to buy at a marginally higher than market value from you,  You can say yes or no.   If the sell side of the market is 25+x btc per ten minutes,  after it will be 12.5+x btc per ten minutes.  The buy side being nonbtc assets and is more or less constant.  So you know I will haveless options to buy from.  I would say you can feel more confident to ask more.

sdp

[odolvlobo]

It all comes down to how much it costs the miners to operate right now. If they need to start charging more to cover their costs, they'll start charging more. If the price is allowing for them to make pure profit right now, they might not change their selling cost at all.

How does a miner go about charging more? If they could charge more, why wouldn't they charge more now? Because charitable & pro bono?

If the sell side of the market is 25+x btc per ten minutes,  after it will be 12.5+x btc per ten minutes.  The buy side being nonbtc assets and is more or less constant.  So you know I will haveless options to buy from.  I would say you can feel more confident to ask more.

Two things you have overlooked:

1. X grows every 10 minutes. What that mean if the buy side is constant?

2. Whether 12.5 or 25, it's very small compared to X.

[franky1]

blue block: december lull.. people concentrating more on christmas and new year. with funds they already cashed out in november [/color]

franky1, your explanations are pure fantasy and speculation. You have no evidence to back up your claims. You say that the reason that there was no immediate rise at the first halving is due to people focused on Christmas. LOL. Good luck supporting that claim.

Here is evidence against your claim of the existence of a "december lull".

12/2010 - Price falls from $0.25 to $0.20, then rises to $0.30: +50% (preceded by -20%)
12/2011 - Price rises from $3.20 to $5.00: +56%
12/2012 - Price rises from $12.40 to $13.20: +6%  (post-halving) <---
12/2013 - Price drops from $1150 to $750: -35%
12/2014 - Price drops from $380 to $310: -18%
12/2015 - Price rises from $360 to $470, then falls to $430: +31% (followed by -9% )

There is no "december lull". If anything, the halving appears to have prevented a change in price instead of causing one.

a lull period.. is a dead, slow, boring, stagnant period..
so we both agree
"If anything, the halving appears to have prevented a change in price" [during a normally active month]

and that was my whole point when talking about explaining the lull, because someone else was debating that the price did not shoot up as soon as november 29th(100confirms after halving).. so i was explaining the lull (slow, no movement)

lol read your post again.. then read mine.. because of the reward halving everyone sorted out their finances in november... thus not much happened in december.. causing a lull... now look at your numbers.. out of all the years which one had the least change... wait for it..

december 2012... so if you want to say that the month after the halving was not a lull (dull boring, nothing exciting).. then why is it that it you did not see a 18-50% price variance.. why was it only 6%

if you can explain away why 6% is not a lull/stagnant/boring/dull amount compared to other decembers of 18-56%.. then you sir deserve an economics award.

so with that said are you still saying that the december 2012 was not a december lull..?

[BitconAssociation]

It all comes down to how much it costs the miners to operate right now. If they need to start charging more to cover their costs, they'll start charging more. If the price is allowing for them to make pure profit right now, they might not change their selling cost at all.

How does a miner go about charging more? If they could charge more, why wouldn't they charge more now? Because charitable & pro bono?

The question is why don't YOU charge more now?   If I offer to buy at a marginally higher than market value from you,  You can say yes or no.

Charge more for what? If you mean "anything that I sell," the answer is "because no one will buy my stuff if I charge more."

If the sell side of the market is 25+x btc per ten minutes,  after it will be 12.5+x btc per ten minutes.

As odolvlobo mentioned in the post above, X in your "25 + X"? That X is nontrivial. That X is roughly 15.5 *million* BTC .
The sum total of BTC issued to date.
If analogies help, think of BTC_supply as a decent sized lake, and BTC_mined as a guy peeing a little into that lake every ten minutes -- that's roughly proportional.

The buy side being nonbtc assets and is more or less constant. ...

If I understand you correctly, you're saying that the demand is ~constant, in which case I disagree. While it is reasonable to guesstimate demand for food/oil/steel etc., this doesn't work for speculative assets like BTC.

If the food supply is reduced, food prices will likely go up -- to live, we got to eat.
If Beanie Baby supply is reduced,* OTOH, some of us may simply choose not to buy Beanies.
*With Teh Halvening though, we're not reducing the world supply of Beanies, we're only slowing the production line to the point where it adds only 12.5 new Beanies to the market.

[cjmoles]

blue block: december lull.. people concentrating more on christmas and new year. with funds they already cashed out in november [/color]

franky1, your explanations are pure fantasy and speculation. You have no evidence to back up your claims. You say that the reason that there was no immediate rise at the first halving is due to people focused on Christmas. LOL. Good luck supporting that claim.

Here is evidence against your claim of the existence of a "december lull".

12/2010 - Price falls from $0.25 to $0.20, then rises to $0.30: +50% (preceded by -20%)
12/2011 - Price rises from $3.20 to $5.00: +56%
12/2012 - Price rises from $12.40 to $13.20: +6%  (post-halving) <---
12/2013 - Price drops from $1150 to $750: -35%
12/2014 - Price drops from $380 to $310: -18%
12/2015 - Price rises from $360 to $470, then falls to $430: +31% (followed by -9% )

There is no "december lull". If anything, the halving appears to have prevented a change in price instead of causing one.

a lull period.. is a dead, slow, boring, stagnant period..
so we both agree
"If anything, the halving appears to have prevented a change in price" [during a normally active month]

and that was my whole point when talking about explaining the lull, because someone else was debating that the price did not shoot up as soon as november 29th(100confirms after halving).. so i was explaining the lull (slow, no movement)

lol read your post again.. then read mine.. because of the reward halving everyone sorted out their finances in november... thus not much happened in december.. causing a lull... now look at your numbers.. out of all the years which one had the least change... wait for it..

december 2012... so if you want to say that the month after the halving was not a lull (dull boring, nothing exciting).. then why is it that it you did not see a 18-50% price variance.. why was it only 6%

if you can explain away why 6% is not a lull/stagnant/boring/dull amount compared to other decembers of 18-56%.. then you sir deserve an economics award.

so with that said are you still saying that the december 2012 was not a december lull..?

franky1,

I see what you're trying to demonstrate but how does that "lull" correlate with the holiday season?  Could it just be the halving alone that caused the "lull?"  I mean, if there were a correlation with the holiday season, then wouldn't some of that be reflected in the other years as well?  The only variable that changed in 2012 was the halving....December didn't change, right?

[BitconAssociation]

...
franky1,

I see what you're trying to demonstrate but how does that "lull" correlate with the holiday season?  Could it just be the halving alone that caused the "lull?"  I mean, if there were a correlation with the holiday season, then wouldn't some of that be reflected in the other years as well?  The only variable that changed in 2012 was the halving....December didn't change, right?

Not to mention that the following year, BTC shot up to $1200 during that very same "December lull."

[franky1]

...
franky1,

I see what you're trying to demonstrate but how does that "lull" correlate with the holiday season?  Could it just be the halving alone that caused the "lull?"  I mean, if there were a correlation with the holiday season, then wouldn't some of that be reflected in the other years as well?  The only variable that changed in 2012 was the halving....December didn't change, right?

usually december of each year is active.. people moving funds to cash out to buy gifts. and retailer moving funds for gifts bought. etc.
but in 2012 specifically most of the pools ((emphasis)who are the majority players on an exchange) done all of their financials BEFORE the halving so that they did not have to have to immediately worry about the consequences of the halving impacting them over that specific christmas period.. hense why there was a lull...

Not to mention that the following year, BTC shot up to $1200 during that very same "December lull."

the 2012 lull.. is not the 2013 rise.. they are totally separate events. so you saying its the "very same" is rediculous
i never said every december was a boring month.. but the specific december after the halving was..

separately the 2013 spike was due to ASICs coming onto the market. which can be easily seen by the release date of the first asics, and the start of the large rise.. which peaked a couple months later. before speculation bubble then burst due to mtgox issues and other things.

do not confuse the 2013 saga with the 2012 halving saga.

[BitconAssociation]

>the 2012 lull.. is not the 2013 rise.. they are totally separate events.
So these "december lull.. people concentrating more on christmas and new year. with funds they already cashed out in november" are not seasonal holiday lulls? They're more of "December 2012 lulls"?
In 2013 people stopped "concentrating more on christmas and new year"?

Are you suggesting that unique events, like that December 2012 lull, are not cyclical, unlikely to be repeated, and therefore worthless for us sage price prognosticators?

Could it be that we actually agree that dumb shit like an exchange going rogue or a 20-something being popped for trying to hirie feds to murder his buddies, that those are the events really driving BTC price?

[BTC-Joe]

Just wanted to point out some things in response to what was said here:

- Miners will sell coins at "double" the price to compensate for drop in reward.

This isn't going to happen. Firstly, because the total BTC is arbitrarily capped at 21 million, as more coins are mined the influence that miners can exert on the price of BTC diminishes substantially. In the early days around 2011 you had around 4-6 M coins in circulation. In Q4 2013 you had around 11M. As of this message you're looking at around 16 M coins, which leaves 5M more to be mined.

The price of bitcoins is now more market-driven by those who already have them, while Q4 2013 was somewhat of a turning point where the advantage shifted away from those mining to the market.

- Fewer coins mined will decrease supply

Nope, the coins already discovered are not going away. Supply was always capped and it never diminishes.

- Big price jumps after previous halving

The price jumps were not due to the halving event itself. There were and still are plenty of other variables with far more influence on the price of BTC, such as how well they are being adopted into the marketplace as a form of payment...which today is a lot more than it was even 3 years ago.

- My BTC will jump to $2,000 per coin and I'll be rich

If there is a sudden price jump like that, don't expect most exchanges to honor sales at those prices. They will not have anywhere near the liquidity to cover a run-on of sell orders for $2K per coin. Even if all exchanges combined together they wouldn't be able to cover it, so while the chart may show $2K you won't be able to sell at that price.

[franky1]

>the 2012 lull.. is not the 2013 rise.. they are totally separate events.
So these "december lull.. people concentrating more on christmas and new year. with funds they already cashed out in november" are not seasonal holiday lulls? They're more of "December 2012 lulls"?
In 2013 people stopped "concentrating more on christmas and new year"?

you are soo ...................

ok some standard psychology...
every year people care about christmas and new year celebrations.. ((emphasis) every year)

but in 2012.. ((emphasis 2012 only) the reward halving cause people to prepare a bit earlier by sorting their finances out early ((emphasis 2012 only)

this explains why there was a lull in ((emphasis) december 2012 only) because they didnt need to use coins as much..

then when january 2013 arrived and people got back to business, bills started arriving.. then the consequences of the halving really started to hit people because there was little noticeable impact during december because no one was really paying bills or cashing out during december.. but now the bills are arriving again and things needed to change.

so the january/february period is where you see the price movements happen due to the reward halving.

[franky1]

Just wanted to point out some things in response to what was said here:

- Miners will sell coins at "double" the price to compensate for drop in reward.

This isn't going to happen. Firstly, because the total BTC is arbitrarily capped at 21 million, as more coins are mined the influence that miners can exert on the price of BTC diminishes substantially. In the early days around 2011 you had around 4-6 M coins in circulation. In Q4 2013 you had around 11M. As of this message you're looking at around 16 M coins, which leaves 5M more to be mined.

you are assuming that all 16million coins are ALL on an exchange and ALL being traded to ALL add some significance to the market value..

im sorry but on average only 10k to 100k volume(per exchange) is moved per day and is usually based on about 3k-30k of real coins being moved a few times a day to total the daily volume.

so the reality is that the bitcoin price of all 16million coins is not based on the trades of 16million coins per day.. but usually less then a hundred thousand coins..

remember not all 16million coins are on exchanges.. no where near that many. so when you realise that it is only a smaller amount contributing to the market value, then you see who is hoarding the majority of that market making value.. you will see that pools do have the power to move prices, should they be motivated to.

[Monnt]

Miners are the deciding factor in the price. They still most probably make actions to push the price up. I do understand what you are saying. The price won't double, but it will rise about 60-70%.

[Quickseller]

The fact that the miners are paid less while you need more is what make them sell their bitcoins at an higher price and thus lead to a price rise.

That's not how it works. Sellers (including miners) are free to ask for higher prices, but if buyers won't pay those prices (typically because others ask for less), then prices don't rise.

This is true, however you (and others) are overlooking one important fact.

Right now there are sufficient buyers in the market so that the price will ~stay the same when there is ~3,600 additional BTC sold throughout the various markets. After the halving occurs, there is no reason why these buyers will start to want to buy less BTC every day, however the miners will have less BTC to sell every day because of lower block subsidy.

In other words, right now buyers are buying roughly 3,600 additional BTC every day and sellers are selling roughly 3,600 new BTC every day. After the halving sellers will be selling roughly 1,800 additional BTC every day so the buyers are going to need to offer higher prices or else they will not be able to buy what they are wanting to buy.

[BitconAssociation]

>the 2012 lull.. is not the 2013 rise.. they are totally separate events.
So these "december lull.. people concentrating more on christmas and new year. with funds they already cashed out in november" are not seasonal holiday lulls? They're more of "December 2012 lulls"?
In 2013 people stopped "concentrating more on christmas and new year"?

you are soo ...................

ok some standard psychology...
every year people care about christmas and new year celebrations.. ((emphasis) every year)

but in 2012.. ((emphasis 2012 only) the reward halving cause people to prepare a bit earlier by sorting their finances out early ((emphasis 2012 only)

this explains why there was a lull in ((emphasis) december 2012 only) because they didnt need to use coins as much..

2010: price went up in December
2011: price again went up in December
2012: lull because Teh Halvening
2013: price went up skyrocketed in December  

^^TL;DR: ♫ Here is my handle/here is my spout ♫

I can't possibly convince you, that's the very essence of idee fixe: everything else must be reconciled with it, and everything appears to you as proof of your correctness re. you being a short & stout teapot.

If reality fails to comply, it won't be due to your *not* being a teapot, but the willful blindness/ignorance of others, and possibly nefarious forces (see: banksters & their lapdogs, the statist jackboots) brainwashing the sheeple into not accepting your teapotty essence.

[BitconAssociation]

The fact that the miners are paid less while you need more is what make them sell their bitcoins at an higher price and thus lead to a price rise.

That's not how it works. Sellers (including miners) are free to ask for higher prices, but if buyers won't pay those prices (typically because others ask for less), then prices don't rise.

This is true, however you (and others) are overlooking one important fact.

Right now there are sufficient buyers in the market so that the price will ~stay the same when there is ~3,600 additional BTC sold throughout the various markets. After the halving occurs, there is no reason why these buyers will start to want to buy less BTC every day, however the miners will have less BTC to sell every day because of lower block subsidy.

In other words, right now buyers are buying roughly 3,600 additional BTC every day and sellers are selling roughly 3,600 new BTC every day. After the halving sellers will be selling roughly 1,800 additional BTC every day so the buyers are going to need to offer higher prices or else they will not be able to buy what they are wanting to buy.

1.

... you're saying that the demand is ~constant, in which case I disagree. While it is reasonable to guesstimate demand for food/oil/steel etc., this doesn't work for speculative assets like BTC.

If the food supply is reduced, food prices will likely go up -- to live, we got to eat. (demand does remain the same)
If Beanie Baby supply is reduced,* OTOH, some of us may simply choose not to buy Beanies. (demand @low prices > demand @higher prices)
*With Teh Halvening though, we're not reducing the world supply of Beanies, we're only slowing the production line to the point where it adds only 12.5 new Beanies to the market.

... Bitcoin is a purely speculative commodity. It's not like oil, which is consumed at a roughly predictable rate, so that cutting supply sends prices skyrocketing.

Bitcoin is different. Bitcoin demand is like demand for potato in a game of hot potato, or for seats in a musical chairs game, or for an ace in a game of Black Jack: People don't need to buy btc like they do oil and food -- they can simply *not buy* BTC & walk away when the game stops being fun. And move on to Ether, or BBQ coin, or whatever looks fun at the moment

2.

... If the sell side of the market is 25+x btc per ten minutes,  after it will be 12.5+x btc per ten minutes.

As odolvlobo mentioned in the post above, X in your "25 + X"? That X is nontrivial. That X is roughly 15.5 *million* BTC .
The sum total of BTC issued to date.
If analogies help, think of BTC_supply as a decent sized lake, and BTC_mined as a guy peeing a little into that lake every ten minutes -- that's roughly proportional.

[Quickseller]

@BitconAssociation

1 - I am not sure there is enough information to describe the elasticity of Bitcoin, so the demand may or may not go down in the event that the price of bitcoin were to go up, however simple economics says that when the supply of a commodity goes down, then all else being equal, the price will go up.

Right now the demand for Bitcoin at $450 is ~3,600 BTC per day. When supply goes down, causing the price to go up to say, $460 then the demand for bitcoin might fall to 1,800 BTC per day and the market will be back in equilibrium.   

There are a lot of speculators in bitcoin, however there are real world applications for Bitcoin that is not dependent on it's price. Although it would not be quite as trivial, it would be possible to stop buying oil and to instead buy alternatives when the price of oil gets to be too expensive.

2. There are roughly 15 million BTC "issued" however that does not mean that they are all for sale at any given time. The miners *need* to sell the majority of their mining revenue to pay their bills, as their bills are denominated and and paid in fiat. This is not true for many other bitcoin related businesses. The last 24 hours of BTC/USD volume on bitfinex is roughly 4,800 BTC, on bitstamp it is roughly 2,400 BTC, on btc-e it is roughly 4,600, so althoughthe miners are not the only ones selling, the likely do make up a very large portion of btc sold every day.

[Wapinter]

Will bitcoins ever sell for $1,000 USD or more again? Possibly, but it's not likely to happen as a reaction to halving. The supply of bitcoins in circulation is not changing, and if miners jump ship that is a strike against bitcoins not something that would warrant a price increase.

The only thing that halving the reward to btc miners will do is make mining half as appealing. In fact, if you think about it, it's not a very good system because the more people using bitcoin, the more you need miners...but the miners get paid less and less as time progresses.

At the very least, as compensation from mining decreases, a minimum network transaction fee should be imposed and it should increase proportionally to difficulty to ensure that all miners receive a predictable and steady flow of bitcoins for the resources they provide.

Halving will attract more users to bitcoin due to media hype.Resulting in high demand for bitcoin, this can lead to price hike and once it triggers price rise,chances are it will touch $1000

[franky1]

@BitconAssociation

1 - I am not sure there is enough information to describe the elasticity of Bitcoin, so the demand may or may not go down in the event that the price of bitcoin were to go up, however simple economics says that when the supply of a commodity goes down, then all else being equal, the price will go up.

Right now the demand for Bitcoin at $450 is ~3,600 BTC per day. When supply goes down, causing the price to go up to say, $460 then the demand for bitcoin might fall to 1,800 BTC per day and the market will be back in equilibrium.  
 

the demand is not 3600.. nor is it 16million..

the market demand is a few hundred thousand, divided by a number of exchanges.. so under 100,000 coins a day(once you subtract the fact that the same coins are swapped a few times a day)..

but.
pools own a nice large stake of coins played around on the exchanges. so if they know their daily fresh income from mining is decreasing.
they also know that demand is 100k ish on exchanges ((emphasis) 2 separate bundles of funds)... so they will move lets say 50k of they reserves out.. meaning that the supply of tradable coins on exchanges changes and causes a price rise.

in short the block reward does not directly cause a price rise.. however its the efforts and motivations and reserves held by the pools on the exchanges that help move the price to compensate themselves for the lower incomes they are getting via mining

[cjmoles]

So, I'm not sure, given bitcoins history of volatility, that we can accurately predict what's going to happen after halving using traditional economic principles.  We all learned things from past experiences here, so might some of those lessons be reflected in the next event?  Will there be many who wait until the actual event to buy?  Will they start moving earlier?  Will they wait for a spike to dump?  Too many non traditional variables....it's starting to hurt my brain cell.  I have resolved myself to the belief that much of the upward movement has already taken place and if there is any upward pressure after halving, it would be negligible. However, I am in position to take advantage of any temporary spikes or dips that I believe will occur due to the hype factor.

[BitconAssociation]

@BitconAssociation

1 - I am not sure there is enough information to describe the elasticity of Bitcoin, so the demand may or may not go down in the event that the price of bitcoin were to go up, however simple economics says that when the supply of a commodity goes down, then all else being equal, the price will go up.

Right now the demand for Bitcoin at $450 is ~3,600 BTC per day. When supply goes down, causing the price to go up to say, $460 then the demand for bitcoin might fall to 1,800 BTC per day and the market will be back in equilibrium.  

BTC  supply is not going down, it's increasing by 25 BTC, every 9 or 10 minutes. It's the rate of increase that's going to be lower, the supply is going to continue increasing.

And, of course, BTC is not a typical commodity.  BTC is never consumed/destroyed (not like oil/consumables, or even durables)

There are a lot of speculators in bitcoin, however there are real world applications for Bitcoin that is not dependent on it's price. Although it would not be quite as trivial, it would be possible to stop buying oil and to instead buy alternatives when the price of oil gets to be too expensive.

Yes, it is possible to stop buying oil, but not_buying_oil only becomes practical if the prices are ~x5 the current.
Not buying BTC, OTOH, is trivial & would create problems for shutin bath salts enthusiasts & pedos only

2. There are roughly 15 million BTC "issued" however that does not mean that they are all for sale at any given time. The miners *need* to sell the majority of their mining revenue to pay their bills, as their bills are denominated and and paid in fiat. This is not true for many other bitcoin related businesses. The last 24 hours of BTC/USD volume on bitfinex is roughly 4,800 BTC, on bitstamp it is roughly 2,400 BTC, on btc-e it is roughly 4,600, so althoughthe miners are not the only ones selling, the likely do make up a very large portion of btc sold every day.

Right. If miners need to sell the bulk of BTC they mine today, there's gonna be a shitshow come Teh Halvening.
Because that "bulc of BTC" gonna be cut in half. Clearly not enough to pay the bills, forget PROFIT!
wat do

... I am in position to take advantage of any temporary spikes that I believe will occur due to the hype factor.

Not unless you're one of the exchanges (with access to *all* the data and zip regulatory interference) you're not. ~3 years ago you probably could, if you had good friends. Now you couldn't. Or, rather, I couldn't.

[actmyname]

2. There are roughly 15 million BTC "issued" however that does not mean that they are all for sale at any given time. The miners *need* to sell the majority of their mining revenue to pay their bills, as their bills are denominated and and paid in fiat. This is not true for many other bitcoin related businesses. The last 24 hours of BTC/USD volume on bitfinex is roughly 4,800 BTC, on bitstamp it is roughly 2,400 BTC, on btc-e it is roughly 4,600, so althoughthe miners are not the only ones selling, the likely do make up a very large portion of btc sold every day.

Right. If miners need to sell the bulk of BTC they mine today, there's gonna be a shitshow come Teh Halvening.
Because that "bulc of BTC" gonna be cut in half. Clearly not enough to pay the bills, forget PROFIT!
wat do

That's why I think if that were true, then a lot of miners would drop out [and come back in, due to difficulty changes] and bitcoin would start to become more centralized [even just a little] due to the mighty pools controlling everything. Of course, miners would even things out by going to different places, but maybe the profit there would be worse than the profit in the large one? Who knows what will happen?

But all I know is that the price will not surge. It will increase [imo] but not surge.

[instacalm]

I'm not expecting any significant price increase.

[BitconAssociation]

2. There are roughly 15 million BTC "issued" however that does not mean that they are all for sale at any given time. The miners *need* to sell the majority of their mining revenue to pay their bills, as their bills are denominated and and paid in fiat. This is not true for many other bitcoin related businesses. The last 24 hours of BTC/USD volume on bitfinex is roughly 4,800 BTC, on bitstamp it is roughly 2,400 BTC, on btc-e it is roughly 4,600, so althoughthe miners are not the only ones selling, the likely do make up a very large portion of btc sold every day.

Right. If miners need to sell the bulk of BTC they mine today, there's gonna be a shitshow come Teh Halvening.
Because that "bulc of BTC" gonna be cut in half. Clearly not enough to pay the bills, forget PROFIT!
wat do

That's why I think if that were true, then a lot of miners would drop out [and come back in, due to difficulty changes] and bitcoin would start to become more centralized [even just a little] due to the mighty pools controlling everything. Of course, miners would even things out by going to different places, but maybe the profit there would be worse than the profit in the large one? Who knows what will happen?

But all I know is that the price will not surge. It will increase [imo] but not surge.

It's a really hard thing to model. For instance, if I knew that my major competitor was nearly broke, it would make sense for me to mine at a loss to choke him out, and it would also make sense for me to form consortium/temporary alliances with other mining farms, with (pseudo)enforceable contracts and stuff, to drive out the competition. It gets mindnumbingly complex, and I suspect that it doesn't even work like I expect it does. I mean, all these guys know each other, there's a handful of them. Not a conspiracy theory buff, just one of those "what would I do" things.

http://s32.postimg.org/ygpu36tyd/youtwaifu.jpg

Decentralized, p2p closed door meeting between 80% of the mining power and the ruling dev team

[BTC-Joe]

you are assuming that all 16million coins are ALL on an exchange and ALL being traded to ALL add some significance to the market value..

No, I'm not assuming that all coins are on the market, but the share of coins that are gained by miners are now significantly less in relation to all coins available.

I never said that miners have no influence on the price; just that events tied to mining are a lot less influential now than they were when the total coins available were under, say, 5M.

Miners need to sell their coins to cover the costs of mining. They have an incentive to sell rather than hold-out for some potential price increase...this incentive to sell their coins only increases with halving.

im sorry but on average only 10k to 100k volume(per exchange) is moved per day and is usually based on about 3k-30k of real coins being moved a few times a day to total the daily volume.

Sure, and any price jump on such low volume is going to be a temporary spike and not a new normal. BTC have  gained roughly 50% over the last year, meaning 12 months before today. I don't see halving as a catalyst for any major shift up or down, but if there is a shift due to halving it's more likely to be down than up.

so the reality is that the bitcoin price of all 16million coins is not based on the trades of 16million coins per day.. but usually less then a hundred thousand coins..

remember not all 16million coins are on exchanges.. no where near that many. so when you realise that it is only a smaller amount contributing to the market value, then you see who is hoarding the majority of that market making value.. you will see that pools do have the power to move prices, should they be motivated to.

It doesn't matter if the coins are all traded or not. The point you are missing is the AVAILABILITY. There are plenty of coins available, even if they are not up for sale right this moment. A surge of new bitcoin buyers would drive the price up; but BTC have already reached their critical mass - the point where they can sort of sustain themselves without the need for external promotion.

Gains in bitcoin usage from new users is going to slow as many new users are already participating. A high price per coin will certainly limit the rate at which participants enter the fray, simply based on psychological reasons. The average person is not going to want to pay $450+ for 1 BTC. Even though fractional BTC are available, it's not quite the same as buying 1...there's a reason why companies on the stock market do splits to keep their share prices down.

[franky1]

That's why I think if that were true, then a lot of miners would drop out [and come back in, due to difficulty changes] and bitcoin would start to become more centralized [even just a little] due to the mighty pools controlling everything. Of course, miners would even things out by going to different places, but maybe the profit there would be worse than the profit in the large one? Who knows what will happen?

But all I know is that the price will not surge. It will increase [imo] but not surge.

the main pools own alot of rigs, they wont move to other pools..

the main pools have alot of funds in reserves because their cost of production is dramatically lower than western pools. so not only can they keep mining without worrying about cost, but their reserves can be used to change the price, when they are motivated to do so.

a few of the smaller pools will decrease in their customer base. but the main pools will continue on

if i was to look at the top 3 pools
f2pool
antpool
btcc

i would say the one that would see most effected would be f2pool. (but not as much as the other 15 smaller pools)

[actmyname]

That's why I think if that were true, then a lot of miners would drop out [and come back in, due to difficulty changes] and bitcoin would start to become more centralized [even just a little] due to the mighty pools controlling everything. Of course, miners would even things out by going to different places, but maybe the profit there would be worse than the profit in the large one? Who knows what will happen?

But all I know is that the price will not surge. It will increase [imo] but not surge.

the main pools own alot of rigs, they wont move to other pools..

the main pools have alot of funds in reserves because their cost of production is dramatically lower than western pools. so not only can they keep mining without worrying about cost, but their reserves can be used to change the price, when they are motivated to do so.

a few of the smaller pools will decrease in their customer base. but the main pools will continue on

if i was to look at the top 3 pools
f2pool
antpool
btcc

i would say the one that would see most effected would be f2pool. (but not as much as the other 15 smaller pools)

Then disregard anything happening to the main pools, but if at any point miners decide to try and leave due to unprofitable reasons in those pools, couldn't they just increase the price the miners get and reduce the pool fee? The system would slowly turn to be more centralized and ruin the largest part of bitcoin.

[franky1]

you are assuming that all 16million coins are ALL on an exchange and ALL being traded to ALL add some significance to the market value..

1. No, I'm not assuming that all coins are on the market, but the share of coins that are gained by miners are now significantly less in relation to all coins available.

2. I never said that miners have no influence on the price; just that events tied to mining are a lot less influential now than they were when the total coins available were under, say, 5M.

3. Miners need to sell their coins to cover the costs of mining. They have an incentive to sell rather than hold-out for some potential price increase...this incentive to sell their coins only increases with halving.

1. "coins available".. what if i told you there are 10billion bananas around the world.. but your supermarket only sells 1 box a day.. if half of the box is still there by the end of the day. then demand is not there.. so they put a reduced price on the banana's to get rid of them.
the price of the bananas has nothing to do with what EXISTS in the world, but what is AVAILABLE on the market.

for instance. satoshi has 1million coins stashed away.. kerpeles has 800k coins stashed away.. they are not AVAILABLE on the market. so people do not care about them and dont even think about them in regards to bitcoins price.. BUT if they suddenly appeared on a market.. then the supply mindset would change..

so dont worry about the 16million coins.. all that matters is the supply AVAILABLE ON the market.. not in someones cold store

2. back in 2012-2013 mtgox had 800k coins at any one time, BTC-E had 300k coins.. yet in 2016 the amount of coins AVAILABLE is far far far less. just check out the volumes and you will see..
i remember people moving 10k btc coins every couple minutes on MTGOX.. now its just 10btc orders being moved every few minutes. so although the fiat valuation has risen the BTC volume has dropped.

3.
lets say you got 1 block an hour..
if you were a western pool. you would want to cash out about 80% of coins to cover the electric at the end of the month. and 10% to invest in more equipment. and 10% profit (if lucky)
but if you u are an asian pool where you also manufactured the rigs.. you would withdraw 20% of coins to cover electric. and ZERO for eqipment investment. leaving you 80% profit. to do with as you please. remember when asian pools sell rigs to the west, the west is literally giving the asian manufacturers a few free rigs due to the large retail markup.

so dont assume major pools are cashing out all of their coins.. to pay bills

[Razick]

Will bitcoins ever sell for $1,000 USD or more again? Possibly, but it's not likely to happen as a reaction to halving. The supply of bitcoins in circulation is not changing, and if miners jump ship that is a strike against bitcoins not something that would warrant a price increase.

The only thing that halving the reward to btc miners will do is make mining half as appealing. In fact, if you think about it, it's not a very good system because the more people using bitcoin, the more you need miners...but the miners get paid less and less as time progresses.

At the very least, as compensation from mining decreases, a minimum network transaction fee should be imposed and it should increase proportionally to difficulty to ensure that all miners receive a predictable and steady flow of bitcoins for the resources they provide.

Fees are intended to replace block rewards as transaction volume increases and Bitcoin matures. It's worth noting that miners have already invested in millions of dollars of capital (mining equipment) for the purpose of mining. From an economic perspective, as long as miners receive enough to cover electricity and any other variable costs (such as time requirements, maintenance, etc), those miners should continue to operate.

Higher block rewards served to compensate miners for investing in the capital needed to enter the market, but they are very expensive for the network long term. Fees will help set a fair market compensation for miners over time.

[franky1]

Then disregard anything happening to the main pools, but if at any point miners decide to try and leave due to unprofitable reasons in those pools, couldn't they just increase the price the miners get and reduce the pool fee? The system would slowly turn to be more centralized and ruin the largest part of bitcoin.

in 2012 there were less then 10 pools.. 2016 there are atleast 18.. just because they are not in america, should not be a reason to say tall tales of centralisation.

infact there are pools in iceland, china, and other places around the world.
i am not so worried about the reward halving causing issues.. its more so the manufacturing of asics that has a deeper and more long term cause/effect on the whole distribution of decentralization.

many simple pieces of code can be written to rectify this.
EG (reject solution if solved by IP address range that has solved within the previous 10 blocks)

that way there would always be 10 different pools..

but as long as there are no rejection rules. and the western pools cannot get their hands on cheap rigs(at cost or free due to selling at massive margin to competitors) then that will be the more long term cause of lessening the distribution.

but as i said.. there are more pools now than in 2013. (yes i know in both cases it is not as distributed as the good old solo mining days of 2009-2012)
but its not doomsday just yet

[franky1]

Higher block rewards served to compensate miners for investing in the capital needed to enter the market, but they are very expensive for the network long term. Fees will help set a fair market compensation for miners over time.

fee's are a 20-100 year game theory.. not really part of the 2016 debate. because fee's are not to be considered a needed income stream, but more so a nice bonus right now

[ahpku]

in 2012 there were less then 10 pools.. 2016 there are atleast 18.. just because they are not in america, should not be a reason to say tall tales of centralisation.

Not at all...



[spoiler] If 3 pools control over 70% of the hash rate and are on first name basis with another 20%, the number of ways remaining 10% are divvied up between pools makes little difference. [/spoiler]

[Quickseller]

@BitconAssociation

1 - I am not sure there is enough information to describe the elasticity of Bitcoin, so the demand may or may not go down in the event that the price of bitcoin were to go up, however simple economics says that when the supply of a commodity goes down, then all else being equal, the price will go up.

Right now the demand for Bitcoin at $450 is ~3,600 BTC per day. When supply goes down, causing the price to go up to say, $460 then the demand for bitcoin might fall to 1,800 BTC per day and the market will be back in equilibrium.   

BTC  supply is not going down, it's increasing by 25 BTC, every 9 or 10 minutes. It's the rate of increase that's going to be lower, the supply is going to continue increasing.

Supply of new coins is going to go down. Like I said before, right now three is demand for 3,600 additional bitcoin that were not previously owned. On a net basis, people are wanting to (and are willing to pay for) buy 3,600 additional BTC every day.

And, of course, BTC is not a typical commodity.  BTC is never consumed/destroyed (not like oil/consumables, or even durables)

One use case of Bitcoin is proof of burn, although it is not used in very large amounts nor very frequently. When compared to trading volume and total amounts in circulation, both gold and silver are very rarely consumed/destroyed, and the same is true for diamonds.

Other currencies like Dollars, Euros, British Pounds and Yen are also never consumed/destroyed.

There are a lot of speculators in bitcoin, however there are real world applications for Bitcoin that is not dependent on it's price. Although it would not be quite as trivial, it would be possible to stop buying oil and to instead buy alternatives when the price of oil gets to be too expensive.

Yes, it is possible to stop buying oil, but not_buying_oil only becomes practical if the prices are ~x5 the current.
Not buying BTC, OTOH, is trivial & would create problems for shutin bath salts enthusiasts & pedos only

There are many use cases of Bitcoin that do not depend on the price of bitcoin other then the fact that the price is somewhat stable. I would say that most use cases of bitcoin involve saving time/money over using traditional payment channels like credit cards, so if someone wanted to use bitcoin to buy a plane ticket somewhere over using their credit card, they would simply buy less.

2. There are roughly 15 million BTC "issued" however that does not mean that they are all for sale at any given time. The miners *need* to sell the majority of their mining revenue to pay their bills, as their bills are denominated and and paid in fiat. This is not true for many other bitcoin related businesses. The last 24 hours of BTC/USD volume on bitfinex is roughly 4,800 BTC, on bitstamp it is roughly 2,400 BTC, on btc-e it is roughly 4,600, so althoughthe miners are not the only ones selling, the likely do make up a very large portion of btc sold every day.

Right. If miners need to sell the bulk of BTC they mine today, there's gonna be a shitshow come Teh Halvening.
Because that "bulc of BTC" gonna be cut in half. Clearly not enough to pay the bills, forget PROFIT!
wat do

I am not exactly sure what you are trying to say, however if a miner cannot pay their bills with their mining revenue then they will stop mining, which all else being equal, will cause the difficulty to decrease.

[richkellj]

I'm not expecting any significant price increase.

BTC will shot up to $1200 during that halving. just see that

[Rubberduckie]

of course the halving automatically doesnt translate into a price surge but...


If it doesnt go up then all these farms that mine bitcoin will have to shut down
unless they have little to free energy and even then their profit cuts in half

the only way to counter act the halving for miners is the price of btc doubling

what will happen remains to be seen but I dont see how it doesnt make the price
rise

[franky1]

in 2012 there were less then 10 pools.. 2016 there are atleast 18.. just because they are not in america, should not be a reason to say tall tales of centralisation.

Not at all...

[spoiler] If 3 pools control over 70% of the hash rate and are on first name basis with another 20%, the number of ways remaining 10% are divvied up between pools makes little difference. [/spoiler]

you are worried about 3 pools.. out of 18??

well in 2013
7 of 10 were american. and guess what.. GHASH had 50% of the hash power to itself..
thats right only 10 pools and of which 1 pool had 50%..

so now we are in 2016 with 18 pools and the top hashrate of 30%... to me.. i see that as better.. but.. as i said before. not as good as the good old days of solo mining of 2009-2012.
however solo mining has its own security risks due to such a low difficulty.

so please dont turn the distribution debate into a racial debate. because it is meaningless if X number of pools are in china. or any other country. and picking on a pool and trying to suggest that they are colluding purely because they are in the same country.. then my friend. i must deem that you are having an affair with all the women within 500 miles of where you live.. after all your all close together in a certain area so you must have lots in common with each other purely because you use the same fiat currency, speak the same language, soobviously there must be some secret relationship yor having with all of these women

[raphma]

When people talk about china farms is not a racial debate but energy price debates...


That's why most miners are there...

[franky1]

When people talk about china farms is not a racial debate but energy price debates...

That's why most miners are there...

iceland and ukraine are cheaper and acceptable climate.. but try thinking about the delivery cost and the 14 day shipping to get it moved out of chinese manufacturers.. to europe (those 2 weeks are alot of lost potential earnings)

if i was to start a ASIC manufacturing business id go for ukraine(low labour/low electric) and have the mining (running rigs) facility within 30 minutes of the manufacturing facility.

i would never start a business in the western world(higher costs) or in hotter countries(extra power needed for climate control), even if they do have slightly cheaper electric.

most of the big players in china have their mining farms within an hour of the manufacturers, that alone makes a difference.
the other difference is retailing out some rigs. and using the profits to build a few rigs (virtually free) for themselves.

[betohell]

I'm not expecting any significant price increase.

I think it will give the effect on the price of bitcoin. bitcoin unless demand decreases when halving certainly will have no effect on the price of bitcoin
but if the same request or enlarged necessarily high prices will rise

[BitconAssociation]

,,,
Supply of new coins is going to go down.

Supply of new coins? Because people don't care for used ones, they only like to buy new ones?
My understanding is that bitcoins are fungible. I'm not even seeing an option to bid on fresh bitcoins, instead of those worn-out ones that are probably on their last legs and missing bits

Like I said before, right now three is demand for 3,600 additional bitcoin that were not previously owned. On a net basis, people are wanting to (and are willing to pay for) buy 3,600 additional BTC every day.

No. There is no "demand for 3,600 additional bitcoin that were not previously owned." To put it in simplest, grossest terms, there is "demand for 3,600 additional bitcoin that were not previously owned @ current price."  Double your price, and you won't sell a single one of your coins. Because your coins are not unique. They're the same as the ocean of (roughly fifteen and a half million) coins which are likely to undersell you. Please tell me if this is unclear, because much of the "let's artificially limit the supply to make our Beanies more valuable" thinking is rooted in this very misunderstanding.

... One use case of Bitcoin is proof of burn, although it is not used in very large amounts nor very frequently. When compared to trading volume and total amounts in circulation, both gold and silver are very rarely consumed/destroyed, and the same is true for diamonds.

By saying that "bitcoins do not get destroyed," i meant "destroyed through normal use." As opposed to commodities like oil (which gets turned into other stuff until it's all gone, and then you have to buy more) and food (which gets turned into heat and poop until it's all gone and then you have to buy more)
Bitcoin is not like that, it doesn't get destroyed through ordinary use, it only changes hands.

This is an important difference, the difference between getting destroyed through regular use vs. not getting destroyed.  The reason being that if we stopped making food today, the world would run out of food, and food prices will skyrocket until everyone tries to feed on each other and dies.

On the other hand, if no more new bitcoins were issued (e.g. when/if the final of 21 mil are mined), we could go on using bitcoin indefinitely, as intended. No one starves to death, world doesn't end.
Again, I've forgotten how everything needs to be spelled out here, so do forgive me for failing to type all this out in my previous post. Now that I did tho, please try to understand this. Don't just try to impress me with your ace knowledge of 6th grade physics, like your "you can burn diamonds" factoid.

Other currencies like Dollars, Euros, British Pounds and Yen are also never consumed/destroyed.

Yes, you are right, money is not consumed/destroyed, excellent point.
That's why when I'm printing money by the boatload/day now, and reduce my issuance to mere truckload tomorrow, it would be grossly disingenuous of me to suggest that I'm "reducing the money supply." And, when people call bullshit, adding "well, I mean I'm reducing the supply of new money" would only make me sound like an ass grasping at straws, no?

[Quickseller]

,,,
Supply of new coins is going to go down.

Supply of new coins? Because people don't care for used ones, they only like to buy new ones?
My understanding is that bitcoins are fungible. I'm not even seeing an option to bid on fresh bitcoins, instead of those worn-out ones that are probably on their last legs and missing bits

I think I might have used a poor choice of words. Maybe I should have used "additional" instead of "new". The growth of additional supply will shrink, however the growth of demand will not.

Like I said before, right now three is demand for 3,600 additional bitcoin that were not previously owned. On a net basis, people are wanting to (and are willing to pay for) buy 3,600 additional BTC every day.

No. There is no "demand for 3,600 additional bitcoin that were not previously owned." To put it in simplest, grossest terms, there is "demand for 3,600 additional bitcoin that were not previously owned @ current price."  Double your price, and you won't sell a single one of your coins.

This is a correct statement. However we are discussing if the halving will result in an increase in price of bitcoin. I am arguing that there is some price point above the current price at which there is demand for 1,800 additional bitcoin that were not previously owned that is above the current price.

Other currencies like Dollars, Euros, British Pounds and Yen are also never consumed/destroyed.

Yes, you are right, money is not consumed/destroyed, excellent point.
That's why when I'm printing money by the boatload/day now, and reduce my issuance to mere truckload tomorrow, it would be grossly disingenuous of me to suggest that I'm "reducing the money supply." And, when people call bullshit, adding "well, I mean I'm reducing the supply of new money" would only make me sound like an ass grasping at straws, no?

Maybe it would be more accurate to say that you are "reducing the money supply growth".

When compared to other currencies, the US Dollar increased in value when QE was scaled back and when QE was stopped. Yes there were other market factors at play when this happened, however I believe that this was primarily the result of lower (additional) supply of dollars into the market.

[Wendigo]

Okay so everything boils down to supply and demand in the end I think. If the block reward is cut in half but Bitcoin will have finite amount of coins at 21 million in 2140, will this slowing down of coin release make the price go up? So if we assume that, theoretically, not everyone is selling their coins owned before the halving and holding for a couple of years to see where the price is going to end up, this means we will have fewer coins on the market so if there are 'new' buyers looking to buy Bitcoin they will create a bigger demand, no? I am not saying the coins in cold storage will not enter the market at some point but they won't be used in circulation for a while.

[Divinespark]

I saw a twwet by Vinny Lingham of Gyft fame yesterday, he reckons there will be a huge short squeeze when halving kicks in. Not so sure about that, but we will see.

[Boosterious]

I saw a twwet by Vinny Lingham of Gyft fame yesterday, he reckons there will be a huge short squeeze when halving kicks in. Not so sure about that, but we will see.

i dont know who is Vinny Lingham,and maybe not just who dont know about him and his company,i want to believe what he say,but i can't because i dont know who really he is,and yes we should wait until halving to make sure that.

[Razick]

Quote from: Quickseller on May 01, 2016, 08:47:33 PM
,,,
Supply of new coins is going to go down.
Supply of new coins? Because people don't care for used ones, they only like to buy new ones?
My understanding is that bitcoins are fungible. I'm not even seeing an option to bid on fresh bitcoins, instead of those worn-out ones that are probably on their last legs and missing bits Sad

I think the assumption is that miners sell the majority of the coins they mine. Since most existing Bitcoins are not on the market at current prices, a reduction, by one-half, of the new coins being mined could change the supply/demand dynamic.

Basically, a large amount of sellers are content to hold their coins until prices are higher. This supply (which is elastic, or price sensitive) will increase as price goes up. Mined coins, however, are inelastic (or price insensitive) because the same amount of coins are mined regardless of price. The supply of these coins can only be altered by miners changing the percent of their coins that they sell versus what they hold.



So the blue line will remain the same post halving, but the green line should be replaced by the yellow line. The aggregate of these two lines represents total supply. Total supply will drop as long as expectations don't change. The point where supply and demand meet determines the price, so a drop in supply, along with constant demand, results in an increase in price.

So in other words, the price will have to go up unless people's expectations (or their income) change on either the supply or demand side. So if we're irrationally exuberant right now, after the halving people might change their minds and the price might drop, or, they might go crazy and create a bubble.

Either way, the underlying effect of a halving does support some increase in price. We just don't know how much.

[odolvlobo]

I think the assumption is that miners sell the majority of the coins they mine. Since most existing Bitcoins are not on the market at current prices, a reduction, by one-half, of the new coins being mined could change the supply/demand dynamic.

Basically, a large amount of sellers are content to hold their coins until prices are higher. This supply (which is elastic, or price sensitive) will increase as price goes up. Mined coins, however, are inelastic (or price insensitive) because the same amount of coins are mined regardless of price. The supply of these coins can only be altered by miners changing the percent of their coins that they sell versus what they hold.

So the blue line will remain the same post halving, but the green line should be replaced by the yellow line. The aggregate of these two lines represents total supply. Total supply will drop as long as expectations don't change. The point where supply and demand meet determines the price, so a drop in supply, along with constant demand, results in an increase in price.

So in other words, the price will have to go up unless people's expectations (or their income) change on either the supply or demand side. So if we're irrationally exuberant right now, after the halving people might change their minds and the price might drop, or, they might go crazy and create a bubble.

Either way, the underlying effect of a halving does support some increase in price. We just don't know how much.

Convince me that you are not confusing (or equating) supply with production. I assume that you understand that the supply curve shifts to the right with every block.

[Razick]

I think the assumption is that miners sell the majority of the coins they mine. Since most existing Bitcoins are not on the market at current prices, a reduction, by one-half, of the new coins being mined could change the supply/demand dynamic.

Basically, a large amount of sellers are content to hold their coins until prices are higher. This supply (which is elastic, or price sensitive) will increase as price goes up. Mined coins, however, are inelastic (or price insensitive) because the same amount of coins are mined regardless of price. The supply of these coins can only be altered by miners changing the percent of their coins that they sell versus what they hold.

So the blue line will remain the same post halving, but the green line should be replaced by the yellow line. The aggregate of these two lines represents total supply. Total supply will drop as long as expectations don't change. The point where supply and demand meet determines the price, so a drop in supply, along with constant demand, results in an increase in price.

So in other words, the price will have to go up unless people's expectations (or their income) change on either the supply or demand side. So if we're irrationally exuberant right now, after the halving people might change their minds and the price might drop, or, they might go crazy and create a bubble.

Either way, the underlying effect of a halving does support some increase in price. We just don't know how much.

Convince me that you are not confusing (or equating) supply with production. I assume that you understand that the supply curve shifts to the right with every block.

Supply does not represent the total quantity in existence, but rather, the quantity that sellers in the market are willing and able to provide during a given time.

Also, note that I differentiate between the supply resulting from existing coins and the supply resulting from new coins. The supply curve resulting from the willingness to sell existing coins depends on many factors, of which number of coins in existence is only one. So while you are correct that the blue supply curve, cetaris paribus, will shift very slightly to the right each time a block is mined, but I don't think cetaris paribus is a necessarily a realistic assumption in this case and even if it does prove true, the impact is very slight.

As for the green and yellow curves, they absolutely do not shift every block. That's like saying the supply curve for baked goods shifts to the right every time Shipley's makes a donut. The supply is currently 50 coins per (approx.) 10 minutes minus whatever miners decide to hold. In several months, this curve will shift to the left by about 50%.

[BitconAssociation]

http://s32.postimg.org/5ccb3r785/market_plane_bitcoin.png

The chart, with demand falling as the price increases, may fit certain commodities that you buy *with* money, but makes no sense when applied to MONEY you buy with money.

Let's say you're buying USD with GBP. The price of USD (its buying power) gets halved, so now you can afford to buy twice as many dollars with your GBP. Does this make you want to buy USD more?

[Razick]

The chart, with demand falling as the price increases, may fit certain commodities that you buy *with* money, but makes no sense when applied to MONEY you buy with money.

Let's say you're buying USD with GBP. The price of USD (its buying power) gets halved, so now you can afford to buy twice as many dollars with your GBP. Does this make you want to buy USD more?

That is a fair point, but not exactly relevant to my argument. Let's say demand is 100% inelastic, which is not likely. In that case, the demand curve is a vertical line, but the price will still vary depending on where the supply curve intersects it:

[The Sceptical Chymist]

The fact that the miners are paid less while you need more is what make them sell their bitcoins at an higher price and thus lead to a price rise.

That's not how it works. Sellers (including miners) are free to ask for higher prices, but if buyers won't pay those prices (typically because others ask for less), then prices don't rise.

Doesn't happen that way in metal mining either.  People here have such a crappy grasp of basic economics.  And that's why the halving isn't going to do what they expect.

[BitconAssociation]

^^You misunderstood me. The supply/demand chart simply doesn't apply when you're buying money with money. The more a dollar is worth, the more you want it.
Let's say there's an imaginary coin called Bitcoin. See fig. 1 below.

http://pre05.deviantart.net/cb2d/th/pre/i/2013/076/5/7/ten_bit_coin___royal_equestrian_mint_by_tidalkraken-d5ydcl1.jpg

                                                     Fig. 1

1. Let's further say that there's a queen, we'll call her Satolestia, who is totally trustworthy and buys and sells those coins for exactly 1 US dollar. She promises to buy all the coins we have to sell, forever, and we trust her, because she's a queen and also an imaginary one, the kind that doesn't lie.
If we're bored enough, we'd buy and sell those coins from/to Satolestia day in and day out.  Pretty pointless, but hey...

2. ...until Satolestia changes the terms: she starts charging a penny more, but still pays a dollar when we sell her a coin.
Wat do?
Obviously, the dumb thing to do would be to keep buying, and losing a penny a coin. But we're in it for PROFIT, so we stop buying altogether. Not just some of us, not slow down our buying, but both of us. Stop buying. Because buying shit for $1.01 and selling it for a penny less is an excellent way to go broke.
Which we don't wanna do.

3. Conversely, if Satolestia starts charging us 99 cents per coin, while still paying a dollar, we'd be on that shit like white on rice -- we'd go into a frenzy, buying a coin and selling it right back to Satolestia at a profit, rinse, repeat, until we're satiated.

You see where I'm going with this?
It doesn't matter to us how many dollars or how many Bit coins there are, the only thing we need is the price, and knowing what someone will pay for our coin. This is an imaginary thing, we know exactly what Satolestia will pay (because she told us & does not lie), so the problem is trivial: If Bitcoin price is < a dollar, buy; If => dollar, don't.

The fun part -- and what makes purely speculative assets fun, is that there is no Satolestia. We have to guess what people will be willing to pay. We might convince them that our Bit coins are worth more than a dollar because there's a limited number, but you and I know that's just a pitch, a nice backstory, a coldblooded thing to say to a motherfucker before you put a cap in his ass.

Other than "too many words," do you see what I'm saying?

[Razick]

^^You misunderstood me. The supply/demand chart simply doesn't apply when you're buying money with money. The more a dollar is worth, the more you want it.
Let's say there's an imaginary coin called Bitcoin. See fig. 1 below.



                                                     Fig. 1

1. Let's further say that there's a queen, we'll call her Satolestia, who is totally trustworthy and buys and sells those coins for exactly 1 US dollar. She promises to buy all the coins we have to sell, forever, and we trust her, because she's a queen and also an imaginary one, the kind that doesn't lie.
If we're bored enough, we'd buy and sell those coins from/to Satolestia day in and day out.  Pretty pointless, but hey...

2. ...until Satolestia changes the terms: she starts charging a penny more, but still pays a dollar when we sell her a coin.
Wat do?
Obviously, the dumb thing to do would be to keep buying, and losing a penny a coin. But we're in it for PROFIT, so we stop buying altogether. Not just some of us, not slow down our buying, but both of us. Stop buying. Because buying shit for $1.01 and selling it for a penny less is an excellent way to go broke.
Which we don't wanna do.

3. Conversely, if Satolestia starts charging us 99 cents per coin, while still paying a dollar, we'd be on that shit like white on rice -- we'd go into a frenzy, buying a coin and selling it right back to Satolestia at a profit, rinse, repeat, until we're satiated.

You see where I'm going with this?
It doesn't matter to us how many dollars or how many Bit coins there are, the only thing we need is the price, and knowing what someone will pay for our coin. This is an imaginary thing, we know exactly what Satolestia will pay (because she told us & does not lie), so the problem is trivial: If Bitcoin price is < a dollar, buy; If => dollar, don't.

The fun part -- and what makes purely speculative assets fun, is that there is no Satolestia. We have to guess what people will be willing to pay. We might convince them that our Bit coins are worth more than a dollar because there's a limited number, but you and I know that's just a pitch, a nice backstory, a coldblooded thing to say to a motherfucker before you put a cap in his ass.

Other than "too many words," do you see what I'm saying?

I agree with you in principle *general,* but there is still a supply and demand curve. Here's why:

We have to guess what people will be willing to pay.

BUT, we are aware that our guesses are not perfect. So consider my portfolio: I am a young college student and therefore have a small income and few assets. I do like to invest though, especially since, at my age, I have a huge potential to benefit from compounding by the time I retire.

Now, Bitcoin has the highest possible upside of ANYTHING I invest in. My stocks may return as much as 100% in a really good year, but there is a chance that Bitcoin could return as much as 2,000% if it has a really good year. My bonds, savings account, and p2p lending investments don't even come close.

Let's assume that I'm a rational person. What should I do? Well, I could invest everything in Bitcoin because it has the highest potential return, but that would be risky. Let's say I believe there is a 10% chance of a really spectacular return, a 50% chance of a good return, a 35% chance of losses, and a 5% chance Bitcoin becomes worthless. It has positive expected value but also high risk.

So, I should invest SOME but not all of my portfolio in Bitcoin, which is what I have done. So let's say I want to invest 10% of my portfolio in Bitcoin and I have $10,000 to invest (just making up numbers here).

I'd invest $1,000 regardless of price.

I'd invest the following:

   1,000 BTC if they cost $1.
   100 BTC if they cost $10.
   10 BTC if they cost $100.
   1 BTC if they cost $1000.

Meaning this is my demand curve:



Now of course this is just my personal demand curve, and it also changes based on my personal expectations of future returns. That said, there will still be some kind of curve for every participant in the market. For some people it will be vertical, for some people it might be highly elastic, but there will be a curve for the market.

Also, remember the willing and able part. I might think that Bitcoin is an excellent value at $100 per coin and be willing to buy nearly infinite BTC. However, If I only have $1,000, I can buy only 10 BTC. At $10 per coin, I can buy 100. Once again, that creates a downward sloping demand curve.

On the supply side, I suspect there is an explanation of why there would be a curve (for example, the opportunity cost of holding Bitcoin: USD is more widely accepted. At higher prices, you get more goods per Bitcoin by selling) but the point of my diagram was not to provide an exact picture of the market. Let's assume you are correct and there is no supply curve but rather a supply "point" (or vertical line).

[NB: Once again, the assumption is that not all owners of Bitcoin are willing to sell at the current price (I think exchange volumes prove this (and also suggest the existence of a supply curve) and that miners sell most of what they mine.]

The point moves around unpredictably based on all the different factors that control whether or not participants in the market (on aggregate) are inclined to buy, sell or hold at a given price. One factor though, block reward, is KNOWN to be positively correlated with supply. So a decrease in the block reward will, as one of many factors, tend to reduce supply.



So cetaris paribus, the block halving reduces supply. Reduced supply with results in higher prices as long as the demand curve does not change. The demand curve could change, but probably not as a result of the halving.

I'm not trying to argue that we *will* see a spike in price, rather, that the effect of a block reward halving is one of many factors that could contribute to higher prices. It's possible that expectations have overbid prices now and that, as a result, they'll actually fall. But, over the long term, prices should average higher with a reward of 25 than they would have with a block reward of 50.

[Razick]

Okay so everything boils down to supply and demand in the end I think. If the block reward is cut in half but Bitcoin will have finite amount of coins at 21 million in 2140, will this slowing down of coin release make the price go up? So if we assume that, theoretically, not everyone is selling their coins owned before the halving and holding for a couple of years to see where the price is going to end up, this means we will have fewer coins on the market so if there are 'new' buyers looking to buy Bitcoin they will create a bigger demand, no? I am not saying the coins in cold storage will not enter the market at some point but they won't be used in circulation for a while.

Sums it up nicely.

[enhu]

Will bitcoins ever sell for $1,000 USD or more again? Possibly, but it's not likely to happen as a reaction to halving. The supply of bitcoins in circulation is not changing, and if miners jump ship that is a strike against bitcoins not something that would warrant a price increase.

The only thing that halving the reward to btc miners will do is make mining half as appealing. In fact, if you think about it, it's not a very good system because the more people using bitcoin, the more you need miners...but the miners get paid less and less as time progresses.

At the very least, as compensation from mining decreases, a minimum network transaction fee should be imposed and it should increase proportionally to difficulty to ensure that all miners receive a predictable and steady flow of bitcoins for the resources they provide.

The bigger mining companies will stay  as they may be the only who can survive and they're not that few though. Still there will be miners.
The Chinese will dominate the industry in the end but they the coin will still circulate with more demands as we're all be using it. but thats just going to remain theory still.

The reality is that we're all be using bitcoin because it necessary if you gamble or pay anonymously an d this is going to dictate its value. It may go up or down but it will still continue to grow.

[DataSecurityNode]

Okay so everything boils down to supply and demand in the end I think. If the block reward is cut in half but Bitcoin will have finite amount of coins at 21 million in 2140, will this slowing down of coin release make the price go up? So if we assume that, theoretically, not everyone is selling their coins owned before the halving and holding for a couple of years to see where the price is going to end up, this means we will have fewer coins on the market so if there are 'new' buyers looking to buy Bitcoin they will create a bigger demand, no? I am not saying the coins in cold storage will not enter the market at some point but they won't be used in circulation for a while.

Sums it up nicely.

Agreed. So I guess we want to see more demand.

[AlexGR]

'Halving Bitcoin Reward Unlikely to Cause Price Surge'

I don't know about a surge but here is the fact:

1. Price is stable at around 440 +/-20$.

2. Price being stable means that the 3600 coins generated per day are met by the market demanding them (either miners wanting to hold them, or buyers buying them), otherwise the price would be sliding down.

3. 3600 coins x 440 = 1.6mn usd per day in inflation that is met by the market

4. Post halving that's 800k usd and another 800k usd will be in excess and uncovered demand.

5. So we have an excess 800k demand that will, by necessity, be unmet as production has slowed down. The only way for the market to acquire an extra 800k usd of coins per day is to take them from old holders. But they aren't selling at these prices otherwise there would be no price equilibrium at our current state of +3600 coins per day. So why would they sell when there are only +1800 coins per day? Thus, price has to rise in order for the old holder to be lured into selling. Or a crisis can be manufactured to increase selling and attain the same effect.

[mki8]

The fact that the miners are paid less while you need more is what make them sell their bitcoins at an higher price and thus lead to a price rise.

they don't need more they are currently earning 4 times their consumption, they are safe at the current price even afte the halving

where did you get this info ?
do you have a reference ?

a documentory (cant remember details off top of my head) showed an interview with one of the top miners, and american that moved his mining to china, he stated he knew other (farm) miners in china and that were losing money when the price was at $250

so how do you figure they are earning 4 times their consumption ?
even with price where it is today

miners will need the price increase,
it wont happen at the halving, it seems like everyone is expecting a massive jump in a single day
which although you may see a bubble (or a few) burst around that time due to speculative trading
price will continue to rise for the months after the halving, similar to the last halving

[pooya87]

actually halving bitcoin reward is the most likely even that can cause the price surge, and the reason is so simple, it is all about the hype.
the normal rise because of more adoption and normal things like more demand is there and you can't deny that the price has been rising and will continue this way on a slow rate.
but if you are looking for a surge then you need hype and what else is better to create a hype than halving. it has already been hyped a lot for the past six months and will continue this way.

[BitconAssociation]

...
I'm not trying to argue that we *will* see a spike in price, rather, that the effect of a block reward halving is one of many factors that could contribute to higher prices. It's possible that expectations have overbid prices now and that, as a result, they'll actually fall. But, over the long term, prices should average higher with a reward of 25 than they would have with a block reward of 50.

Since we're clearly not getting anywhere, how about some data to ponder? Here's Litecoin halvening, I think Aug. 26 is when it happened.

http://s32.postimg.org/xtvi2yzs5/Capture.png

Would you be able to point to Teh Halvening on the chart if not for the helpful vertical line?
Why did the price not go up, as the halvening faithful predicted?

Let's give analogies one more chance, let's imagine again.
The Princess (from our last game) issued a decree: "On Jan. 1, 2017, Princess Satolestia will buy all your Bit coins @ $10k/BTC."

Taking into account that you are the cunning and rational trader I know you to be, wat do?
Do you wait until Jan. 1, or do you start buying now?
If you chose to wait until Jan 1, why? If not, why?

While we have to imagine that Princess never lies, we can be 100% sure that Teh Halvening will happen, because algorithmically determined and maths. It's been announced back in 2009, and will surprise no one who cares

[Blinken]

This post makes absolutely no sense whatever. Take some intelligence pills or something. Maybe read "The Wealth of Nations"? I don't know. At this point, until further action, I would advise against doing anything that would involve suggestions originating in your mind. I recommend latching on to someone with proven skills as a logical thinker and then slavishly following them around and doing whatever they say. That might be a success path for you.

[--Encrypted--]

...
I'm not trying to argue that we *will* see a spike in price, rather, that the effect of a block reward halving is one of many factors that could contribute to higher prices. It's possible that expectations have overbid prices now and that, as a result, they'll actually fall. But, over the long term, prices should average higher with a reward of 25 than they would have with a block reward of 50.

Since we're clearly not getting anywhere, how about some data to ponder? Here's Litecoin halvening, I think Aug. 26 is when it happened.

you're comparing bitcoin with litecoin... how many people actually buy litecoin to use them and not just for trading?

[streazight]

Okay so everything boils down to supply and demand in the end I think. If the block reward is cut in half but Bitcoin will have finite amount of coins at 21 million in 2140, will this slowing down of coin release make the price go up? So if we assume that, theoretically, not everyone is selling their coins owned before the halving and holding for a couple of years to see where the price is going to end up, this means we will have fewer coins on the market so if there are 'new' buyers looking to buy Bitcoin they will create a bigger demand, no? I am not saying the coins in cold storage will not enter the market at some point but they won't be used in circulation for a while.

Right now there are sufficient buyers in the market so that the price will  stay the same 

[BitconAssociation]

...
I'm not trying to argue that we *will* see a spike in price, rather, that the effect of a block reward halving is one of many factors that could contribute to higher prices. It's possible that expectations have overbid prices now and that, as a result, they'll actually fall. But, over the long term, prices should average higher with a reward of 25 than they would have with a block reward of 50.

Since we're clearly not getting anywhere, how about some data to ponder? Here's Litecoin halvening, I think Aug. 26 is when it happened.

http://s32.postimg.org/xtvi2yzs5/Capture.png

Would you be able to point to Teh Halvening on the chart if not for the helpful vertical line?
Why did the price not go up, as the halvening faithful predicted?

Let's give analogies one more chance, let's imagine again.
The Princess (from our last game) issued a decree: "On Jan. 1, 2017, Princess Satolestia will buy all your Bit coins @ $10k/BTC."

Taking into account that you are the cunning and rational trader I know you to be, wat do?
Do you wait until Jan. 1, or do you start buying now?
If you chose to wait until Jan 1, why? If not, why?

While we have to imagine that Princess never lies, we can be 100% sure that Teh Halvening will happen, because algorithmically determined and maths. It's been announced back in 2009, and will surprise no one who cares

Bawww!

^Sorry ur platinum mad, bro, didn't mean to pop ur bubble.
Just go back 2 wat u waz doin' pl0x

http://opioids.com/images/opiumsmoker.jpg

@--Encrypted--: how many people actually use BTC "not just for trading"? How is LTC fundamentally different from BTC?
P.S. Feel free to play my game above, see boldface

[--Encrypted--]

@--Encrypted--: how many people actually use BTC "not just for trading"? How is LTC fundamentally different from BTC?
P.S. Feel free to play my game above, see boldface

LTC have much less adoption than BTC so once it gets a bit of a spike, people are likely to sell all their coins to secure profit. same with BTC but because it have more adoption more people will buy bitcoins, and when the price spiked there's not always the need to sell to secure profit because you can buy things with it anyway.

just my 2 sats.

[Razick]

...
I'm not trying to argue that we *will* see a spike in price, rather, that the effect of a block reward halving is one of many factors that could contribute to higher prices. It's possible that expectations have overbid prices now and that, as a result, they'll actually fall. But, over the long term, prices should average higher with a reward of 25 than they would have with a block reward of 50.

Since we're clearly not getting anywhere, how about some data to ponder? Here's Litecoin halvening, I think Aug. 26 is when it happened.



Would you be able to point to Teh Halvening on the chart if not for the helpful vertical line?
Why did the price not go up, as the halvening faithful predicted?

Let's give analogies one more chance, let's imagine again.
The Princess (from our last game) issued a decree: "On Jan. 1, 2017, Princess Satolestia will buy all your Bit coins @ $10k/BTC."

Taking into account that you are the cunning and rational trader I know you to be, wat do?
Do you wait until Jan. 1, or do you start buying now?
If you chose to wait until Jan 1, why? If not, why?

While we have to imagine that Princess never lies, we can be 100% sure that Teh Halvening will happen, because algorithmically determined and maths. It's been announced back in 2009, and will surprise no one who cares

Yeah, I agree, that particular piece of evidence does not support the "price surge" that is the topic of this thread. That said...

But, over the long term, prices should average higher with a reward of 25 than they would have with a block reward of 50.

And look what happened when the dust settled:



Nothing to get exited about, but I would argue that the equilibrium shifted slightly higher.

As for your scenario, I believe you are suggesting that the halving is already priced in. I think you are right for the most part, but it may be only partly (mostly?) priced in due to the time value of money and the risk of holding Bitcoin to that point.

I'm not really sure what the disagreement is since we both have modest expectations about the halving. I may be slightly more bullish than you, but I think in general we are on the same page.

[maokoto]

I agree with the view of original poster, but miners may decide to stay in and sell their bitcoins much higher too.