Why does the mining reward halve periodically, rather than decreasing smoothly?

[jfhoff]

Is there a reason why the reward for mining, currently 25 coins per 10 minutes, halves every 4 years, instead of decreasing smoothly?

Every   ((4 years) * (365.25 days/year) * (24 hours/day) * (6 payouts/hour)) = (210,384 payouts), the payout halves. Instead, the payout could be reduced by a factor of (the 1/210384th root of 1/2) = 0.99999670532911859551036168842216 every 10 minutes.

In this way, there would not be a huge jolt to the mining system every four years. Granted, the system survived its first jolt, but why have such a stress in the first place?

[shibaji]

Easier to code.

[jfhoff]

Once you have the number, it's pretty easy to code.

[shibaji]

Not really :-) think about it harder.

[jfhoff]

Alternatively, the payout could be reduced by a factor of (the 1/48th root of 1/2) = 0.98566319864018757466759415575871 once a month. Anything would make it smoother.

[phk]

Why reduce the reward at all?

[NO2squik]

^It makes them more rare. It raises the value of the BTC that already exist. If there were no rarity to Bitcoins, and we just kept "printing money," bitcoins would be like the US Dollar. They have to become harder to get, so their value goes up. People see that as a potential investment, and buy bitcoins.

[ymer]

^It makes them more rare. It raises the value of the BTC that already exist. If there were no rarity to Bitcoins, and we just kept "printing money," bitcoins would be like the US Dollar. They have to become harder to get, so their value goes up. People see that as a potential investment, and buy bitcoins.

Yea pretty much this

[phk]

^It makes them more rare. It raises the value of the BTC that already exist. If there were no rarity to Bitcoins, and we just kept "printing money," bitcoins would be like the US Dollar. They have to become harder to get, so their value goes up. People see that as a potential investment, and buy bitcoins.

In practice, I don't think halving the reward does anything to the value of the BTC that already exist.  The only thing that halving the reward does is compensate the miner less for his (increasing) amount of work he has done.

I think the "value" of the BTC is controlled only by the human beings who hold those BTC, and those who don't hold them but would like to.  Supply and demand.

Maybe this issue is addressed when the blocks come with "fees" in addition to the "reward", but nobody is really talking about that yet.

[turtlepower]

Can't the difficulty of the challenge be decreased to make it easier to mine blocks?  Thus the reward is less but you get the reward more often?