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Author Topic: Bitcoin halving, does it have to be like this?  (Read 1891 times)
fluidjax
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November 27, 2013, 02:48:06 PM
 #1

Every 4 years the Bitcoin reward halves, this creates a significant event in the mining community where people's operation suddenly becoming unprofitable, this may cause some unpredictability and instability in the bitcoin ecosystem.

Why isn't this reward smoothed so it is a function of the block number, no major jumps, just a slow decrease in the bitcoins mined each block?
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November 27, 2013, 02:50:46 PM
 #2

Every 4 years the Bitcoin reward halves, this creates a significant event in the mining community where people's operation suddenly becoming unprofitable, this may cause some unpredictability and instability in the bitcoin ecosystem.

Why isn't this reward smoothed so it is a function of the block number, no major jumps, just a slow decrease in the bitcoins mined each block?


Every difficulty jump is your "smoothing" basically. But you make an interesting point.

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November 27, 2013, 02:51:14 PM
 #3

Not a bad idea, but it also makes it harder to time when to enter mining.  If it just steadily went down, would make it a lot harder to decide when it would be a good time to buy a rig.  The way it is now, mining hardware prices decrease right after the block reward goes down.  That's the only reason I can really think of why it wouldn't be a good idea..  Then again, with the way difficulty is right now, the block reward is almost a moot point

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November 27, 2013, 02:55:50 PM
 #4

Every 4 years the Bitcoin reward halves, this creates a significant event in the mining community where people's operation suddenly becoming unprofitable, this may cause some unpredictability and instability in the bitcoin ecosystem.

Why isn't this reward smoothed so it is a function of the block number, no major jumps, just a slow decrease in the bitcoins mined each block?

predictable events like that will be correctly priced by the market.

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November 27, 2013, 03:28:30 PM
 #5

agree with Jutarul.

as the miners know it's going to happen they can make an economic calculation before they invest.

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November 27, 2013, 03:31:36 PM
 #6

Every 4 years the Bitcoin reward halves, this creates a significant event in the mining community where people's operation suddenly becoming unprofitable, this may cause some unpredictability and instability in the bitcoin ecosystem.

Why isn't this reward smoothed so it is a function of the block number, no major jumps, just a slow decrease in the bitcoins mined each block?

predictable events like that will be correctly priced by the market.

+1

I didn't believe it either and thought it was harsh until I experienced the first one. The next one is less of an issue due to experience. 

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November 27, 2013, 03:33:44 PM
 #7

Economics 101.. if there is less supply, the price goes up.  So eventually the price just adjusts itself (read: doubles)
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November 27, 2013, 03:49:29 PM
 #8

Every 4 years the Bitcoin reward halves, this creates a significant event in the mining community where people's operation suddenly becoming unprofitable, this may cause some unpredictability and instability in the bitcoin ecosystem.

Why isn't this reward smoothed so it is a function of the block number, no major jumps, just a slow decrease in the bitcoins mined each block?


Every miner knows about this halving and calculates with it. It is not that it suddendly halves and the miner just bought expensive hardware and is now surprised. It ist different with the difficulty. I don't know how high it will be in 3 years. How high the block reward will be, I know. But not, how high in dollars.

There is no need for change!

"Morality, it could be argued, represents the way that people would like the world to work - whereas economics represents how it actually does work." Freakonomics
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November 27, 2013, 05:25:25 PM
 #9

Just wondering, when is the next halving going to be?
fluidjax
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November 27, 2013, 05:33:31 PM
 #10

Yes, you guys are right, its priced into an efficient market, and its anticipated by the miners.
But I can't see a positive reason for it being like this, but the negative implications of it, can probably be dealt with.

There is no compelling reason to change, but if we could do it all again, perhaps it would be a better way.



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November 27, 2013, 05:36:19 PM
 #11

Just wondering, when is the next halving going to be?

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November 27, 2013, 05:43:10 PM
 #12

If we start changing the rules , one thing could lead to another.
Bitcoin is a success based on how it is designed and the protocol rules.
If we change the rewards or the timing , the next step will be chaos.

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November 27, 2013, 07:20:23 PM
 #13

Every 4 years the Bitcoin reward halves, this creates a significant event in the mining community where people's operation suddenly becoming unprofitable, this may cause some unpredictability and instability in the bitcoin ecosystem.

Why isn't this reward smoothed so it is a function of the block number, no major jumps, just a slow decrease in the bitcoins mined each block?

predictable events like that will be correctly priced by the market.
This always happens in the altcoin market and they've stayed profitable.


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November 27, 2013, 09:51:52 PM
 #14

predictable events like that will be correctly priced by the market.

Easy answer, but just how will the market price it in?  Will it ubruptly increase the price of a Bitcoin to allow the miners margins to persist, or will they have to increase fees to cover?  At the rate things are going mining will probably rely on fees to cover costs anyway.
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November 28, 2013, 12:05:17 AM
 #15

But could somebody change the rules? Is it even possible??


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November 28, 2013, 12:10:10 AM
 #16

But could somebody change the rules? Is it even possible??
Miners can adopt any changes they want.  However if not all miners agree then welcome to hard fork.
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November 28, 2013, 12:10:27 AM
 #17

But could somebody change the rules? Is it even possible??
Yes it is possible, but the majority of investors/consumers would probably lose their trust in BTC.


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November 28, 2013, 03:26:48 AM
 #18

Economics 101.. if there is less supply, the price goes up.  So eventually the price just adjusts itself (read: doubles)
Ah theoretically that's what happens. The last time the blockchain reward got halved, the price didn't exactly double.

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November 28, 2013, 04:17:45 AM
 #19

predictable events like that will be correctly priced by the market.

Easy answer, but just how will the market price it in?  Will it ubruptly increase the price of a Bitcoin to allow the miners margins to persist, or will they have to increase fees to cover?  At the rate things are going mining will probably rely on fees to cover costs anyway.
In the time before the drop inefficient mining equipment will change hands and be relocated to areas with low or no power costs. This will be a rather smooth transition, since people have different ideas on when the optimal time for liquidation is.

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November 28, 2013, 08:18:53 PM
 #20

I wonder what the price will be by then.


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