What's the point of reducing block rewards over time?

[duazo]

Just a quick question. Why do most altcoins (and Bitcoin) have block rewards that reduce over time?

Block reward halving surely has the same effect on mining as the difficulty doubling? The same number of coins would be produced for a given hashrate, and the same number of coins would be introduced into the supply.

Am I misunderstanding something? Thanks.

[Cloudpost]

This thing support dev and early miners\supporters in case of good and successfull coin.
Also when coin is listed on cryptsy and when it gets focused by multipool mine & dump strategy it will help to keep coin value. Just my opinion

[Thrillho]

I always assumed it was anticipation of technological development. It becomes much easier to mine over time due to computing power increasing, hence the payout decreasing, attempting "fairness" in the long haul.

[iGotSpots]

Wow, talk about missing the fundamentals of Bitcoin entirely

[duazo]

I always assumed it was anticipation of technological development. It becomes much easier to mine over time due to computing power increasing, hence the payout decreasing, attempting "fairness" in the long haul.

Doesn't increasing difficulty do the same though?

[MicroGuy]

I always assumed it was anticipation of technological development. It becomes much easier to mine over time due to computing power increasing, hence the payout decreasing, attempting "fairness" in the long haul.

Doesn't increasing difficulty do the same though?

The code adjusts difficulty to offset coin output based on network hashrate.

So coin output is a relative constant (steady) and not determined by changing hashrate or difficulty as you believe.

[DeathAndTaxes]

A key component of Bitcoin is a fixed money supply.  You can't do that if you issue new coins forever.  Now you could keep the block reward at 50 BTC and just go 50 BTC to zero like a car hitting a brick wall at 100 mph and hope the network can handle it.  The subsidy halving gives the Bitcoin "economy" time to adapt to being supported by transaction fees.

In theory you "could" have a crypto currency without a fixed money supply.  You couldn't say things like no more than 21M coins will ever be created but on a long enough timeline the difference between <1% annual money supply growth and <1% annual money supply reduction is minimal.  Of course changing the rule after the fact would be unethical.

[ecliptic]

The actual reason is to make money of course, everything anyone else says is lies, FUD and disinfo

quark took this to the extreme and it made them millions in less than half a year.

doge went for this + meme but they made the block halving longer but still short.  because it takes ~2.5 minutes they keep getting hit by multipools

reward halving guarantees you can mine early and have something vastly more scarce to mine later, meaning if people want it, they have to buy it (from you)

[MicroGuy]

The actual reason is to make money of course, everything anyone else says is lies, FUD and disinfo

quark took this to the extreme and it made them millions in less than half a year.

The actual reason is to create diminishing production which results in a finite supply.

[ecliptic]

The actual reason is to make money of course, everything anyone else says is lies, FUD and disinfo

quark took this to the extreme and it made them millions in less than half a year.

The actual reason is to create a finite supply.

the reason they choke off supply is to raise price for a given demand

of course this greed has gone to the extreme with premine/PoS coins like NXT where they use a block reward that halves every 0 seconds

[Nullu]

Just a quick question. Why do most altcoins (and Bitcoin) have block rewards that reduce over time?

Block reward halving surely has the same effect on mining as the difficulty doubling? The same number of coins would be produced for a given hashrate, and the same number of coins would be introduced into the supply.

Am I misunderstanding something? Thanks.

Block rewards halving is entirely different from difficulty. Difficulty is determined by the coin and the coin miners, block halving is determined entirely by the coin. It's to do with controlling inflation, which is a major problem in fiat currency. The miners can't control the inflation. That wouldn't make any sense.

bitcoinmagazine.com/2842/block-reward-halving-a-guide/

[baritus]

As the currency gets older, it should gain value. Every so often, a lower reward is required to keep supporting the same security. So this lowers the inflation rate on holders since the extra inflation doesn't contribute to extra security.

[duazo]

The code adjusts difficulty to offset coin output based on network hashrate.

So coin output is a relative constant (steady) and not determined by changing hashrate or difficulty as you believe.

Thanks for the reply!

[duazo]

Block rewards halving is entirely different from difficulty. Difficulty is determined by the coin and the coin miners, block halving is determined entirely by the coin. It's to do with controlling inflation, which is a major problem in fiat currency. The miners can't control the inflation. That wouldn't make any sense.

bitcoinmagazine.com/2842/block-reward-halving-a-guide/

Gotcha. Thanks for the reply and link.