BIP: CREATE STABLE PRICE RISE (+FASTER ADOPTION) BY SMOOTHING THE 4-YEAR HALVING

[cotrader_com]

Bitcoin's 4-year block-reward halving schedule arguably hurts stability - an important feature of good money.

The halving of the inflation rate drives prices up strongly, causing a fomo wave, but when the hash rate catches up, prices fall back down in a destructive crash.

Why not use a 0.0000033% per-block reduction of the block-reward (to achieve the same halving in 4 years, but smoothly)?

This per-block reduction can be implemented to begin 2 years after the 2020 halving, in 2022.

This way, miners don't lose anything. Many miners have been put out of business by the wild price fluctuations, so this might be a welcomed change.

This should support a smoother price increase curve, and therefore also help bring new users, who are now unsure when to enter the market and when to hold, as well as prevent the industry-wide destructive crashing waves of huge price falls.

If there was a constant upwards motion, and not big spike, then 3 years down, then adoption demand should be high and constant over the entire 4 years.

Bottom line, do you think it would be an improvement, if it could be done smoothly in 2022?

https://twitter.com/cotrader_com/status/1066861393528463360

[1714016593]

1714016593

[pooya87]

coinbase halving

it is called block reward halving since it is the "reward" that halves.
coinbase is a transaction, you can't halve a transaction!

Why not have a 0.0000033% per-block coinbase reduction (to achieve the same halving in 4 years, but smoothly)?
Wouldn't it be better in that it'd support stable price/rise?

because price isn't volatile because of halving to become stable if we change it!

[cotrader_com]

How do you know that the sudden halving of the block-rewards doesn't affect additional volatility?

Basic economics principles of supply and demand suggests that a sudden halving of the supply inflation rate would cause prices to rise, causing a fomo wave, leading to a boom/bust cycle.

Indeed, the price history chart is not inconsistent with this explanations (although the sample size is small).

(Thanks. Yes, I meant the block-reward halvings.)

coinbase halving

it is called block reward halving since it is the "reward" that halves.
coinbase is a transaction, you can't halve a transaction!

Why not have a 0.0000033% per-block coinbase reduction (to achieve the same halving in 4 years, but smoothly)?
Wouldn't it be better in that it'd support stable price/rise?

because price isn't volatile because of halving to become stable if we change it!

[pooya87]

How do you know that the sudden halving of the block-rewards doesn't affect additional volatility?

it does affect the volatility but it is not the only reason and it definitely is not the biggest reason. in other words even if distribution of supply had another model the price would have still been moving in the same roller-coaster manner.

for example price didn't go up to the moon in 2017 because the reward was halved a year ago! it went up because some big countries like Japan adopted bitcoin as a currency and many other countries started having similar friendly regulations towards bitcoin. additionally we finally had a scaling solution for bitcoin be implemented. and like always because the media was talking about bitcoin nonstop! that was a process to speed up the demand and that caused the spike which would have happened even if reward was different.

[flying_bit]

Dear Satoshi, did you want an unstable coin, or why the harsh 4-year halvings?

Bitcoin's 4-year coinbase halving schedule arguably exacerbates wild price fluctuations, instead of a steady rise.

Why not have a 0.0000033% per-block reduction of the block-reward (to achieve the same halving in 4 years, but smoothly)?

Wouldn't it be better in that it'd support stable price/rise?

This would help grow new userbase, now scared to hold, and prevent the generally destructive crashing waves of huge price falls.

first of all, bitcoin halving will due to happen on 2020. Halving is happening due to the fact that there's  only limited bitcoin supply of 21 000 000 (which we all know) and with halving happening there will be more difficulties in mining and because of this difficulties bitcoin value will suppose to rise which ofcourse due to scarcity like gold. And yes, that's how satoshi nakamoto wants to happen. If you look at bitcoin roadmap we're still in early stage of bitcoin development.
So if I we're you, bag some while it's cheap coz when halvening happens on 2020 price will surely skyrocket.

[mk4]

Regardless of how the mining scarcity is implemented, that really won't do much right now when talking about the volatility. Bitcoin is volatile simply because it's being widely used as a speculative investment, and not really as a store of value. A good percentage of all the bitcoin holders bought bitcoin for the sole reason of making profit, and nothing else; hence we have these huge hype cycles. Bitcoin could already be at 21-million mined BTC right now and bitcoin would still be very volatile.

I think your "solution" to reduce price volatility and increase price would only work if we assume that everyone simply just holds; which is definitely not the case.

Bitcoin's 4-year coinbase halving schedule arguably exacerbates wild price fluctuations, instead of a steady rise.

? ?

[cotrader_com]

There is often great news that doesn't drive bitcoin prices up. We can't know the exact effects as we can't repeat the experiment.

However, basic economics and monetary theory, and numerous historical examples, both even discussed in the book "The Bitcoin Standard" itself, explain that the Stock vs Flow of a currency defines its hardness.

Suddenly halving this ratio (or inflation rate), instead of smoothly doing so, seems like an notably sub-optimal configuration that negatively affects an important property of good money - stability.

How do you know that the sudden halving of the block-rewards doesn't affect additional volatility?

it does affect the volatility but it is not the only reason and it definitely is not the biggest reason. in other words even if distribution of supply had another model the price would have still been moving in the same roller-coaster manner.

for example price didn't go up to the moon in 2017 because the reward was halved a year ago! it went up because some big countries like Japan adopted bitcoin as a currency and many other countries started having similar friendly regulations towards bitcoin. additionally we finally had a scaling solution for bitcoin be implemented. and like always because the media was talking about bitcoin nonstop! that was a process to speed up the demand and that caused the spike which would have happened even if reward was different.

[cotrader_com]

I wasn't arguing against the reduction in the block-reward, but rather against the harsh and sudden 4-year schedule instead of a smooth per-block micro reduction that would achieve the same thing, without harming price stability - a desirably quality of good money.

Dear Satoshi, did you want an unstable coin, or why the harsh 4-year halvings?

Bitcoin's 4-year block-reward halving schedule arguably exacerbates wild price fluctuations, instead of a steady rise.

Why not have a 0.0000033% per-block reduction of the block-reward (to achieve the same halving in 4 years, but smoothly)?

Wouldn't it be better in that it'd support stable price/rise?

This would help grow new userbase, now scared to hold, and prevent the generally destructive crashing waves of huge price falls.

first of all, bitcoin halving will due to happen on 2020. Halving is happening due to the fact that there's  only limited bitcoin supply of 21 000 000 (which we all know) and with halving happening there will be more difficulties in mining and because of this difficulties bitcoin value will suppose to rise which ofcourse due to scarcity like gold. And yes, that's how satoshi nakamoto wants to happen. If you look at bitcoin roadmap we're still in early stage of bitcoin development.
So if I we're you, bag some while it's cheap coz when halvening happens on 2020 price will surely skyrocket.

[cotrader_com]

Well, you claim that, but that's not what basic economic and monetary theory would predict (as we've seen in fact happen) about suddenly halving the supply, inflation rate, even in the book "The Bitcoin Standard" itself.

Regardless of how the mining scarcity is implemented, that really won't do much right now when talking about the volatility. Bitcoin is volatile simply because it's being widely used as a speculative investment, and not really as a store of value. A good percentage of all the bitcoin holders bought bitcoin for the sole reason of making profit, and nothing else; hence we have these huge hype cycles. Bitcoin could already be at 21-million mined BTC right now and bitcoin would still be very volatile.

I think your "solution" to reduce price volatility and increase price would only work if we assume that everyone simply just holds; which is definitely not the case.

Bitcoin's 4-year [edit: block-reward] halving schedule arguably exacerbates wild price fluctuations, instead of a steady rise.

? ?

[cotrader_com]

Regardless of how the mining scarcity is implemented, that really won't do much right now when talking about the volatility. Bitcoin is volatile simply because it's being widely used as a speculative investment, and not really as a store of value. A good percentage of all the bitcoin holders bought bitcoin for the sole reason of making profit, and nothing else; hence we have these huge hype cycles. Bitcoin could already be at 21-million mined BTC right now and bitcoin would still be very volatile.

I think your "solution" to reduce price volatility and increase price would only work if we assume that everyone simply just holds; which is definitely not the case.

Bitcoin's 4-year block-reward halving schedule arguably exacerbates wild price fluctuations, instead of a steady rise.

? ?

[BitcoinPanther]

I wasn't arguing against the reduction in the block-reward, but rather against the harsh and sudden 4-year schedule instead of a smooth per-block micro reduction that would achieve the same thing, without harming price stability - a desirably quality of good money.

Well the fact that Satoshi base the supply to how the gold is mined state it.  Satoshi wanted to established an ever inclining currency I guess.  Probably with the four year period, Satoshi wants a seasonal spike in price so that holders will get rewarded handsomely and there is a window for the new comer when price spiked and dumped.  

[Kakmakr]

The impact of the halving is really small and the counter argument is that it is making a permanent change to the rarity of the coins, not like the federal reserve that can print more or less fiat money when they want to. So you have a fixed schedule to plan for and you also know the frequency when it is going to happen. <I would rather take the halving, than having to deal with the unknown.>

There are also a lot of other factors that influence the price and it might happen that a large event at the same time as the Halving, might absorb the decline or the increase of the price.  

[cotrader_com]

I'm not arguing against the reduction of the block-reward, but rather the smoothness of doing so, to support price stability - a desirable quality of money.

Dear Satoshi, did you want an unstable coin, or why the harsh 4-year halvings?

Bitcoin's 4-year block-reward halving schedule arguably exacerbates wild price fluctuations, instead of a steady rise.

Why not have a 0.0000033% per-block reduction of the block-reward (to achieve the same halving in 4 years, but smoothly)?

Wouldn't it be better in that it'd support stable price/rise?

This would help grow new userbase, now scared to hold, and prevent the generally destructive crashing waves of huge price falls.

first of all, bitcoin halving will due to happen on 2020. Halving is happening due to the fact that there's  only limited bitcoin supply of 21 000 000 (which we all know) and with halving happening there will be more difficulties in mining and because of this difficulties bitcoin value will suppose to rise which ofcourse due to scarcity like gold. And yes, that's how satoshi nakamoto wants to happen. If you look at bitcoin roadmap we're still in early stage of bitcoin development.
So if I we're you, bag some while it's cheap coz when halvening happens on 2020 price will surely skyrocket.

[QuestionAuthority]

Dear Satoshi, did you want an unstable coin, or why the harsh 4-year halvings?

Bitcoin's 4-year coinbase halving schedule arguably hurts stability - an important feature of good money.

The halving of the inflation rate drives prices up strongly, causing a fomo wave, but when the hash rate catches up, prices fall back down in a destructive crash.

Why not use a 0.0000033% per-block reduction of the block-reward (to achieve the same halving in 4 years, but smoothly)?

This should support a smoother price increase curve, and therefore also help grow new userbase, now unsure when to enter the market and when to hold, and prevent the industry-wide destructive crashing waves of huge price falls.

You don’t have long to worry OP. With the next reward drop (and certainly with the one after) the mining reward will be inconsequential. Mining, at that point, will be almost entirely supported by transaction fees.

The days of the individuals mining and fighting with each other over the reward will be long gone. The new face of mining will be large bitcoin businesses that need to keep bitcoin alive and transactions happening smoothly. Eventually, even large mining farms will fail or be forced to drive up transaction fees to maintain a profit above equipment costs. The much anticipated reward drop will pass every four years without anyone noticing.

[cotrader_com]

These are good points. However, early holders would be rewarded the same, just along a smoother curve, and perhaps rewarded even more, because bitcoin might be perceived as safer to adopt if the price rose more steadily.

And, perhaps more important, actually useful money, and even SOV, benefit users and the economy much more, when they rise in a manner that's stable and dependable.

I wasn't arguing against the reduction in the block-reward, but rather against the harsh and sudden 4-year schedule instead of a smooth per-block micro reduction that would achieve the same thing, without harming price stability - a desirably quality of good money.

Well the fact that Satoshi base the supply to how the gold is mined state it.  Satoshi wanted to established an ever inclining currency I guess.  Probably with the four year period, Satoshi wants a seasonal spike in price so that holders will get rewarded handsomely and there is a window for the new comer when price spiked and dumped.  

[Pursuer]

when Satoshi created bitcoin and set the supply distribution plan the way it is right now, he was thinking about controlling the supply and the way it is going to be created. and he had no concerns about the price.
besides what you are proposing is only an assumption. who is to say that if we actually had that method of distribution with block rewards reducing with a fixed rate every block, then price could be stable?

as I always say price is volatile because the market is pretty small and price is only determined on exchanges. so when someone dumps a large amount of bitcoin on exchanges the price drops drastically. so whether block reward is reduced every 4 years or every 10 minutes the exchanges will still remain small.

[btc-room101]

These are good points. However, early holders would be rewarded the same, just along a smoother curve, and perhaps rewarded even more, because bitcoin might be perceived as safer to adopt if the price rose more steadily.

And, perhaps more important, actually useful money, and even SOV, benefit users and the economy much more, when they rise in a manner that's stable and dependable.

I wasn't arguing against the reduction in the block-reward, but rather against the harsh and sudden 4-year schedule instead of a smooth per-block micro reduction that would achieve the same thing, without harming price stability - a desirably quality of good money.

Well the fact that Satoshi base the supply to how the gold is mined state it.  Satoshi wanted to established an ever inclining currency I guess.  Probably with the four year period, Satoshi wants a seasonal spike in price so that holders will get rewarded handsomely and there is a window for the new comer when price spiked and dumped.  

Well this is why there are 1900+ alt's, fake BTC clones, because then you can put your own flavor of BTC on the world, and tell your user base that the halving is everyday, or every twenty years, but BTC is what it is, and it ain't going to change.

It's always strange to see endless people coming in an telling a community that really has no means of changing anything to 'change'

This is why we have all the silly clones, because somebody thought they could improve the ALGO, but then they find they have no user-base, what's a mother to do? I GUESS you could get on the source committee and convince them to modify the source, however the folks in say CHINA (+51%), may not go along, ...

The subject of modifying the source to implement your suggestion, as you note the odd's of your MOD getting traction, is about 1 in 2**11, one in 2,000, say here only btc-cash, has even came close as a coin, to be being 'as valuable' as the mother herself.

In summary, your suggestion has NO possibility that it will be implemented, and if you go ahead and make a clone-fork, it will certainly be used by nobody,


As to the reasoning of why things are the way they are, the simple answer is 'because'

Given the situation, I suggest you make a clone, and be the only user, and enjoy life, as only you know you got your way 

[cotrader_com]

Well, we can say "we just don't know what would happen", but the most fundamental economic principles of supply and demand are at play here.

The supply of new bitcoins today is 1800. After 2020, they'll be just 900 per day. That suddenly halved supply (supply shifts left in the graph below) would meet higher demand (buy) prices, as there will be a relative shortage.

when Satoshi created bitcoin and set the supply distribution plan the way it is right now, he was thinking about controlling the supply and the way it is going to be created. and he had no concerns about the price.
besides what you are proposing is only an assumption. who is to say that if we actually had that method of distribution with block rewards reducing with a fixed rate every block, then price could be stable?

as I always say price is volatile because the market is pretty small and price is only determined on exchanges. so when someone dumps a large amount of bitcoin on exchanges the price drops drastically. so whether block reward is reduced every 4 years or every 10 minutes the exchanges will still remain small.

[cotrader_com]

I don't think miners would be against, it, and perhaps even for it, because there'd be no more destructively sudden halving, but, rather, gradual and manageable change. Many miners have been put out of business by the wild fluctuations, after all.

It can begin in 2022, not 2020, and then in 2024, no halving. That way they don't lose anything, on average.

I agree it's unlikely, but interesting anyhow. I wanted to document and share the idea, as it seems a definitely improvement, whether anyone would use it now, or not. Someone might, some day.

These are good points. However, early holders would be rewarded the same, just along a smoother curve, and perhaps rewarded even more, because bitcoin might be perceived as safer to adopt if the price rose more steadily.

And, perhaps more important, actually useful money, and even SOV, benefit users and the economy much more, when they rise in a manner that's stable and dependable.

I wasn't arguing against the reduction in the block-reward, but rather against the harsh and sudden 4-year schedule instead of a smooth per-block micro reduction that would achieve the same thing, without harming price stability - a desirably quality of good money.

Well the fact that Satoshi base the supply to how the gold is mined state it.  Satoshi wanted to established an ever inclining currency I guess.  Probably with the four year period, Satoshi wants a seasonal spike in price so that holders will get rewarded handsomely and there is a window for the new comer when price spiked and dumped.  

Well this is why there are 1900+ alt's, fake BTC clones, because then you can put your own flavor of BTC on the world, and tell your user base that the halving is everyday, or every twenty years, but BTC is what it is, and it ain't going to change.

It's always strange to see endless people coming in an telling a community that really has no means of changing anything to 'change'

This is why we have all the silly clones, because somebody thought they could improve the ALGO, but then they find they have no user-base, what's a mother to do? I GUESS you could get on the source committee and convince them to modify the source, however the folks in say CHINA (+51%), may not go along, ...

The subject of modifying the source to implement your suggestion, as you note the odd's of your MOD getting traction, is about 1 in 2**11, one in 2,000, say here only btc-cash, has even came close as a coin, to be being 'as valuable' as the mother herself.

In summary, your suggestion has NO possibility that it will be implemented, and if you go ahead and make a clone-fork, it will certainly be used by nobody,


As to the reasoning of why things are the way they are, the simple answer is 'because'

Given the situation, I suggest you make a clone, and be the only user, and enjoy life, as only you know you got your way  

[Pursuer]

Well, we can say "we just don't know what would happen", but the most fundamental economic principles of supply and demand are at play here.

first of all supply and demand is only one of many things that can affect the price and it is a lot complicated than that simplified graph you posted.

secondly you are saying supply "AND" demand. but in your first post you are only talking about the supply and the rate at which it is being created and forget about the demand. demand doesn't has a fixed rate! in fact a big part of volatility is because of the changeable demand rate. for example at some point there is a surge of interest for bitcoin and that shoots the price up. and right now for example there is a surge of FUD which is decreasing the demand and also has slowed down adoption to a halt.