So how exactly will the halving of bitcoin block reward benefit bitcoin.

[Vision2020s]

I haven't understood clearly but have read on different sites on how bitcoin halving automatically means bitcoin price will increase due to fomo and other factors, so my questions goes like this, how exactly will the halving of bitcoin block reward benefit bitcoin, now can this also benefits altcoins, I need details information and will it be advisable to buy altcoins in anticipation of reward that will come to the industry after the bitcoin halving of block reward successfully occurs. Some sites I read indicated that the market in general will benefit from the event based on new Investors that'll pick interest in the industry. I bought into the idea as it looks realistic to me, as the media will contribute to this by spreading the news. What do you think?

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[AdolfinWolf]

Halving = less money needed to maintain the current pricelevel.

So, in theory, if the inflow of money stays the same- 12.5BTC to keep the price the same after each block-, there's now 6.25BTC less - which would drive up the price -.


I'll try to give an example but i think it'll come out a bit flawed:

There's 100 k worth of x resource on the table. every 10 minutes someone places the equivalent of 12.5 k of that resource on the table. Now, since there is more of that resource- the price someone would offer for a quantity of that resource would go down- unless it keeps a sustained interest- meaning that every 10 minutes, someone is willing to buy (let's say for simplicity) 12.5$ worth of that resource.

Now, let's say that every 10 minutes, only the equivalent of 6.25k is placed on that table, (halvening) but, the interest in that resource is still worth 12.5$ of that resource every 10 minutes. Which means that 6.25$ worth couldn't get it..

What happens? The price goes up, as the resource becomes scarcer.


But- bitcoin isn't a resource, above all, it's a currency. (Although some people see it as "digital gold"), and for currencies, deflation such as the halvening, is usually a bad thing. Instead of spending their coins, people will hoard their coins believing they will be worth more in the near future. What effect that has on the price...; one can only speculate.

[Heisenberg_Hunter]

I have double thoughts on the halving event and the halving might either increase the price as like in the history of the prices or might slump down to the bottom. As AdolfinWolf said, bitcoin is deflationary rather than the common fiat currencies which are more or less inflationary. Deflation i.e the reducing of the mined bitcoin from 12.5BTC to 6.25BTC has various impacts on the miners, traders and the common users of bitcoin.

Speaking from a miner's perspective, they would sell some of their holding btc to pay for the electricity as blocks generate half less than what they were used to in these 4 years. This sudden halving of btc, will probably dump the prices as miners would be selling off some of their holding btcs.

Speaking from a traders FOMO perspective, many tend to hold their btc and would sell them at a higher prices. For the past 2 halving events, the prices dumped initially half way through and gradually rised multi-folds. We can very well infer that, miners should be selling their btc initially for paying the additional electricity charges and traders later trading them to increase the prices. 2013 & 2017 FOMO market was completely driven off with hype and both these market conditions reached the saturation point when the new traders left the game after selling off well below for what they have bought after incurring a loss.


I believe bitcoin as a decentralized digital currency for making payments rather than a trading mechanism, get-rich-quick-scheme or a digital gold kind of thing. When the global population starts following this trend in mainstream instead of trading, that would be the perfect ideal time we would be watching the true potential of bitcoin price. FOMOs and other bullshits are completely dangerous for long term if bitcoin is considered as a currency.

We can consider a simple example or a real time scenario from a miner's perspective,

#1

For all this time miners would have been receiving 12.5BTC and let us consider on an average 4320 blocks are mined each month (24hrs*30 days*6(each hour has six 10 minute interval)) and with the current btc prices miners receive a fair share of 54000 bitcoins which when sold yields a total of $37,63,72,440 (I have not taken tx fees into considerations).

Halving Period : 2016-2020
Total Blocks mined per month : 4320 [24 hours * 30 days * 6]
Total Bitcoins mined : 54000

#2

With the halving coming into practice, they would receive a fair share of only $18,81,86,220 which is quite lesser to pay their electricity. Either they would be waiting for the prices to rise up or would dump the market with their prior mined bitcoins.

Halving Period : 2020-2024
Total Blocks mined per month : 4320
Total Bitcoins mined : 27000 at the rate of 6.25BTC per block

[squatter]

I haven't understood clearly but have read on different sites on how bitcoin halving automatically means bitcoin price will increase due to fomo and other factors, so my questions goes like this, how exactly will the halving of bitcoin block reward benefit bitcoin

It doesn't automatically increase the price. That assumes that demand won't decrease or that non-mining supply won't increase. In other words, we can't view the halving in a vacuum since the inflation rate is just one factor affecting the price.

If we assume an otherwise constant supply and demand, then AdolfinWolf's example works. The price should increase based on less mining supply being sold post-halving.

[mk4]

It doesn't automatically increase the price. That assumes that demand won't decrease or that non-mining supply won't increase. In other words, we can't view the halving in a vacuum since the inflation rate is just one factor affecting the price.

Take a huge note of this. This could actually drop the price if we assume that people already bought enough bitcoin in anticipation of the halving, and them panic selling their coins if the price didn't actually increase as they were expecting. But in the end, we're just speculating and no one knows for sure what's going to happen with the short time price. Just as always.

In the mid to long term though, this should have a positive effect on the price simply due to the supply shock(hence lower selling pressure) alone.

[pooya87]

Speaking from a miner's perspective, they would sell some of their holding btc to pay for the electricity as blocks generate half less than what they were used to in these 4 years. This sudden halving of btc, will probably dump the prices as miners would be selling off some of their holding btcs.

having doesn't change the "cost" of mining. if for example it was costing $100 for a miner to run his operation per month, it will still continue costing $100 even if he is earning smaller amount. so the miner still sells the same amount even if he is earning less. and as long as they are selling the same amount, technically there shouldn't be any kind of extra drops.

[HeRetiK]

It doesn't automatically increase the price. That assumes that demand won't decrease or that non-mining supply won't increase. In other words, we can't view the halving in a vacuum since the inflation rate is just one factor affecting the price.

Take a huge note of this. This could actually drop the price if we assume that people already bought enough bitcoin in anticipation of the halving, and them panic selling their coins if the price didn't actually increase as they were expecting. [...]

The halving is definitely already priced in, to what extend, that's the big question

now can this also benefits altcoins

When Bitcoin enters a bull market, alt coins usually follow. However they also tend to get hit harder during bust cycles, behave like hot potatoes and attempting to pick a good one is a bit of a crapshot.

[Lucius]

I need details information and will it be advisable to buy altcoins in anticipation of reward that will come to the industry after the bitcoin halving of block reward successfully occurs.

Personally, I wouldn't invest anything in altcoins because I consider them a far greater risk than investing in Bitcoin. It's just my personal opinion, but diversifying your money into different assets can also mean reducing your risk. What you are actually asking is what will happens after BTC halving, and it belongs to the area of regular speculation.

My opinion is that after the halving, a new big bull run will happen (within 1-2 years), but I wouldn't bet altcoins will follow BTC this time. If you ask me why, well I would say that the reason is that most have realized after 2017 that most altcoins do not have any purpose. I think they will not make same mistake twice in a row, but that doesn't mean the world is not full of ignorant people who think BCH/BSV or any other alt is a good coin to invest.

[BitcoinsGreat]

I need details information and will it be advisable to buy altcoins in anticipation of reward that will come to the industry after the bitcoin halving of block reward successfully occurs.

Personally, I wouldn't invest anything in altcoins because I consider them a far greater risk than investing in Bitcoin. It's just my personal opinion, but diversifying your money into different assets can also mean reducing your risk. What you are actually asking is what will happens after BTC halving, and it belongs to the area of regular speculation.

My opinion is that after the halving, a new big bull run will happen (within 1-2 years), but I wouldn't bet altcoins will follow BTC this time. If you ask me why, well I would say that the reason is that most have realized after 2017 that most altcoins do not have any purpose. I think they will not make same mistake twice in a row, but that doesn't mean the world is not full of ignorant people who think BCH/BSV or any other alt is a good coin to invest.

Well, if people do not invest in altcoins this time, they may also not invest in bitcoins too as they know that after the bull run there will be a big long bear market. We will see what different happen this time after the halving and always remember that bitcoin price movement is always against what the majority of the people are thinking about it.

[bob123]

Well, if people do not invest in altcoins this time, they may also not invest in bitcoins too as they know that after the bull run there will be a big long bear market.

There is something you are missing.. The majority of altcoins (if not all) are worthless and just made to get rich relatively quick.
Bitcoin on the other hand has a value and actually is useful. No one invented it to get rich quick.

Just because people don't invest into shitcoins altcoins, this doesn't mean that they won't invest into bitcoin - a coin with an actual purpose.

While it is true that most 'investors' just want to get rich with bitcoin, there are still some people who actually believe in the future of it. As a store of value and as a currency without any limitations.

IMO people are way too much focused on the BTC/$ value instead of the actual technology and improvements being done.

[Febo]

So how exactly will the halving of bitcoin block reward benefit bitcoin.

It will reduce yearly emission inflation to close to what is Golds yearly mining emission. So new Bitcoin/Gold coming into existence compared to all the other existing Gold/Bitcoin.   It will not benefit Bitcoin in any way. It will only reduce supply pressure what should positively influence price of Bitcoin. So price of Bitcoin and not Bitcoin itself.

[Heisenberg_Hunter]

having doesn't change the "cost" of mining. if for example it was costing $100 for a miner to run his operation per month, it will still continue costing $100 even if he is earning smaller amount. so the miner still sells the same amount even if he is earning less. and as long as they are selling the same amount, technically there shouldn't be any kind of extra drops.

Very true. But does miners really mine bitcoin even for a loss? Let us consider the same scenario such that the total electricity costs were $100 for a miner and they receive $150 worth of mined bitcoins now. They sell $100 and have the extra $50 worth as a profit. With halving coming into practice and let us consider that bitcoin price stays in the same level then they would be receiving a fair share of only $75 for mining. An additional $25 in bitcoin should be sold to cover their expenses.

But well, many doesn't mine for a loss and when these miners leave these operations to prevent further losses subsequent decreasing of difficulty takes place and bitcoins could be generated more easily than before which will reduce the cost of mining it. But all these incidents might happen on a longer term after a minor dump.

[figmentofmyass]

having doesn't change the "cost" of mining. if for example it was costing $100 for a miner to run his operation per month, it will still continue costing $100 even if he is earning smaller amount.

the fiat costs to run the same operation may not change, but that operation will net half the output it used to (ignoring transaction fee revenue). in other words, the cost per bitcoin will double.

so the miner still sells the same amount even if he is earning less. and as long as they are selling the same amount, technically there shouldn't be any kind of extra drops.

halving the mining subsidy shouldn't drop the price. after all, it just means miners have less BTC to dump. the biggest concern is the drop in mining profitability will cause hash rate to nose dive as unprofitable miners shut down post-halving.

[BitcoinsGreat]

Well, if people do not invest in altcoins this time, they may also not invest in bitcoins too as they know that after the bull run there will be a big long bear market.

There is something you are missing.. The majority of altcoins (if not all) are worthless and just made to get rich relatively quick.
Bitcoin on the other hand has a value and actually is useful. No one invented it to get rich quick.

Just because people don't invest into shitcoins altcoins, this doesn't mean that they won't invest into bitcoin - a coin with an actual purpose.

While it is true that most 'investors' just want to get rich with bitcoin, there are still some people who actually believe in the future of it. As a store of value and as a currency without any limitations.

IMO people are way too much focused on the BTC/$ value instead of the actual technology and improvements being done.

But then all the money will not flow into bitcoins. There are many other altcoins which have decent projects behind them and they will also pump and move up with bitcoins. The whole marketcap will be divided among bitcoins and good altcoins. Not all the altcoins are shitcoins.

[Jet Cash]

All of the Bitcoin that will ever exist were created with the genesis block. This means that the contribution for the block rewards are similar to a HODLer opening his wallet, except that there doesn't have to be a buyer, as they are being given away. In theory that should drive down the price, but it seems that it increases the availability and interest, and that increases the price. We seem to be going through an accumulation phase at the moment, and a reduction in the additions to the circulating supply could result in a price increase, and this could lead to an increase in the contents of HODL wallets. There is also a massive increase in the price of Bitcoin in Iran, and this could give an indication of future price trends.

I think that on balance, the halving has been factored into most calculations, and is unlikely to be a major factor in determining future [rice movements in the medium term. It does provide a great topic for FUD and manipulation though.

[figmentofmyass]

All of the Bitcoin that will ever exist were created with the genesis block.

not exactly. the genesis block only created 50 BTC. https://en.bitcoin.it/wiki/Genesis_block

The first 50 BTC block reward went to address 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa,[1] though this reward can't be spent due to a quirk in the way that the genesis block is expressed in the code.

the protocol itself hard coded the limit of 21 million BTC. it didn't create them. even today, there are still 2.9 million BTC which haven't been "created" yet.

I think that on balance, the halving has been factored into most calculations, and is unlikely to be a major factor in determining future [rice movements in the medium term. It does provide a great topic for FUD and manipulation though.

that seems to be the consensus opinion but in my experience, the crowd is usually wrong.