OTHER NEGATIVE EFFECTS OF THE BITCOIN HALVING EVENT

[Tungbulu]

A lot of people don't really understand the concept of bitcoin halving.
We only consider the positive aspect of the Bitcoin Halving without also putting into consideration the negative aspects even when we know that wherever there's an advantage, there's surely a disadvantage too.

Many believe that immediately after halving, bitcoin immediately becomes a safe haven for investors to fall to and start making crazy ass profits. Yes the halving will actually influence the price of bitcoin positively but before that happens, there are things involved and high transaction fees happen to be one of those things.

People are getting mad because transaction fees has actually skyrocketed more than the usual convenient fees we normally pay. Here let me explain the reason for the sudden increase in transaction fees.

Halving event means lesser BTC rewards for miners, and what does that mean?
It means that miners will also mine lesser bitcoin since their reward has been slashed in halves. When miners mine less bitcoin, that means, less bitcoin in the market and that equally means  the lesser the bitcoin the higher the competition for the remaining Bitcoins left.

This is exactly where the High fees comes in because the more users are competing for the remaining Bitcoins, that means more transactions in the Chain, we already know the law of scarcity, demand and supply.
The more a product's supply drops, the product becomes scarce and the demand increases and that means the price also increases.

It's just like bidding in an auction, the more the competition, the higher the price gets. It's simple as that.

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[d5000]

Halving event means lesser BTC rewards for miners, and what does that mean?
It means that miners will also mine lesser bitcoin since their reward has been slashed in halves. When miners mine less bitcoin, that means, less bitcoin in the market and that equally means  the lesser the bitcoin the higher the competition for the remaining Bitcoins left.
This is exactly where the High fees comes in because the more users are competing for the remaining Bitcoins, that means more transactions in the Chain, we already know the law of scarcity, demand and supply.
The more a product's supply drops, the product becomes scarce and the demand increases and that means the price also increases.

The fee spike was caused by Ordinals (because some believe that satoshis in the halving block have more value) and by the new Runes protocol, also tokens on the Bitcoin blockchain (nothing new or interesting though).

In fact, transaction fees were so high that miners after the halving had more income than before (several blocks had more than 10 BTC of transaction fees) so the halving's effect on miners is delayed a bit.

In theory what you wrote -- the effect that some miners could be leave the market due to the reduced block rewards -- could reduce the hashrate temporarily, but the difficulty mechanism means that in 2, at most 3 weeks if the hashrate is reduced, the block time will stabilize again at 10 minutes and blocks become as frequent as before the halving. The previous halvings have shown that the effect is indeed only short. For example, just in another thread I had shared the following image with the hashrate evolution near the 2020 halving (Halving date was May 11):


Source: Coinwarz

You see that hashrate indeed is reduced a bit (about 15%) around mid-May 2020, but then only a couple of weeks later it increases again. As the increase rate seems to be largely the same than before the halving, I think this is caused mainly by hardware improvements (Moore's Law) and not by an increase of miner expenses or new miners entering the market.

[Upgrade00]

This is exactly where the High fees comes in because the more users are competing for the remaining Bitcoins, that means more transactions in the Chain, we already know the law of scarcity, demand and supply.

This is incorrect in different ways;

• Firstly, over 95% of the total supply has been mined and we currently have a daily trading volume of over $25 billion in fiat value. A halving to 3.125BTC is not enough to cause an instant scarcity and lead to a run in on the network to claim the few remaining coins that are available. The halving has less and less impact on supply as the time goes.

• A drop in supply does not instantly result in a rise in demand. Changes in demand happens over extended periods of time.

• No one who is looking to accumulate more Bitcoin will pay the ridiculous amount of fees that are pushing the feerate up. There are transactions paying more in fees that is being transacted.

[CryptoHeadlineNews]

It's just like bidding in an auction, the more the competition, the higher the price gets. It's simple as that.

And in addition to what you just said, for me, I will say that the reason for the recent increase for the transaction fee of Bitcoin is simply because miners are yet to get along with the new reduction in the mining fee that was cut into half few hours ago due to the Halving, as they are now only focusing on transaction with high fees, and neglecting those of lesser fees, just for them to be able to accumulate a good sum of Bitcoin per each mining. But one thing certain is that as time goes on, so will the current high fees go back to normal when the market demand and supply goes back to the usual. Because I'm actually a victim of the current delay transaction, as the a transaction I made since 4 days ago from a Trust wallet to an exchange wallet is yet to be confirmed, simply because I made used of a low transaction fee. (I.e 30 sat/kilobyte).

[serjent05]

Halving event means lesser BTC rewards for miners, and what does that mean?
It means that miners will also mine lesser bitcoin since their reward has been slashed in halves. When miners mine less bitcoin, that means, less bitcoin in the market and that equally means  the lesser the bitcoin the higher the competition for the remaining Bitcoins left.

Does this have something to do with supply and demand?  The Bitcoin in the market does not become lesser when Bitcoin halves, since the Bitcoin in the market circulation is already mined and has nothing to do with the halving event.  What becomes less is the incoming supply since the block reward halves, the incoming supply mined by the miners also halves.  The Bitcoin circulating in the market does not become less it even becomes more when newly mined Bitcoin is delivered to the market.  It is the incoming supply that becomes less when there is a Bitcoin halving and not the Bitcoin that is already in the market.

This is exactly where the High fees comes in because the more users are competing for the remaining Bitcoins, that means more transactions in the Chain, we already know the law of scarcity, demand and supply.

The high fee does not come from users who are competing for the remaining Bitcoins but rather for the user who are competing to be the first one to get confirmed.  If we are talking about the competition or the remaining Bitcoin, for the block reward to be specific, it has something to do with the hashrate not the transaction fee.  Besides the current increase in transaction fee has nothing to do with Bitcoin halving, because the reason why the current transaction fee spike is due to the launch of Rune Protocol which actually has nothing to do with Bitcoin.

The more a product's supply drops, the product becomes scarce and the demand increases and that means the price also increases.

For Bitcoin holders, an increase in price is not a negative effect, instead holders would love to see their portfolio increasing in price.  So this effect is considered positive by those who own Bitcoin.

It's just like bidding in an auction, the more the competition, the higher the price gets. It's simple as that.

I think it is more appropriate to say that the higher the demand than the supply, the higher the price.

[davis196]

A lot of people don't really understand the concept of bitcoin halving.

I have the feeling that you don't understand the concept of BTC halving.
The transaction fees have nothing to do with the BTC halving. It's just bigger short term transaction quantity making the blockchain stuck for a while.
Like another forum member already wrote, 95% of all BTC is already mined, your theory about transaction fees being high because more people are competing for less BTC is just nonsense. The overall scarcity of BTC affects the BTC price, not the transaction fees.
Bitcoin already went thru four halvings in the past years(including the last one). What "negative effects" did you see in the last three halvings?
I didn't seen any negative effects at all.

[Z390]

This is exactly where the High fees come in because the more users are competing for the remaining Bitcoins, that means more transactions in the Chain, we already know the law of scarcity, demand and supply.
The more a product's supply drops, the product becomes scarce and the demand increases and that means the price also increases.

It's just like bidding in an auction, the more the competition, the higher the price gets. It's simple as that.

This is disappointing, you shouldn't have created this topic when you are not so sure about what's happening, you just embarrassed yourself.

This is not the first halving that I have witnessed and this instant crazy transaction fee doesn't happen then, it is very clear that Ordinals and Runes are behind this insanely high transaction fee, please stop spreading false news.

Spend your time to learn, if you aren't sure of something you should ask questions first, since the beginning of Bitcoin getting halved there has never a negative effect because of the halving.
If miners are to compete for the remaining Bitcoin it will be on hashrate, they will add up to their mining equipment to get more BTC, this is the only way they can compete, not through the transaction, this is so lame.

[Synchronice]

Halving event means lesser BTC rewards for miners, and what does that mean?
It means that miners will also mine lesser bitcoin since their reward has been slashed in halves. When miners mine less bitcoin, that means, less bitcoin in the market and that equally means  the lesser the bitcoin the higher the competition for the remaining Bitcoins left.

Don't you remember that you can use as low as 0.00000001 BTC? Also, don't you remember that halving usually brings the bull market too? So, reward in Bitcoin declines during halving but USD value increases. We all calculate prices in USD, not in Bitcoins, so we use less Bitcoins as price goes up. High value in USD balances the decreased reward from mining. Also, on top of that, miners are getting very fatty reward from transaction fees these days.

I still don't understand the negative effects of the Bitcoin halving. There are none except Bitcoin's price is easier to speculate and when there is a bull market, someone is easily capable to bust the bubble.

[Tungbulu]

Halving event means lesser BTC rewards for miners, and what does that mean?
It means that miners will also mine lesser bitcoin since their reward has been slashed in halves. When miners mine less bitcoin, that means, less bitcoin in the market and that equally means  the lesser the bitcoin the higher the competition for the remaining Bitcoins left.

Don't you remember that you can use as low as 0.00000001 BTC? Also, don't you remember that halving usually brings the bull market too? So, reward in Bitcoin declines during halving but USD value increases. We all calculate prices in USD, not in Bitcoins, so we use less Bitcoins as price goes up. High value in USD balances the decreased reward from mining. Also, on top of that, miners are getting very fatty reward from transaction fees these days.

I still don't understand the negative effects of the Bitcoin halving. There are none except Bitcoin's price is easier to speculate and when there is a bull market, someone is easily capable to bust the bubble.

I think you must have misunderstood me or you simply just didn't read through the whole content.

I didn't say at any point that the halving event was entirely bad or that the effects of the Halving on Bitcoin was completely negative.
The importance of the Halving on Bitcoin price can't be overemphasized, if you read well or read again, you'll see that I'm only trying to point out a few negative effects I've noticed.

All what you've said is right as they are just the advantages oand positive effects of the Halving, as many people only consider the positive aspect.

Maybe my theory might be wrong about how came about the excessive transaction fees, but the truth still remains that it was and still is an after effects of the Halving, and yes it's true that the fees will normalize after a period of time and people can use other alternatives to avoid paying such robust amount of fee. But the fact still remains that this is an after effects of the Bitcoin halving event and most people are complaining because they never expected it.

[Apocollapse]

Miners didn't only make money from halving reward, they also make money from the fees that paid by the senders i.e. include the transactions into blocks and solve the cryptographic puzzle.

The negative effect of halving event is forcing small miners to retire/shifting because they can't bear the electricity and maintenance cost while the reward gets smaller.

IMO high fees isn't really a negative effect because it what makes Bitcoin is the most secure than other coins.

[Catenaccio]

I'm only trying to point out a few negative effects I've noticed.

A lot of people don't really understand the concept of bitcoin halving.

Bitcoin halving is for reduction of block subsidy to be a half of 210,000 previous block before a halving. Nothing more, nothing less. Effects people are discussing all about price impacts from a Bitcoin halving.

Many believe that immediately after halving, bitcoin immediately becomes a safe haven for investors to fall to and start making crazy ass profits.

Bitcoin is Bitcoin and I did not know any belief like this. Become a safe haven after a halving, no it's not true. If Bitcoin is a safe haven, it must be like this before a halving, not only after that.

Yes the halving will actually influence the price of bitcoin positively but before that happens, there are things involved and high transaction fees happen to be one of those things.

Transaction fee is dynamic, not static and halving has nothing to do with Bitcoin transaction fee. Demands of people for transactions on Bitcoin blockchain and the blockchain capacity to handle demands, will decide transaction fee.

Halving event means lesser BTC rewards for miners, and what does that mean?

No. Not actually like this.

Bitcoin miners get bitcoins from two reward types. First reward type is Bitcoin block subsidy and if it is not a solo mined block, Bitcoin miners of a pool which finds a block will share bitcoin subsidy for that block. Second reward type is Bitcoin transaction fee that has nothing to do with Bitcoin block subsidy. Bitcoin block subsidy is fixed for each 210,000 blocks but Bitcoin transaction fees change with times and with demands from users.