HALVING GP and BURNING MATH [simplified]

[Mia Chloe]

Before I proceed GP in this post refers to a simple maths expression known as geometric progression. And yeah this post is going to be related mainly to halving and crypto burning.

Let's dive right in;

Well, it's obvious that crypto halving is about cutting something about a cryptocurrency in half. But the question is what exactly??  Now  if we simply put supply it's wrong, similarly putting circulation is also a  misconception. For a simpler  understanding let's take bitcoin as a case study. Going a bit into Bitcoin economics, Bitcoin has a totally supply of 21 million coins. Now this 21 million supply is the maximum number of bitcoins that can be mined and hence put into circulation. Now the question is Since we aren't cutting supply in half in the case of halving what then?

Bitcoin uses a proof of work mechanism where coins are mined  into circulation through a process known as hashing. During the very first 4 years of the creation of Bitcoin, mining was far more profitable, as valid  hashes found during successive mining sessions brought more bitcoin rewards which was 50BTC per block .

In halving , these rewards are the ones that are cut in half.  Halving occurs on the Bitcoin network after every  successfully mined 210,000 blocks which takes Approximately 4 years and yes it's quite a constant period of time because the network is able to adjust it's difficultly based on the rate at which the previous block was mined. You can find more explanation about that on this quiz thread by Blackhatcoiner;

• Quiz question
• Quiz answer about bitcoin network difficulty adjustment

Based on the network protocol, the  halving reward per block gives a mathematical geometric progression having a first term of 50BTC , a second term of 25BTC ,a third term of 12.5 BTC...............  (50BTC , 25BTC , 12.5BTC ..........)

Below is a simple mathematical process giving a GP equation for halving rewards per block.


May seem new to some members here but it will be of help to those still trying to understand the whole halving process.


BURNING

Unlike halving that has a GP for successively new and reduced block rewards per halving, crypto burning doesn't. In halving the rate at which new coins are mined and added to circulation is being reduced without affecting the total supply.

Well burning is different. Although both are aims to regulate the value of the coin, burning means simply cutting off a relatively huge amount of the coins from circulation.

Take for example, before bitcoin became popular today, SATOSHI mined say 500,000BTC , stored them all in a single wallet and got rid of the keys, that's burning. Now take note that the effect of that burning doesn't affect the total supply of Bitcoin which is still 21 million, however is has removed 500,000 from the total amount of circulating coins, meaning if 5 million BTC had been mined at the time of the burning, bitcioners will only be able to circulate 4.5 million BTC + coins that will be successively mined after that by making bitcoin transactions.

Since the burning doesn't use a specific rate, we can't actually create a GP equation for it, except some coin existed which a fixed amount of it is constantly burned every period of time say 4 years. The truth is over time , as a coin begins to gain value burning would gradually become uneconomical since it's a loss of money to the person burning it.
Imagine burning 10,000 bitcoins today ( lol  ) that would obviously be beyond crazy.

[Sim_card]

It is people that have more than enough Bitcoin that will burn their coins and not investors that love money or have little in their portfolio. Satoshi was able to burn those bitcoin back then because they were valueless and he can get more than enough if he wants. In the early days bitcoin was nothing to Satoshi.

[Felicity_Tide]

Bitcoin has a totally supply of 21 million coins. Now this 21 million supply is the maximum number of bitcoins that can be mined and hence put into circulation.

I think you've done a very great job in providing this simplified explanation to halving rewards. How about there is a little touch of the word Approximately , or maybe the word "totally" means something else.

BURNING
Unlike halving that has a GP for successively new and reduced block rewards per halving, crypto burning doesn't. In halving the rate at which new coins are mined and added to circulation is being reduced without affecting the total supply.

~

Since the burning doesn't use a specific rate, we can't actually create a GP equation for it, except some coin existed which a fixed amount of it is constantly burned every period of time say 4 years. The truth is over time , as a coin begins to gain value burning would gradually become uneconomical since it's a loss of money to the person burning it.

You are right. There is probably no GP formula for calculating that, as anyone might choose to burn some of his/her Bitcoin(maybe little amount).
And also, I think some burning might not be intensional, because there are some people that might not have access to their Bitcoin due to missing keys and other stuff. Those Bitcoin are literally gone.

Imagine burning 10,000 bitcoins today ( lol   ) that would obviously be beyond crazy.

Burning BTC10K intensionally by one single individual?, I doubt if anyone is willing to risk that at this current price .

[SilverCryptoBullet]

It's simpler to look at Bitcoin Wiki if I want to learn about Bitcoin total supply.

Bitcoin Controlled Supply
How is the 21 million Bitcoin cap is defined and enforced?

This is like saying...

  50 * 210000
+ 25  * 210000
+ 12.5  * 210000
…
+ 0.00000002 * 210000
+ 0.00000001  * 210000
= 20999999.9769

The total supply in float number is 20999999.9769 but in integer number, it is 21 millions that is commonly used on media.

Take for example, before bitcoin became popular today, SATOSHI mined say 500,000BTC , stored them all in a single wallet and got rid of the keys, that's burning.

We don't know who is or are Satoshi Nakamoto and we don't know how many bitcoins were mined by Satoshi Nakamoto. 500,000 BTC or any number is only estimation.

Now take note that the effect of that burning doesn't affect the total supply of Bitcoin which is still 21 million, however is has removed 500,000 from the total amount of circulating coins, meaning if 5 million BTC had been mined at the time of the burning, bitcioners will only be able to circulate 4.5 million BTC + coins that will be successively mined after that by making bitcoin transactions.

Total supply is fixed, capped at 21M.

What changed is circulating supply that will be affected by two things.
The first thing is new supply from new found blocks mined by miners because before 2140, with new found blocks there will be new bitcoins in Block subsidy to be released to circulating supply.
The second thing is possible lost bitcoin with time, more people will lose their bitcoins because of lack of usable backups.

People can have better practice and minimize risk of losing bitcoin by reading this blog post. How to back up a seed phrase

[Ambatman]

And also, I think some burning might not be intensional, because there are some people that might not have access to their Bitcoin due to missing keys and other stuff. Those Bitcoin are literally gone.

No they are usually intentional
Unintentional are called loss of coins
Though the effect are same but there's difference in the act
Lost Bitcoins could be later accessed but Coins really burnt cannot be accessed since they are usually sent to addresses that no one has access to whether in time of sending or before.

So unlike the halving units that can be calculated
Total burnt Bitcoin cannot be known but given a rough estimate based on idle addresses.

[Faisal2202]

We don't know who is or are Satoshi Nakamoto and we don't know how many bitcoins were mined by Satoshi Nakamoto. 500,000 BTC or any number is only estimation.

Its strange you know the exact number of BTC in circulation like in float numbers but don't know that his holdings of BTC exceed 1 Million BTC. Well, we all are in the learning phase, here you can confirm how much BTC Satoshi has in his public address, and yeah no one can really know how many BTC he has in his other private wallets, that he must have. Thing is people are even sending BTC to his genesis address, which now holds more than 100 BTC

Total supply is fixed, capped at 21M.

What changed is circulating supply that will be affected by two things.
The first thing is new supply from new found blocks mined by miners because before 2140, with new found blocks there will be new bitcoins in Block subsidy to be released to circulating supply.
The second thing is possible lost bitcoin with time, more people will lose their bitcoins because of lack of usable backups.

It can also be affected by people recovering there lost BTC. There are numerous stories of people getting there lost BTC funds back after so many years.

[Felicity_Tide]

And also, I think some burning might not be intensional, because there are some people that might not have access to their Bitcoin due to missing keys and other stuff. Those Bitcoin are literally gone.

No they are usually intentional
Unintentional are called loss of coins
Though the effect are same but there's difference in the act
Lost Bitcoins could be later accessed but Coins really burnt cannot be accessed since they are usually sent to addresses that no one has access to whether in time of sending or before.

You have a point, but though they still serve same purpose by reducing the number of coins in circulation(circulating supply).

And do you think there are ways to recovering lost Bitcoins when you clearly don't have your keys, like I pointed out?. I will like to know how this is done.