Why Reduce the Block Reward?

[lyth0s]

The coin is secured by the blockchain.
The blockchain is secured by the miner.
The miner is secured by the block reward.

So why reduce the block reward when it's unnecessary and detrimental to the security of the system? The problem is that the coinbase has a hard supply limit and no mechanism for deflation. The solution is to keep the block reward constant until the very last coin is mined from the coinbase, and give all transactions expiration dates, a year for example, so that lost and abandoned coins can be returned to the coinbase. Expired transactions, and all previous transactions with no other dependencies, can then be pruned from the blockchain.

1. So why reduce the block reward when it's unnecessary and detrimental to the security of the system?
A. Block reward is responsible for securing the system by encouraging miners for now. In the future as the number of transactions increases the miners will still have incentive secondary to all of the cumulative small transaction fees.

2. The problem is that the coinbase has a hard supply limit and no mechanism for deflation
A. Deflation in a non-debt backed system is okay and even considered good.

3. lost and abandoned coins can be returned to the coinbase
A. With deflation we don't need any actually "lost" coins returned to the coinbase. This would also prevent people from "saving and forgetting" for x amount of time since their savings could instantly be purged from the blockchain.

You are however welcome to make your own coin that follows these rules and see how much adoption you get.

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[Eastfist]

The coin is secured by the blockchain.
The blockchain is secured by the miner.
The miner is secured by the block reward.

So why reduce the block reward when it's unnecessary and detrimental to the security of the system? The problem is that the coinbase has a hard supply limit and no mechanism for deflation.

The block reward needs to remain constant until the very last coin is mined from the coinbase, and transactions need to expire after some time, a year for example, so that lost and abandoned coins can be returned to the coinbase. Expired transactions, and all previous transactions with no other dependencies, can then be pruned from the blockchain.

I read that often recently and it is just the worst idea, ever.
There are some many scenarios, where somebody wouldn't touch his coins for a year. Just look at my savings account, there is money lying around in case of an emergency and luckily emergencies don't come once a year.

Exactly. That's like stealing someone's rightful savings. If you want to treat Bitcoin as money, treat Bitcoin as money. Don't steal people's hard-earned money.

[bcoinbilly]

You are welcome to create your alt-coin with these rules.

Interesting answer. I hear it's not difficult to make an alternative currency.

[The Bad Guy]

well if there is no refuce on the block reward , the bitcoin price would've be only from Supply and demand ... and there will be no increasement of the price , since it's always the same amount of supply . so all depends on the demand ... but if the supply decrease , that should make a little pump to the price

[oleganza]

If Satoshi left fixed 50 BTC/block reward forever, it would still make the system deflationary since the relative reward (compared to the total supply) would slowly diminish over time. Economically, it would work just fine and make transaction fees matter more and more eventually.

There are a few good reasons, in my view, to introduce regular halving and having a completely fixed nominal supply.

1. Psychological-1: perspective of a drastic halving in a few years/months makes people hurry up and grab coins while there are more of them. Of course, on "efficient market" the knowledge of the future is already accounted for, but real markets are made of real people (and we witness that every day on forums, mailing lists and exchanges).

2. Psychological-2: talking about reward is easier when the supply is nominally fixed to some amount (in our case it's 21M coins). We still have a lot of people who don't understand inflation/deflation and "real" vs "nominal" prices and wages. Having ever-increasing supply of coins which is actually deflationary is a hard concept for many to wrap their head around.

3. Practical: having fixed amount of coins makes it possible to fit all possible amounts into 64-bit integer using in transactions. Ever-increasing block reward would eventually lead to an overflow and require a dynamically-sized field which only complicates things and creates tons of opportunities for fatal mistakes.

[Exther2]

It's not only about Bitcoin. It is every coin. I see many people mention Statoshi.
It's nothing to do with Satoshi. It is simply deflation system.
Deflation is about how to keep the block reward constant until single last block get mined.
It is concept of every coin.

[DeathAndTaxes]

If Satoshi left fixed 50 BTC/block reward forever, it would still make the system deflationary disinflationary since the relative reward (compared to the total supply) would slowly diminish over time.

They aren't the same thing.
http://en.wikipedia.org/wiki/Disinflation

[DeathAndTaxes]

Deflation is about how to keep the block reward constant until single last block get mined.

The block reward isn't constant.

[mriulian]

Well this is not the best ideea.

[zebedee]

I read that often recently and it is just the worst idea, ever.
There are some many scenarios, where somebody wouldn't touch his coins for a year. Just look at my savings account, there is money lying around in case of an emergency and luckily emergencies don't come once a year.

Exactly. That's like stealing someone's rightful savings. If you want to treat Bitcoin as money, treat Bitcoin as money. Don't steal people's hard-earned money.

Statists gonna state.  They want your money, because you don't deserve it, to spend as they want, because that's obviously right.

[zebedee]

You are welcome to create your alt-coin with these rules.

Interesting answer. I hear it's not difficult to make an alternative currency.

It is indeed trivial.  The hard part is getting someone else to care.

[benthach]

no need this nonsense

[chaosknight]

block rewards are reduced to control the supply of the coin in the near future, many developers reduce rewards for their coins with their personal thoughts if you want a coin with reward reducing then you can create one for yourself, launch it and you will see if people like this