Topic: BIP: CREATE STABLE PRICE RISE (+FASTER ADOPTION) BY SMOOTHING THE 4-YEAR HALVING (Read 327 times)

I've updated the title as a BIP. The point wasn't to blame Satoshi, who got so much right.

The reason the 4 year cycle does create price spikes and big falls: when the inflation halves suddenly, prices have rather dramatic upwards pressure because of the supply curve shifting left. Then, what follows is FOMO, culminating in a peak and fall. AKA, boom/bust cycle.

If the inflation were per-block and gradual, we'd at least remove this sudden shock problem.

Adoption would be more steady and serious about using bitcoin as a stable increasingly valuable money. Such adoption could happen over the entire 4 year term, not just during the short upward cycle, like now, with everyone waiting for the next rush. It's not healthy for any realistic currency.

Remember that this is a prototype project, bitcoin despite being a fairly complete coin has flaws from its origin, we are just starting with the development of this technology and I do not think Satoshi could predict how big it would become, so certain decisions do not make sense now that bitcoin has become so massive.

Bitcoin is not unstable due to halving actually halving process to limit the overall supply only.  Halving should cause increase in price only not the downward turn. It is unstable because community is governed by the "HODL" principle. Very basic requirement of currency is that it should circulate and widely accepted, easy to transact and not counterfeit.

Unfortunately in current scenario , community instead of creating business (that will involve transaction of currency) believes in locking it.

PS: Stop blaming Satoshi ,he is not asking to dump the coin or spike the price.

I think about the same as you, but there are some differences. It seems to me that a person who already has such large-scale thoughts in his head at the time of the idea can change the system as a whole. This shows us the history and so it was from time immemorial. It seems to me that this man is very brave and we just need to support him in his endeavors.

It's not decreasing the supply that will help make for a stable rise, but removing the shocking change of inflation rate to 1/2 every 4 years, needlessly, afaik, to doing so gradually, per block. Does that make sense?

Though I do agree the suddenly halving the supply increases the price, we shouldn't be looking at the price here. We should be looking at the supply itself.  Also again, I really honestly don't think you can make the price stable just by decreasing the supply alone. It's still mostly due to supply and demand, like what Pursuer said on his reply.

Anyway, while I disagree with your proposal, thanks for creating a topic that's actually debatable and not bullcrap.

The halving helps investors know the best times to invest in bitcoin which is before the halving pump. Next couple of years is a good time to accumulate before the next pump

Good points. If there was a constant upwards motion, and not big spike, then 3 years down, then adoption demand would be fairly 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?

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.

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.

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.

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 

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.

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.

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.

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.

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.

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.