Topic: Halving Bitcoin Reward Unlikely to Cause Price Surge - page 2. (Read 3466 times)

Convince me that you are not confusing (or equating) supply with production. I assume that you understand that the supply curve shifts to the right with every block.

I think the assumption is that miners sell the majority of the coins they mine. Since most existing Bitcoins are not on the market at current prices, a reduction, by one-half, of the new coins being mined could change the supply/demand dynamic.

Basically, a large amount of sellers are content to hold their coins until prices are higher. This supply (which is elastic, or price sensitive) will increase as price goes up. Mined coins, however, are inelastic (or price insensitive) because the same amount of coins are mined regardless of price. The supply of these coins can only be altered by miners changing the percent of their coins that they sell versus what they hold.



So the blue line will remain the same post halving, but the green line should be replaced by the yellow line. The aggregate of these two lines represents total supply. Total supply will drop as long as expectations don't change. The point where supply and demand meet determines the price, so a drop in supply, along with constant demand, results in an increase in price.

So in other words, the price will have to go up unless people's expectations (or their income) change on either the supply or demand side. So if we're irrationally exuberant right now, after the halving people might change their minds and the price might drop, or, they might go crazy and create a bubble.

Either way, the underlying effect of a halving does support some increase in price. We just don't know how much.

i dont know who is Vinny Lingham,and maybe not just who dont know about him and his company,i want to believe what he say,but i can't because i dont know who really he is,and yes we should wait until halving to make sure that.

I saw a twwet by Vinny Lingham of Gyft fame yesterday, he reckons there will be a huge short squeeze when halving kicks in. Not so sure about that, but we will see.

Okay so everything boils down to supply and demand in the end I think. If the block reward is cut in half but Bitcoin will have finite amount of coins at 21 million in 2140, will this slowing down of coin release make the price go up? So if we assume that, theoretically, not everyone is selling their coins owned before the halving and holding for a couple of years to see where the price is going to end up, this means we will have fewer coins on the market so if there are 'new' buyers looking to buy Bitcoin they will create a bigger demand, no? I am not saying the coins in cold storage will not enter the market at some point but they won't be used in circulation for a while.

I think I might have used a poor choice of words. Maybe I should have used "additional" instead of "new". The growth of additional supply will shrink, however the growth of demand will not.

This is a correct statement. However we are discussing if the halving will result in an increase in price of bitcoin. I am arguing that there is some price point above the current price at which there is demand for 1,800 additional bitcoin that were not previously owned that is above the current price.

Maybe it would be more accurate to say that you are "reducing the money supply growth".

When compared to other currencies, the US Dollar increased in value when QE was scaled back and when QE was stopped. Yes there were other market factors at play when this happened, however I believe that this was primarily the result of lower (additional) supply of dollars into the market.

Supply of new coins? Because people don't care for used ones, they only like to buy new ones?
My understanding is that bitcoins are fungible. I'm not even seeing an option to bid on fresh bitcoins, instead of those worn-out ones that are probably on their last legs and missing bits

No. There is no "demand for 3,600 additional bitcoin that were not previously owned." To put it in simplest, grossest terms, there is "demand for 3,600 additional bitcoin that were not previously owned @ current price."  Double your price, and you won't sell a single one of your coins. Because your coins are not unique. They're the same as the ocean of (roughly fifteen and a half million) coins which are likely to undersell you. Please tell me if this is unclear, because much of the "let's artificially limit the supply to make our Beanies more valuable" thinking is rooted in this very misunderstanding.


By saying that "bitcoins do not get destroyed," i meant "destroyed through normal use." As opposed to commodities like oil (which gets turned into other stuff until it's all gone, and then you have to buy more) and food (which gets turned into heat and poop until it's all gone and then you have to buy more)
Bitcoin is not like that, it doesn't get destroyed through ordinary use, it only changes hands.

This is an important difference, the difference between getting destroyed through regular use vs. not getting destroyed.  The reason being that if we stopped making food today, the world would run out of food, and food prices will skyrocket until everyone tries to feed on each other and dies.

On the other hand, if no more new bitcoins were issued (e.g. when/if the final of 21 mil are mined), we could go on using bitcoin indefinitely, as intended. No one starves to death, world doesn't end.
Again, I've forgotten how everything needs to be spelled out here, so do forgive me for failing to type all this out in my previous post. Now that I did tho, please try to understand this. Don't just try to impress me with your ace knowledge of 6th grade physics, like your "you can burn diamonds" factoid.

Yes, you are right, money is not consumed/destroyed, excellent point.
That's why when I'm printing money by the boatload/day now, and reduce my issuance to mere truckload tomorrow, it would be grossly disingenuous of me to suggest that I'm "reducing the money supply." And, when people call bullshit, adding "well, I mean I'm reducing the supply of new money" would only make me sound like an ass grasping at straws, no?

I think it will give the effect on the price of bitcoin. bitcoin unless demand decreases when halving certainly will have no effect on the price of bitcoin
but if the same request or enlarged necessarily high prices will rise

iceland and ukraine are cheaper and acceptable climate.. but try thinking about the delivery cost and the 14 day shipping to get it moved out of chinese manufacturers.. to europe (those 2 weeks are alot of lost potential earnings)

if i was to start a ASIC manufacturing business id go for ukraine(low labour/low electric) and have the mining (running rigs) facility within 30 minutes of the manufacturing facility.

i would never start a business in the western world(higher costs) or in hotter countries(extra power needed for climate control), even if they do have slightly cheaper electric.

most of the big players in china have their mining farms within an hour of the manufacturers, that alone makes a difference.
the other difference is retailing out some rigs. and using the profits to build a few rigs (virtually free) for themselves.

When people talk about china farms is not a racial debate but energy price debates...


That's why most miners are there...

you are worried about 3 pools.. out of 18??

well in 2013
7 of 10 were american. and guess what.. GHASH had 50% of the hash power to itself..
thats right only 10 pools and of which 1 pool had 50%..

so now we are in 2016 with 18 pools and the top hashrate of 30%... to me.. i see that as better.. but.. as i said before. not as good as the good old days of solo mining of 2009-2012.
however solo mining has its own security risks due to such a low difficulty.

so please dont turn the distribution debate into a racial debate. because it is meaningless if X number of pools are in china. or any other country. and picking on a pool and trying to suggest that they are colluding purely because they are in the same country.. then my friend. i must deem that you are having an affair with all the women within 500 miles of where you live.. after all your all close together in a certain area so you must have lots in common with each other purely because you use the same fiat currency, speak the same language, soobviously there must be some secret relationship yor having with all of these women

of course the halving automatically doesnt translate into a price surge but...


If it doesnt go up then all these farms that mine bitcoin will have to shut down
unless they have little to free energy and even then their profit cuts in half

the only way to counter act the halving for miners is the price of btc doubling

what will happen remains to be seen but I dont see how it doesnt make the price
rise

BTC will shot up to $1200 during that halving. just see that

Supply of new coins is going to go down. Like I said before, right now three is demand for 3,600 additional bitcoin that were not previously owned. On a net basis, people are wanting to (and are willing to pay for) buy 3,600 additional BTC every day.
One use case of Bitcoin is proof of burn, although it is not used in very large amounts nor very frequently. When compared to trading volume and total amounts in circulation, both gold and silver are very rarely consumed/destroyed, and the same is true for diamonds.

Other currencies like Dollars, Euros, British Pounds and Yen are also never consumed/destroyed.
There are many use cases of Bitcoin that do not depend on the price of bitcoin other then the fact that the price is somewhat stable. I would say that most use cases of bitcoin involve saving time/money over using traditional payment channels like credit cards, so if someone wanted to use bitcoin to buy a plane ticket somewhere over using their credit card, they would simply buy less.
I am not exactly sure what you are trying to say, however if a miner cannot pay their bills with their mining revenue then they will stop mining, which all else being equal, will cause the difficulty to decrease.

Not at all...



[spoiler] If 3 pools control over 70% of the hash rate and are on first name basis with another 20%, the number of ways remaining 10% are divvied up between pools makes little difference. [/spoiler]

fee's are a 20-100 year game theory.. not really part of the 2016 debate. because fee's are not to be considered a needed income stream, but more so a nice bonus right now

in 2012 there were less then 10 pools.. 2016 there are atleast 18.. just because they are not in america, should not be a reason to say tall tales of centralisation.

infact there are pools in iceland, china, and other places around the world.
i am not so worried about the reward halving causing issues.. its more so the manufacturing of asics that has a deeper and more long term cause/effect on the whole distribution of decentralization.

many simple pieces of code can be written to rectify this.
EG (reject solution if solved by IP address range that has solved within the previous 10 blocks)

that way there would always be 10 different pools..

but as long as there are no rejection rules. and the western pools cannot get their hands on cheap rigs(at cost or free due to selling at massive margin to competitors) then that will be the more long term cause of lessening the distribution.

but as i said.. there are more pools now than in 2013. (yes i know in both cases it is not as distributed as the good old solo mining days of 2009-2012)
but its not doomsday just yet

Fees are intended to replace block rewards as transaction volume increases and Bitcoin matures. It's worth noting that miners have already invested in millions of dollars of capital (mining equipment) for the purpose of mining. From an economic perspective, as long as miners receive enough to cover electricity and any other variable costs (such as time requirements, maintenance, etc), those miners should continue to operate.

Higher block rewards served to compensate miners for investing in the capital needed to enter the market, but they are very expensive for the network long term. Fees will help set a fair market compensation for miners over time.

1. "coins available".. what if i told you there are 10billion bananas around the world.. but your supermarket only sells 1 box a day.. if half of the box is still there by the end of the day. then demand is not there.. so they put a reduced price on the banana's to get rid of them.
the price of the bananas has nothing to do with what EXISTS in the world, but what is AVAILABLE on the market.

for instance. satoshi has 1million coins stashed away.. kerpeles has 800k coins stashed away.. they are not AVAILABLE on the market. so people do not care about them and dont even think about them in regards to bitcoins price.. BUT if they suddenly appeared on a market.. then the supply mindset would change..

so dont worry about the 16million coins.. all that matters is the supply AVAILABLE ON the market.. not in someones cold store

2. back in 2012-2013 mtgox had 800k coins at any one time, BTC-E had 300k coins.. yet in 2016 the amount of coins AVAILABLE is far far far less. just check out the volumes and you will see..
i remember people moving 10k btc coins every couple minutes on MTGOX.. now its just 10btc orders being moved every few minutes. so although the fiat valuation has risen the BTC volume has dropped.

3.
lets say you got 1 block an hour..
if you were a western pool. you would want to cash out about 80% of coins to cover the electric at the end of the month. and 10% to invest in more equipment. and 10% profit (if lucky)
but if you u are an asian pool where you also manufactured the rigs.. you would withdraw 20% of coins to cover electric. and ZERO for eqipment investment. leaving you 80% profit. to do with as you please. remember when asian pools sell rigs to the west, the west is literally giving the asian manufacturers a few free rigs due to the large retail markup.

so dont assume major pools are cashing out all of their coins.. to pay bills

Then disregard anything happening to the main pools, but if at any point miners decide to try and leave due to unprofitable reasons in those pools, couldn't they just increase the price the miners get and reduce the pool fee? The system would slowly turn to be more centralized and ruin the largest part of bitcoin.