Topic: Shared idea on Bitcoin scarcity and it's relation to halving (Read 189 times)

The limited supply of bitcoins is what makes it so valuable and good especially against inflation. It will be more valuable as the years go by as the amount available to everyone further reduces, thanks to halving. With what you know about bitcoins and how more scarce it is becoming, it is a good choice and plan planning on how to get more bitcoins. When bitcoin becomes very scarce, Holders who have a lot of bitcoins will be able to make a lot of profit from it should they decide to let some of the bitcoins they have back into the market.

That is correct, but it is still a block that was mined and it wasn't created in the protocol by definition. Going by this definition, then Satoshi would have far more than 50BTCs, because he was the only person mining at that point in time.

The 50BTCs would still be considered to be a part of the total supply.

First of all, congrats for plunging deep into the cryptocurrency pool and learning a little bit about Bitcoin. If I had a dollar for every time I wished I had started using Bitcoin sooner, man.

"Yes We Can" is the antithesis of Bitcoin's inherent scarcity. "No, We Cant (make more)" is more accurate. No central authority, not even its creator, will be able to change the system's trajectory thanks to its decentralised nature. Digital democracy at its finest, right there.

Dont worry about the terms because everyone is still learning here. The main lesson? Consensus underpins the halving and scarcity features of bitcoin.

You are right that the 50BTC coinbase reward from Genesis Block 0 cannot be redeemed or spent, but that does not invalidate the post you are replying to.

Satoshi just created a protocol but did not put any Bitcoins into it. It was designed to function in a specific way with a distribution mechanism. The 50 bitcoins from Block 0 were not put by Satoshi either and miners are still redeeming their coinbase reward long after any involvement from Satoshi.

- Jay -

Correct me if I'm wrong but afaik that's not accurate.

The 50coins in the genesis block can't be spent, but they exist nonetheless.

0, Satoshi started Bitcoin with no Bitcoins.

The distribution mechanism of Bitcoin is actually dictated by halving itself. Satoshi used a base of 50 Bitcoins and halved it for every 210,000 blocks. The distribution of Bitcoin's supply would be a geometric progression with a ratio of 0.5. If you use the formula to calculate the limit of it, you will get approximately 21 Million, but not exactly. As such, there will actually be less than 21 million Bitcoin in existence in the future.

No!

Then how many of the bitcoins were put out in the Blockchain from the onset by Satoshi. I always thought it's 21million and these is quite different from the number of blocks . Aren't they?

It occurs exactly every 210,000 blocks not approximately.

Capped supply has nothing to do with mining difficulty at least not directly. The number of miners or more precisely hashrate is the only reason determining difficulty

No!

You got it right here. Did you copy this whole text from two different places that it has this contradiction inside?!

Exactly and in fact this is one of the most important characteristics of Bitcoin that sets it apart from majority of altcoins.

Let's get it clear first of all, bitcoin is not a scarce commodity, asset or digital currency as the case maybe unlike the other centralized currencies and assets, whenever you are interested in bitcoin investment you're free to come in at any given time by just going through the decentralized p2p network and acquire your bitcoin, talking more about halving, bitcoin has a limited supply but that doesn't mean after the whole blocks had been mined it will be scarce, the value and distribution of bitcoin increases and continues respectively with time.

Bitcoin mining is modeled after gold mining... The more gold is mined the more the reserve is depleted and it becomes harder for miners to mine new gold due to scarcity. The depletion of gold reserve and the reduction in the amount of gold that can be mined is called deflation in Bitcoin context. In Bitcoin mining, deflation is the halving of the number of bitcoins that can be mined, and this occurs every four years. With the halving, bitcoins become scarce and harder to mine. This scarcity contributes to the increase in the price of Bitcoin. The harder mining bitcoins get the more valuable Bitcoin becomes

This is in contrast to fiats currencies, which supplies are continuously inflated as long as the papers and computer numbers for printing them are in abundant. This is why they become worthless overtime thereby weakening the purchasing power of fiat holders.

Are we saying the Bitcoin community can't be compromised to achieve this alterations in halving? Wow if yes then I am good to say Bitcoin is void of corrupt practices. It's no respecter of social status you have to play by the rules of the game!

Satoshi must have thought less of how this digital currency will have become. I can't imagine him knowing that Bitcoin will develop such a resistance to centralization. Now I hear of CBDC I'm sure it won't affect Bitcoin to the extent the government think it will.
Nice one !

I think the Bitcoin "scarcity" for Dummies, can be best explained by thinking of the old Gold miners.

They dug tunnels into the ground, trying to find Gold channels and then excavating it and using hard labor to extract it from the earth. They know that there are a limited amount of Gold in the earth, so they competed with each other to get it.

Bitcoin was designed by Satoshi Nakamoto to simulate the same concept, where a limited amount of tokens are hard-coded into the protocol and people are competing to mine it. Satoshi also made sure that the block reward will decline over time, to simulate the depletion of the resource... like Gold. 

We have to admire Satoshi's brilliance, if you look at this whole concept. 

Bitcoin scarcity follows the trail of bitcoin mining down to the mandated 10 minute block mining duration, 2 weeks mining difficulty and halving. Bitcoin mining made bitcoin what it is today. Think of how many USD is equal to 1 bitcoin. Illustrating how highly inflated fiat is. But, if, bitcoin wasn't scarce it would be a weak technology with minimal value. Minting bitcoin out of thin air, or if the government manipulated and controlled halving, a reserved bitcoin won't exist. If anybody can perform 51% attack and double spending - the idea, algorithm and tech, of bitcoin wouldn't make it thus far.


Having no provision for such in the protocol would lead to no hard fork. Miners get discouraged of such nuisance it'll cause, that they don't execute or follow a hard fork. Those that try to manipulate the algorithm will get staled or orphaned.


To me the institution of bitcoin scarcity is teaching the world that  a monetary system can be managed with no central body, while maintaining the circulation limit. It would need a million and one man power, if it was a manual process. More meaning to why mining a block takes up much electricity. So, bitcoin design revolves on an appointed time, to execute a function.

^ For me, this scarcity is hard-coded into the BTC protocol and cannot be changed without a consensus among the network's participants. This limit was intentionally set by BTC's creator to mimic the scarcity of precious metals like gold. So the relation of BTC scarcity and the halving is a very simple thought, to reduced supply growth. The halving events result in a diminishing rate of BTC issuance over time. In the early years of BTC, the reward for mining a new block was 50 BTCs. After the first halving, it became 25 BTC, then 12.5 BTC, and so on. This reduction in the reward causes a slowdown in the rate at which new BTCs are mined and introduced into the ecosystem. I think that is all about.

"Why is Bitcoin said to be scarce?"
Bitcoin is considered scarce primarily due to its built-in supply limit and the rules of its protocol. The maximum supply of Bitcoin is capped at 21 million coins. This scarcity is achieved through the process of mining, where miners solve complex mathematical puzzles to validate transactions and create new blocks on the blockchain.
Every four (4) years, an event known as the "halving" occurs in the Bitcoin network. During a halving, the block reward that miners receive for their efforts is reduced by half. This event is programmed into the Bitcoin protocol and occurs approximately every 210,000 blocks. As a result, the rate of new Bitcoin issuance decreases over time. The combination of the 21 million coin limit and the decreasing issuance rate due to halvings creates a scarcity effect, making Bitcoin increasingly difficult to mine and ultimately limiting its total supply.
This scarcity is in contrast to traditional fiat currencies, which can be printed by central banks without a fixed supply limit, potentially leading to inflation. Bitcoin's scarcity has contributed to its appeal as a digital store of value and a potential hedge against inflation.

"On addition of more coins to the already distributed 21 million coins will this change the halving graph of complex?, Will it alter the timing of halving in Bitcoin?"

The Bitcoin halving events are programmed into the Bitcoin protocol and occur automatically based on the block height, specifically every 210,000 blocks. This means that the halving schedule is determined by the consensus rules of the network and is not subject to arbitrary changes by individuals or entities. The protocol ensures that the halvings occur roughly every four years, but the exact timing may vary due to the unpredictable nature of block generation.
The halving events are designed to control the issuance of new bitcoins, gradually reducing the block reward and ultimately capping the total supply at 21 million coins. There is no provision within the protocol to extend or delay the halving events beyond the predetermined schedule.
Adding more available coins or changing the halving schedule would require a hard fork of the Bitcoin network, which would likely result in a split and the creation of a new blockchain. Such changes would require widespread consensus among the Bitcoin community, including miners, developers, users, and other stakeholders. Given the decentralized and consensus-driven nature of the Bitcoin network, making significant changes like altering the halving schedule is a complex process and would likely face significant resistance.
In summary, the proposed date of Bitcoin halving is determined by the protocol's rules and is not easily subject to delays or extensions. Any major changes to the halving schedule would require consensus among the Bitcoin community and would likely lead to a contentious fork of the network.
From the above I just got better understanding that even the man who invented Bitcoin has no monopolised power or single power to alter the trend of Bitcoin and halving period. It has to be consensus between many Bitcoin users .

I may not use the correct terms I'm still learning I hope this clarifies whatever confusion another may have concerning Bitcoin scarcity and how it relates to halving