What happens to Bitcoin value when block reward drops?

odolvlobo

legendary

Activity: 4522

Merit: 3426

Quote from: DualSignal on November 13, 2013, 04:16:33 AM

What is likely to happen to the Value of BTC against USD when the block reward is halved in 2016? Any predictions and reasons for you forecast. Is the Value likely to return to where it was before the drop?

Nothing happened the first time it halved. Nothing will happen the next time.

Quote from: ParabelluM on November 13, 2013, 04:27:00 AM

The price = Skyrocket

No.

Quote from: Gator-hex on November 13, 2013, 05:43:57 AM

It will cost more to mine new coins so pretty much guarantees as rise in Bitcoin price.

Quote from: ajax3592 on November 13, 2013, 06:55:16 AM

When the bitcoin reward per block gets reduced, there is a scarcity of Bitcoins which shoots up the value.

Quote from: c789 on December 06, 2013, 12:10:58 PM

So, when the reward halves, it effectively becomes more scarce, which will cause its value to rise.

The block reward has no virtually no effect on the supply of bitcoins. 3600 coins are mined daily vs. 200,000 coins traded daily. Even if all the newly mined coins were sold every day, halving that would change volume by only 1%, which is less than the daily variance.

yogi

legendary

Activity: 947

Merit: 1042

Hamster ate my bitcoin

The last time the block reward halved the price remained the same. But the number of transactions went though the roof as everybody wanted to have a transaction in those historic blocks.

MinerTrain213

newbie

Activity: 5

Merit: 0

I just started mining a few weeks ago but mining will continue to be strong and an asset to anyone who has a miner. Mining is just one way of being rewarded and it also allows the market and the entire globe to get in from a merchants perspective with 0 ZERO fees. When the rewards start to go down more the fees will start to rise but at best they should never get to the point of our current CC companies.

operrajunk74

sr. member

Activity: 344

Merit: 250

Quote from: natd on December 06, 2013, 12:50:49 PM

What if nobody else wants to mine BTCs? No new blocks, no possibility of new transaction, right?

Right, but I doubt *nobody* will want to mine BTCs because of block reward halving

natd

full member

Activity: 182

Merit: 102

What if nobody else wants to mine BTCs? No new blocks, no possibility of new transaction, right?

freakying99

sr. member

Activity: 429

Merit: 250

Pythagoras and Plato are my brothers.

Quote from: Sigmoid on December 06, 2013, 12:09:53 PM

Unless people start paying transaction fees asap.

10 cents per transaction is enought, miners just need to include more transactions

Jcw188

hero member

Activity: 546

Merit: 500

Carpe Diem

But does it make sense to actually end inflation entirely? Why not just keep halving it and maintain a constant, albeit very low, inflation rate? At some point won't there be way more "have nots" than "haves" and there'll be poor people, just like now with fiat?

MR2

newbie

Activity: 47

Merit: 0

Quote

It still rules out the deliberate easings that central banks use to debase fiat currency.

There is economical reason for it - not saying it is the best approach how it is handled nowadays, but you need to have some sort of control to counter-react in some circumstances. There will be always fraud but without that control many things would have much more impact, than they have now. Economics is nothing new, we have many years of experience what can happen in terms of currency; just because there is BTC does not mean, that we have to run into the same problems like before - people are starving because of such problems, people will die or lose everything. Are you from the US? Could you possible imagine what would happen with the US NOW, when there would be no regulation? What would've been happend some years back .. those subjects are not simple but they exist. Noone thought of them when inventing BTC ..

Cyberdyne

hero member

Activity: 630

Merit: 500

Quote from: natd on December 06, 2013, 12:01:31 PM

The block reward will be halving ad infinitum? 1BTC -> 0.5 BTC -> 0.25 and so on?

Correction, the block reward will be halving ad 1/infinitum

Sigmoid

newbie

Activity: 28

Merit: 0

Quote from: MR2 on December 06, 2013, 12:16:00 PM

It's an overall problem of BTC (one of many) - in the end only some few entities will control Blockchain = compromised = end of BTC. Just one of many problems which will prevent BTC from being successful.

Other Coins have much better technique and are more suited for future use.

I haven't yet seen a major alt coin with a constant linear money supply. It makes perfect sense to have predictable low inflation over a long term. It would make for a much more stable and much more ethical system.

It still rules out the deliberate easings that central banks use to debase fiat currency.

MR2

newbie

Activity: 47

Merit: 0

There will be transaction fees - easy like that.

People who already had mining hardware will stick to them and get the transaction fees - the hardware should have paid for itself already. There are already huge bitcoin farms. Most of them will be profitable with transaction fees.

Some will sell their hardware or shut down their hardware due of el. cost or they get damaged and not replaced. Difficulty will go down but stay high cause of ASICS going to be much cheaper.

Most of the big farms will stay alive where electricity is cheap or free. Maybe Asian, may be Afrika or even Dubai, when there is big money involved. Everyone else will be sorted out. Also possible: Solar Farms in Desert. Cheap area, free power, Sat Uplink. Whoever has feet in there will just grow more everyone else will starve.

It's an overall problem of BTC (one of many) - in the end only some few entities will control Blockchain = compromised = end of BTC. Just one of many problems which will prevent BTC from being successful.

Other Coins have much better technique and are more suited for future use.

Jcw188

hero member

Activity: 546

Merit: 500

Carpe Diem

Quote from: Sigmoid on December 06, 2013, 12:09:53 PM

It may (will) undermine hashing distribution, and eventually destroy bitcoin.

"Mining is for an elite" = security and anonymity has been compromised.

Unless people start paying transaction fees asap.

Yes this is a fear, if only a small number of users can ultimately mine. Isn't that one of the strengths of BTC, that there are many miners? I bet this has been discussed in a different forum, ppl might be thinking it's so far away it can be changed in the future.

c789

hero member

Activity: 850

Merit: 1000

One of the many things I love about Bitcoin is that it is based upon sound economic and computer science prinicples.

As for your question, the economic principle of scarcity comes into play. When something is scarce, especially scare and in demand, then its value goes up. So, when the reward halves, it effectively becomes more scarce, which will cause its value to rise.

Kinda makes you wonder what politicians are thinking when they decide to print more money to either pay off debt or so that "everyone can have more." Neither works.

Sigmoid

newbie

Activity: 28

Merit: 0

It may (will) undermine hashing distribution, and eventually destroy bitcoin.

"Mining is for an elite" = security and anonymity has been compromised.

Unless people start paying transaction fees asap.

fiddelingones

full member

Activity: 127

Merit: 100

Quote from: natd on December 06, 2013, 12:01:31 PM

The block reward will be halving ad infinitum? 1BTC -> 0.5 BTC -> 0.25 and so on?

Yes, you are correct, about every 4 years

natd

full member

Activity: 182

Merit: 102

The block reward will be halving ad infinitum? 1BTC -> 0.5 BTC -> 0.25 and so on?

blbec

newbie

Activity: 2

Merit: 0

Quote from: ParabelluM on November 13, 2013, 04:27:00 AM

The price = Skyrocket

I don't think so

i mean yes, but it will be much earlier before the reward drops. and after reward drops, it starts to returning back on the lower price.

ajax3592

full member

Activity: 210

Merit: 100

Crypto News & Tutorials - Coinramble.com

Quote from: DualSignal on November 13, 2013, 04:16:33 AM

What is likely to happen to the Value of BTC against USD when the block reward is halved in 2016? Any predictions and reasons for you forecast. Is the Value likely to return to where it was before the drop?

When the bitcoin reward per block gets reduced, there is a scarcity of Bitcoins which shoots up the value.
Anything produced in less number with high demand has high value.

AuroraHF

hero member

Activity: 784

Merit: 500

Won't better equipment be produced to keep up with the difficulty, hence it's easier to mine? As long as the equipment stays cheap though.

Gator-hex

hero member

Activity: 490

Merit: 500

It will cost more to mine new coins so pretty much guarantees as rise in Bitcoin price.

Expect to see lots of Bitcoin arbitrage scams around this period. They go something like this...

I have the miracle mining machine, you'll need it to remain profitable, pre-order with Bitcoins now!

Reward drops, bitcoin price rises.

Sorry the project has been canceled / indefinably delayed (until you cancel order), here's your money back, in dollars, because we had to convert it.

They pocket the price rise for themselves, the people who pre-ordered in Bitcoins lose out.

Topic: What happens to Bitcoin value when block reward drops? (Read 1299 times)