Topic: What happens when the block reward halves to 25? - page 3. (Read 12767 times)

Hey thanks for clearing that up Stephen.

There's two goals -- to get a bitcoin economy functional where the currency circulates, yet at the same time allow it to function as a store of value.  Since the future demand can't be known, the only lever available is the supply.  

So if the issuance starts out fast but continually slows, it can serve both needs.



 - http://en.bitcoin.it/wiki/Controlled_Currency_Supply
 - http://en.bitcoin.it/wiki/FAQ#How_are_new_Bitcoins_created.3F

Sorry, I'm sure this is answered somewhere but in my limited research I didn't find an answer...

What was the original reason for the reward half? Is it to increase coin value, to prolong release of all coins...? Just curious

You forgot that price is not just influenced by supply. Demand also plays an important role and will decerase if the price goes up.
Some users will buy more BTC weeks / months before the cut, because they expect the BTC/USD rate to go up, which creates a higher demand *before* the cut will happen.
Other users will sell their BTC after the cut to bring their profit home.

50% are sold right away?  So wouldn't that mean that halving the block reward should decrease the supply and increase the price by 25%.  Or is my logic derp?

I've heard half the coins mined are sold right away..

Does anyone know what perecentage of the coins being sold on a daily basis come from miners?  If most of the coins being moved by the big exchanges are just miners cashing in their profits, the lower supply should cause the price to increase.

Another thread on the topic:
 - https://bitcointalksearch.org/topic/date-for-25-btc-per-block-67185

I think this thread deserves a bump.

This ^^ and the 50BTC/block will be a fork of but no longer actually Bitcoin.

We don't need to. Bad blocks will be already rejected by existing code.

Maybe we need every major pool operator to take the "Oath of Satoshi" and promise to always run their pool and code in such a manner that it halves reward every 210k blocks and promise to always reject code that does not.

Difficulty doubling does.  So does price of USD: BTC falling half.  Both events have occured in the past many times and are essentially unpredictable.  The subsidy cut however is very predictable.

I thought we were talking about predictability...
As long as you factor in the subsidy-halving into your profitability calculations, you should be good to go. Difficulty, on the other hand, you can only guesstimate.

I don't believe difficulty increases have that much of impact on profit as cutting the payout in half. All we can hope is value of 1btc to double at least - Then its all good.

It really depends on the direction and size of moves in the btc/usd exchange rate.  This is because the pace of block generation (faster vs. slower) will generally follow a price move (increase vs. decrease).  For example, currently the difficulty hasn't caught up to the price move up -- and mining is still profitable for most, but only marginally so.   So instead of each block taking an average of 10 minutes, it is taking maybe 9 and 1/2 minutes as hashing capacity likely exceeds what the difficulty level target would suggest exists.

To get to a rough estimate on a date -- with roughly 7,200 BTC generated per-day then there are then 309 days remaining.  This puts the target at December 10th.  So to guess at the range then lets say we end up with a $10 BTC/USD by April, and a $15 by summer.  Block 210,000 (the first block where the reward drops to 25 BTC) could then come as early as mid-November.  If instead we drop back to a sub-$3 BTC/USD perhaps that block will come in late December instead.   Or maybe some affordable FPGA or ASIC design ships in quantity and we're there before Halloween!

Keep in mind though, no matter what exact day it occurs, it will nonetheless will occur with a known amount of BTCs issued by that time -- exactly 10,500,000 BTC.

[edit: added example to explain how price move can affect the pace of block generation.]

You're saying this completely predictable subsidy cut is a bigger problem than the mostly unpredictable difficulty?

I think the price will go up before the split. A lot of people are going to be expecting the value to increase and will start hording coins. I imaged the price will drop a while after the split but not fall below four dollars. Right now most people need the price to stay above two dollars to justify running a miner. After the split the price will need to be above four dollars to earn the same amount. It would have been nice if they had done a more gradual decrease rather then cutting it in half.

I believe this is huge problem for bitcoin stability, having 50% change in basically payout. I would be very careful on investments made till the change happens or at least make the investments break even on the rough date of change. I am normally pretty good on my gutt feeling when it comes to market and stocks and this I believe will have bad impact on price per btc, For how long idk...

Is there a link to an accurate estimate of the DATE that the block will split?