Topic: Why reward halving instead of doubling? (Read 431 times)
It started from 50 fo faster development of supply volume. And now it going to be lower and lower for higher prices and lower inflation
I wonder how much of an increase transaction fees would need to get to incentivize miners to stay.
Wrong question. Difficulty is floating, it'll adapt to whatever is there. A single asicminer using a hundred watts is enough to keep blocks being produced.The question you should instead ask is "how much of an increase is needed to keep security acceptable?". Because if a single asicminer is all thats keeping the network going then two asicminers would be all that were needed to reorg blocks and replace recent transactions (and twenty could replace ones that weren't particularly recent!).
A couple years ago during congestion before segwit was rolled out, there were sustained total fees in amounts similar to the block subsidy! So I think that's pretty strong evidence that fees can be high enough to provide for reasonable amounts of security.
At the moment Bitcoin arguably has too much capacity now between changing usage patterns (e.g. batching, and sweeping during low fee times) and segwit and as a result fees are floating at about 2% of subsidy and often running right at the default minimum relay fee. After the halving they'll end up about 4% (though, likely they'll go much higher in a brief period after the halving due to congestion, due to the rate of block production going down for a little while).
our track now is
2012 25
2016 12.5
2020 6.25
2024 3.125
2028 1.5625
2032 0.78125
2012 25
2016 12.5
2020 6.25
2024 3.125
2028 1.5625
2032 0.78125
In the distant future, bitcoin's price curve will eventually flatten, probably after one of those future years you quoted. I wonder how much of an increase transaction fees would need to get to incentivize miners to stay.
What was Satoshi's reasoning behind halving the mining reward over time? Why did he not instead choose to do it in reverse and double the reward at each "doubling" (up to 50 BTC and then 0 - same total mined reward but distributed in reverse order)?
It seems that increasing the mining reward over time would have made more sense for at least two reasons:
1) It doesn't favor early adopters.
2) As mining difficulty rises, so does the cost of mining and therefore, the reward should be higher as well. Of course the rising price of BTC compensates for that but as we've seen recently, the price doesn't necessarily grow all the time.
Discuss.
It seems that increasing the mining reward over time would have made more sense for at least two reasons:
1) It doesn't favor early adopters.
2) As mining difficulty rises, so does the cost of mining and therefore, the reward should be higher as well. Of course the rising price of BTC compensates for that but as we've seen recently, the price doesn't necessarily grow all the time.
Discuss.
Well who the fuck is going to mine for 0 that's why.
I would argue that instead of 21million coins with ½ ings every 4 years.
32 million coins with ½ ings every 6 years would have given more time for it to be adopted.
We would be coming up to second ½ ing in 2021
I see issues with bitcoin at the ½ ing point that drops us to 0.78125 coins reward that is only 8 years from now.
If we split at 6 years
2015 25 coins
2021 12.5 coins
2027 6.25 coins
2033 3.125 coins
2039 1.5625 coins
2045 0.78125 coins
our track now is
2012 25
2016 12.5
2020 6.25
2024 3.125
2028 1.5625
2032 0.78125
I don't see how it works at this pace.
Put it this way. Of all the myriad coins out there that have tried different distribution schemes, none of them are ever likely to be as successful as this one.
We could spend forever debating how or why that decision was reached, but at the end of the day, it worked. If you could go back in time and make major alterations, there's no guarantee the result would have been the same.
We could spend forever debating how or why that decision was reached, but at the end of the day, it worked. If you could go back in time and make major alterations, there's no guarantee the result would have been the same.
If we were to have doubling every 4 years instead of halving, it'd look more like a scary event than an exciting one. In fact, wouldn't BTC turn into a ponzi scheme?
Bitcoin was launched and had only a handful of people supporting it in the early days. If we had block reward doubling, it means BTC would be 2x less scarce every 4 years.. so in order to keep its price up, we would've needed to gather more and more investors to keep pumping money in it to maintain the price - until they can't
I mean, imo Satoshi placed the best distribution scheme on BTC and it's a proven huge success like you said. If we had BTC start from a block reward doubling scheme, we would've had an alt overtake it as soon as a dev thought of creating a scace cryptocurrency. Hence, BTC would've been a big shitcoin right now..
So basically, based on your theory, BTC rewards should be doubled. But what exactly will it do? It'll speed up the entire process of getting all that BTC on the table to be mined as quickly as drinking a cup of coffee. It'd have been all mined years ago if this theory was to be considered from the beginning. The reason why we all follow the halving strategy is the fact that the cause behind BTC's price rise is this halving only, whether you trust us or not.
What was Satoshi's reasoning behind halving the mining reward over time? Why did he not instead choose to do it in reverse and double the reward at each "doubling" (up to 50 BTC and then 0 - same total mined reward but distributed in reverse order)?
It seems that increasing the mining reward over time would have made more sense for at least two reasons:
1) It doesn't favor early adopters.
2) As mining difficulty rises, so does the cost of mining and therefore, the reward should be higher as well. Of course the rising price of BTC compensates for that but as we've seen recently, the price doesn't necessarily grow all the time.
Discuss.
It seems that increasing the mining reward over time would have made more sense for at least two reasons:
1) It doesn't favor early adopters.
2) As mining difficulty rises, so does the cost of mining and therefore, the reward should be higher as well. Of course the rising price of BTC compensates for that but as we've seen recently, the price doesn't necessarily grow all the time.
Discuss.
So you do talk about reversing the whole system? Doubling reward rather than halving? If thats the case then we wont see on where Bitcoin is placed now.
Satoshi made the entire system to be like this and i dont see anything wrong with this perfect idea not only it limits out the supply but also its also not prone
to centralization.When it comes to miners then only the toughest ones would able to sustain in spite of the current price we are into.
I think this is a comparable appreciation for early adopters. The system that has been designed by Satoshi makes the internal value scale of BTC tends to increase, moreover the blockchain is increasingly popular and adopted by many companies. With limited supply, the level of difficulty of mining which also increases, demand increases, it will increase prices. This is not an instant process, there are times when correction, strategy, and mental are needed. There is no guarantee that prices will always go up, understand the risks and use the best possible opportunity to make a profit
1.
New generated coins are reduced, so the inflation rate is reduced.
Now the inflation rate is 3.7%. After halving, it will decrease to 1.8%.
After 2024 halving, the inflation rate will be lower than 1% which is lower than the inflation rate in almost all developed countries.
New generated coins are reduced, so the inflation rate is reduced.
Now the inflation rate is 3.7%. After halving, it will decrease to 1.8%.
After 2024 halving, the inflation rate will be lower than 1% which is lower than the inflation rate in almost all developed countries.
Does the reason we're seeing the bitcoin price fluctuating by $2000 have something to do with its large inflation rate? We see developing countries with that kind of inflation rate lose half or a third of its currency value every now and then. 3.7% sounds like a lot of inflation but I don't know how the inflation rate affects the current price of bitcoin. When the inflation rate goes down, shouldn't it make bitcoin change price less drastically? Between now and 2016 halving we're no longer seeing price changes by the hundreds but by the thousands, even though the inflation rate is less than it was before 2016.
So does that mean after the next halving, price changes by even more thousands of dollars will be regular?
Everything is very logical, a reduction in supply will stimulate a price increase, but with the opposite option, bitcoin would only depreciate faster and faster, also it is not worth explaining what high risks the first bitcoin users bore, unlike the current ones. Therefore, these considerations have nothing to themselves.
I can say Satoshi can not be just only one person, he created bitcoin in a way that it will be limited, scare and reducing in supply. These are what keeps bitcoin growing. Otherwise, bitcoin will be nothing.
Put it this way. Of all the myriad coins out there that have tried different distribution schemes, none of them are ever likely to be as successful as this one.
We could spend forever debating how or why that decision was reached, but at the end of the day, it worked. If you could go back in time and make major alterations, there's no guarantee the result would have been the same.
We could spend forever debating how or why that decision was reached, but at the end of the day, it worked. If you could go back in time and make major alterations, there's no guarantee the result would have been the same.
Well, the action taken by Satoshi Nakamoto was taken because things of this nature will occur in the mind of the Bitcoiners. Believed me, the actions taken in my opinion was to reward the early adoptors and not to randomly give richies to those out there. This was a great move for the entire technology to strive hence it may not. Reward halving is better than doubling holders, think of this mate: those who help built a network be left aside and then reward those who get involve into the network for quick Cash out or to enrich themselves.
If you make a continuation of mining of bitcoin it hits hard the rule of the market that is the supply and demand and the halving is only coming every four years, and I think it is quite balanced and normal if many people getting mine a lot of coins the market price of the bitcoin does not becomes profitable enough because many people now hold the same value and also the halving is good because not all the people are going to mining think about this many people getting more mining computers of bitcoin and they now using those power to make more money without doing anything just to mine.
What was Satoshi's reasoning behind halving the mining reward over time? Why did he not instead choose to do it in reverse and double the reward at each "doubling" (up to 50 BTC and then 0 - same total mined reward but distributed in reverse order)?
It seems that increasing the mining reward over time would have made more sense for at least two reasons:
1) It doesn't favor early adopters.
2) As mining difficulty rises, so does the cost of mining and therefore, the reward should be higher as well. Of course the rising price of BTC compensates for that but as we've seen recently, the price doesn't necessarily grow all the time.
Discuss.
That's some out-of-the-box thinking, and I like that. But let's consider the effects of such a decision.It seems that increasing the mining reward over time would have made more sense for at least two reasons:
1) It doesn't favor early adopters.
2) As mining difficulty rises, so does the cost of mining and therefore, the reward should be higher as well. Of course the rising price of BTC compensates for that but as we've seen recently, the price doesn't necessarily grow all the time.
Discuss.
1. It would be barely possible to boost adoption as there would be a very small amount of mined Bitcoins.
2. The number of new Bitcoins appearing from one halving to another would be huge, and this could easily cause the inflation problem.
In the end, I don't think Bitcoin would become a thing in this scenario, as it would be impossible to have about a hundred million users right now (BTC would just be too scarce).
Do you think Satoshi looks like someone who will think of what everyone thinks? The general opinion might have been the way you said it. But he has already chosen the best way for Bitcoin to reach its true potential. He has also made the right choice, as far as we have seen so far.
What was Satoshi's reasoning behind halving the mining reward over time? Why did he not instead choose to do it in reverse and double the reward at each "doubling" (up to 50 BTC and then 0 - same total mined reward but distributed in reverse order)?
It seems that increasing the mining reward over time would have made more sense for at least two reasons:
1) It doesn't favor early adopters.
2) As mining difficulty rises, so does the cost of mining and therefore, the reward should be higher as well. Of course the rising price of BTC compensates for that but as we've seen recently, the price doesn't necessarily grow all the time.
Discuss.
It seems that increasing the mining reward over time would have made more sense for at least two reasons:
1) It doesn't favor early adopters.
2) As mining difficulty rises, so does the cost of mining and therefore, the reward should be higher as well. Of course the rising price of BTC compensates for that but as we've seen recently, the price doesn't necessarily grow all the time.
Discuss.
If the emission schedule were reversed, the hard limit on supply would create a dangerous situation. Inflation would increase exponentially until it abruptly stopped at 21 million units, at which point miners would shut down en masse due to the huge reward drop. The network could come to a grinding halt.
The reward halvings were intended to do the opposite -- smoothly transition to zero inflation. The initial large subsidy was also meant to bootstrap the network by incentivizing miners with larger native rewards. Satoshi expected price and miner fee revenue to grow as the network grew, lessening the need for the miner subsidy over time.
If it did favor early adopters, then they basically control the market for almost the entire time before the event which is as you said "doubling". Not to mention that there wouldn't be even enough traders to adopt BTC because of the lack of supply that early adopters would encounter. It's kind of understandable though, the concept of starting from small then building it slowly to become bigger and bigger, but that wouldn't give out a solid foundation because Bitcoin itself requires the community to continue existing.
As for the second scenario, wouldn't that give out a lack of development? Especially with regards to the mining part. Plus, early adopters should still get some sort of advantage. If you were to compare it to the first reward of 50btc per block, then miners would hugely be disadvantaged once a few years have passed right? Just compare it to now and imagine if at the beginning. No one would probably mine at that point, with the minimal reward they are getting.
As for the second scenario, wouldn't that give out a lack of development? Especially with regards to the mining part. Plus, early adopters should still get some sort of advantage. If you were to compare it to the first reward of 50btc per block, then miners would hugely be disadvantaged once a few years have passed right? Just compare it to now and imagine if at the beginning. No one would probably mine at that point, with the minimal reward they are getting.
it would have complicated the supply distribution by A LOT. you want the bitcoin supply to be limited and you want to have enough coins in circulation to not run out or feel constraints. if you start from a small amount at first and then double it that means at first the circulating supply was very little, nobody would have used bitcoin if total supply was 0.00000100!
i say complicated because with your proposal the supply distribution should have been like this:
1- initial supply release either with a premine (which is a terrible idea) or a big mining reward per block (which again is terrible idea) or the same 50 per block for some time (but how long? 1 year? 2?) to get a moderate supply going
2- reduce it to a smaller amount (eg. 1 satoshi/block) then double it every 4 years.
3- reduce it again after certain point to still keep the maximum supply capped at 21 million.
now this design might look good at first but it has a big problem, it can not take into consideration the adoption we have. for example you can set the initial supply at 1 million then reduce it to 1 sat/block but after reaching 1 million you could see mass adoption and then face scarcity. additionally reducing block reward like that will kill hashrate.
now lets look at the current design.
initial block reward is high (50) it creates enough supply so that we stay ahead of the adoption and never face sever scarcity. and since the price is very little it justifies the cost by being high.
as bitcoin grows its price grows and when we cut it in half the miners are still receiving a lot more money than before. for example when block reward went from 25 to 12.5 the price was $600 and 12.5BTC was worth $7500 in a little while when 12.5 is cut in half and turns into 6.25 the miners (with current price) are going to receive about $43000.
as you can see even when we cut in in half they are still receiving A LOT more money compared to the beginning when the reward started being this much.
this works because it changes with adoption -> more adoption > higher price > higher reward cost > half of reward still has a lot higher value
i say complicated because with your proposal the supply distribution should have been like this:
1- initial supply release either with a premine (which is a terrible idea) or a big mining reward per block (which again is terrible idea) or the same 50 per block for some time (but how long? 1 year? 2?) to get a moderate supply going
2- reduce it to a smaller amount (eg. 1 satoshi/block) then double it every 4 years.
3- reduce it again after certain point to still keep the maximum supply capped at 21 million.
now this design might look good at first but it has a big problem, it can not take into consideration the adoption we have. for example you can set the initial supply at 1 million then reduce it to 1 sat/block but after reaching 1 million you could see mass adoption and then face scarcity. additionally reducing block reward like that will kill hashrate.
now lets look at the current design.
initial block reward is high (50) it creates enough supply so that we stay ahead of the adoption and never face sever scarcity. and since the price is very little it justifies the cost by being high.
as bitcoin grows its price grows and when we cut it in half the miners are still receiving a lot more money than before. for example when block reward went from 25 to 12.5 the price was $600 and 12.5BTC was worth $7500 in a little while when 12.5 is cut in half and turns into 6.25 the miners (with current price) are going to receive about $43000.
as you can see even when we cut in in half they are still receiving A LOT more money compared to the beginning when the reward started being this much.
this works because it changes with adoption -> more adoption > higher price > higher reward cost > half of reward still has a lot higher value
Because:
- Bitcoin should be the opposite of fiat. Fiat's supply is inflating which causes its value to depreciate over time. Bitcoin's supply is fixed and the reward deflates every 210,000 blocks or approximately every 4 years which makes every single BTC appreciates in value over time, or so it should.
- This was somehow likened to gold and other precious metals and stones in that over time the supply dwindles. Mining in both Bitcoin's and gold's sense will produce less and less reward over time because the supply is not unlimited as compared to fiat.
- It is for me a basic supply and demand approach. If the supply lessens while supposing the demand increases or remains the same, every BTC gains value.
- If you double the reward every 4 years, there is no sense of urgency, of people competing to get it now rather than tomorrow or in the future. And, again, this adds value.
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