Topic: Will Bitcoin fail when the block reward drops to 25BTC? - page 2. (Read 5009 times)

I anticipate that we'll get a pile of press around the block halving time, and that it will be good press.

It will remind the world that Bitcoin has been around for FOUR years, and that the supply is about to be permanently cut in half.

DAT, I know you're more than a little bit familiar with the economics of mining.  What do you think the distribution of miners and their profits are like?  What I'm getting at is do you think that half of the miners are currently mining below 50% of the current miner marginal revenue (giving a 50% profit) or somewhere else?  Where do you think the average mining profit sits w/r/t mining revenue?

FWIW I saw people in the mining subforum attributing the current decrease in hashrate to slowing down/shutting off miners for the higher summer electricity cost.  If someone could get a good guess at the average electricity rate change from winter -> summer it could be used to get a very rough estimate of the elasticity of miners.

I am not saying difficulty (hashing power) and price won't oscillate.  They certainly will.  I also think volatility (both in terms of hashing power and price) are likely to increase as we move through this "event".  I am just saying even a change from 10TH/s to 5TH/s doesn't materially change the strength of Bitcoin. 

No, he is just an arrogant person who thinks he is so much smarter than anyone else on this forum. He believes he is an economic hot shot. But even if he was, this way of ridiculing other people's opinions shows he just gets the laughs in winding people up. It's all over the forum. He even wanted to be paid to answer questions. Too bad claiming you know it better won't just do it in forums. If you don't want to educate others without being paid for it you shouldn't be on such a forum. You should keep your precious knowledge and sell it to rich college kids only. Only they deserve to deal with you. Since you won't pay any respect to others, why should they listen to you? One more thing, do you think it's funny calling people names?

Quite frankly, why isn't the moderator banning people who violate network etiquette so blatantly? Oh, yes yes - this post is a violation of your intelligence. I get it, blah.

The thing is, difficulty lags behind the hash rate (correct me if I'm wrong). So at the very least it will introduce a jolt where new coins suddenly more expensive to produce, without a corresponding decrease in difficulty. That "while" might be a few days, or it might be several months. If one has a look at historical difficulty charts, to me it looks like the difficulty is still oscillating from last year's bubble.

also, we should all probably just put cunicula on ignore because all we're doing is bumping this FUDlicious thread.

this:


and this:


also,

While "persistence of the status quo when a major change occurs should be assumed and does not need to be supported by argument," may not be true, that your specific scenario should play out is still a positive claim. Are you completely unfamiliar with the concept of burden of proof? Are you some kind of creationist or something?

Good. Then you should stop. 
At the top of the page click "Logout".

Honestly why do you talk like this? What is the purpose of these posts I keep seeing where you just insult people and provide 0 useful or interesting info?

Persistence of the status quo when a major change occurs should be assumed and does not need to be supported by argument. Nice, please continue. I've discovered that the best method of discrediting you comes from just getting you to respond. The revealed idiocy is so extreme that any thinking person necessarily perceives it.

Arguing with you is not a good strategy. The audience here is not sufficiently intelligent to follow a logical argument. It is like speaking in a foreign language. Or like US politics. Logical arguments are simply ignored and have no impact (watch I'll try in the next post). It is easier and more effective to goad one's opponent into writing something blatantly foolish.

10TH/s isn't significantly harder to destroy than 5TH/s.

Yeah it is 2x but 2x isn't much of a multiple.  For example lets say Chase Bank decided to destroy Bitcoin.  Granted very implausible but lets say they decided.   At ~$1M per TH/s to 51% the network at 10TH/s requires $10M and @ 5TH/s requires $5M.  Now yes simplisticly $10M is larger than $5M but any entity willing AND able to devote $5M to the destruction of Bitcoin could just as easily devote $10M.  If Chase bank could devote $5M to the destruction of Bitcoin they could just as easily devote $10M.  If $5M is worth it then $10M is also likely worth it.

The reality is given the tiny economic value of the network even $1M probably isn't worth it.

Now $200M or $5B that is a different story.    Those change the dynamics.  $200M is harder to hide from shareholders and harder to justify as an expenditure.  $5B puts Bitcoin out of the reach of most non-governmental entities.

In terms of "non-economic" (attacker isn't looking to directly profit from the double spends) 51% attack protection: 10TH/s ~= 5TH/s

Worst case scenario (for hashing power) is reward is cut in half and price doesn't rise at all.  If hashrate falls by half the remaining miners will be just as profitable as now.  That puts a floor at ~5TH/s which isn't materially different than 5TH/s.  It would take a drop of something like 95% or a rise of something like 5000% to materially change the strength of the network.

I think this claim originates from a simplistic analysis that assumes miners are selling all new coins immediately.

On that basis, 7200 new coins are coming onto the market every day. If the price remains stable around $5, there must also be $36000 of new additional coming into the Bitcoin exchanges each day (equal to 7200 x $5).

If the supply of new coins drops to 3600 per day, but the influx of new money stays at $36000 per day, the market price will rise to $10.

Obviously there are many factors that are not considered in that naiive analysis, so it's not of much use.

Careful, he'll call you an asshat....

it is FUD because you've given meager to no explanation in the OP about why you possibly think this specific horror scenario should play out. "explain why it WON'T happen, asshat" are words which come out of the mouth of someone trying to avoid the burden of proof. you made the claim, the onus is on you. BTC is trading at $5 a piece right now, so "BITCOIN WILL FAIL" claims are indeed positive claims, not the opposite.

do you have any evidence at all to believe what you wrote in the OP?

I don't think the price needs to necessarily double. If the average break-even price right now is around $3, the reward halving would kick it up to $6. So, as long as the price gets above, and stays above $6, it'll be similar to what we have been seeing since November.

If overall BTC supply is not heavily represented by miners then there's no reason to think that the BTC/USD rates will go up when the mining reward halves.

On the other hand, if supply is impeded by profit miners creating walls.  Miners would have to represent enough of the supply.  I just don't see that.

15 to 20 percent? Nice, drive out at least 60% of the other miner's capacity and there's your 50%. I don't at all doubt that Mystery Miner is in a position to greatly increase its capacity if the mood suits, so the drop out rate could be even lower than 60% and the blockchain could be theirs.

I keep seeing a claim that the Halving of the Bitcoin will cause it to double in value, but it's not clear to me why this would be. Any insights would be appreciated.

Let's have a look at a couple of different strategies to see what might happen:
Mining Strategy 1) Avoid speculating. Simply mine and sell coins continuously. Given that the mining difficulty lags behind the mining "effort", halving of the reward rate is basically a doubling of costs. These miners would simply be forced to withhold their coins until they get bids that they're happy with. If they control a sufficiently large share of the total Bitcoin supply, this would force the price up by pushing the "ask wall" to the right and any serious bidder will simply have to cough up more if they want to get Bitcoins.

Mining Strategy 2) Greed. Mine coins and hold onto them in anticipation of higher prices in the future, and only sell when there is a very good opportunity. These guys are more likely to be stacking months in advance, hoping for a large price increase. However, a sudden flooding of the market with cheap coins could prevent a price increase from occurring in the first place. Anticipating this, some may be thinking about taking profits early, "before the rush". The problem: if the miners are all equally greedy, how do they prevent a herd mentality from foiling their plan?

Mining Strategy 3) Speculation. Similar to strategy 2, but the intention is to bankrupt the non-speculators, thus gaining a larger share of future mining rewards. This one is very risky because there are lots of unknowns: assumptions that there are some non-speculating miners, and assumptions that one's own position is sufficiently strong not to get forced out of the market by an even stronger player who might keep the price low even longer.

Ironically, it seems the "dumb" miners (strategy 1) are the only ones actually making any regular returns, the greedy ones get frustrated, while the speculators end up subsidizing the Bitcoin economy and risk going bankrupt! In reality, the mining ecosystem probably has an eclectic mix of lots of different strategies (e.g.: mining and actually purchasing stuff with Bitcoin) so I agree that the actual effect of the reward halving will be unpredictable. My prediction is that there will be a spike in volatility that mostly lags behind the 50 to 25 coin reward change.

But how? What will they do?

Please refer me to the relevant posts and/or give me a valid reason for actually doing it.