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I think the impact on the bitcoin price is not easily predictable.At least in theory, a known event should not have an abrupt impact on the bitcoin price at that time, because all parties (bitcoin market participants and miners) reflect that information in advance when weighing up the economics of their current decisions. There may be an action required at that point (such as miners turning off equipment), but, again in theory, the potential for all those actions and their consequences should be built into the current price in a fully informed market. In fact the entire future schedule of reward reductions should, in principle, already be built into the market's valuation of bitcoin in this way.That means that any resulting movements that do occur at such times are not directly from the event itself, but from endogenous market reactions as talk of the event becomes elevated and market participants try to collectively trade off the sentiments of all other players and less informed participants. This endogenous action may (or may not) trigger some increased volatility around the event, but, again in theory if the market were efficient (a big "if") at pricing in the events, it would not be possible to profitably predict the price reaction one way or the other.Having said all that, the bitcoin market is very immature, so in practice it may be possible to speculate on whether the market is actually pricing in the event efficiently or not.
Hi Guys, Just thought i would throw in a comment from a few conversation i had over the last couple of months; I know a guy involved in a large mining operation in china (3 warehouses filled with custom built 16nm miners - shhhh apparently anything under 20nm is illegal in china...(military spec)) and he has suggested to me once before that they are profitable <$100USD p/btc at current block reward. ##i deleted all the details as they are a bit fuzzy in my mind and did not want to speculate or spread misinformation. i will say they are not on your everyday power deal and are looking to expand x3. i will most likely see this guy this week so will clarify the details further and pull out a calculator to check some figures and repost if people are still interested.I have no reason the doubt this fellow and the way he conducts himself it seems as though mining profits especially for their group are anything but thin.
Prices will quadruple..invisible hands at work
and ...
Markets have already discounted the halfing... Price won't double because of the halfing, i will guarantee that
Understood .. makes sense ..I still think more people should consider that potential outcome prior to the halving ..
@bytemaster: how about a provocing blog article in the line of your post above? Adding some of the remarks from the whole thread ... i have a feeling people are taking you blog serious already and we might be able to actually have the yet anotger article that shows "how bitshares experience improves the bitcoin protocol" (you get what i refer to?)
Toast, Nathan, and myself were discussing this very thing tonight. We came up with the following deadlock:Scenario one:1) The reward halves and Big Oil Miners already running on thin margins will go dark.2) With the big boys turned off the diff is so hard the remaining diehards won't solve a block for weeks or months or years and the diff can't adjust until a block is found. Can Bitcoin survive that long with zero transactions processed? Certainly Overstock, NewEgg, TigerDirect, etc. won't put up with that .3) Rinse and repeat every 4 years.Scenario Two:1) The Big Miners decide to mine at a loss to get the diff down. However since they need to have enough hash to get a block out the diff won't adjust as much. It is a tradeoff between an insufficient diff adjustment (too much hashing) and the block times becoming so long the transaction time is untenable (on an already super slow network).2) A balance is found where the Big Miners can survive while the diff reduces back to profitable.3) Rinse and repeat every four years.Scenario Three (most likely)1) The big miners see the golden goose is almost dead. Keeps the cash incinerator lit until the halving and walk away.2) Diehard miners stay online until Bitcoin eventually produces a block after a year or so and the diff adjusts. Maybe someone will be around who cares. Everyone else will have long since jumped on to BitShares or some other DPOS/POS alternative.3) No rinsing or repeating required.
Just wanted to get some thoughts on bitcoins 2016 reward halving.Right now, bitcoin is paying 25 BTC per ~10 minutes in the form of inflation to keep its network secure. When the reward halves to 12.5 BTC in 2016, the price has to increase dramatically to maintain the same level of security. If the price doesn't continue up, hashing is likely to decrease significantly. It's possible that 95% of mining hardware will be rendered obsolete, causing hash rate to plummet and difficulty to readjust. Seems like a really big unknown. What will happen?
One thing I never quite got is why didn't Satoshi just go through the trouble to make a better decaying function. It is like BTC was meant to be a proof of concept which turned out to be a game changer.
Quote from: MeTHoDx on September 23, 2014, 06:53:00 pmThe halving occurs every 210,000 blocks, which is roughly equivalent to four years. Why not simply perform a miniscule adjustment on every block, which occurs roughly every 10 minutes? To be equivalent to the four-year halving, the reward amount would simply be multiplied by a cumulative constant. That constant would be the inverse of the 210000th root of 2, which is 0.99999669930458749782628258129969. The resultant value would need to be rounded down to the nearest satoshi, so that it eventually rounded down to zero.To make the conversion as equivalent as possible, it could either be done at the midpoint between two halvings (the next one being Nov 2014), or, at the next halving (in Nov 2016), a "half of a halving", i.e., a reduction by the square root of 2 (0.70710678118654752440084436210485) could be performed.I'm surprised that this was not implemented in the original protocol by Satoshi. It just avoids a big abrupt event that will cause chaos.The thing is making it go to half is about the most abrupt change he could reasonably make. It all seems like random numbers, so why not just 10% adjustments but more often etc. 5%.. whatever..
The halving occurs every 210,000 blocks, which is roughly equivalent to four years. Why not simply perform a miniscule adjustment on every block, which occurs roughly every 10 minutes? To be equivalent to the four-year halving, the reward amount would simply be multiplied by a cumulative constant. That constant would be the inverse of the 210000th root of 2, which is 0.99999669930458749782628258129969. The resultant value would need to be rounded down to the nearest satoshi, so that it eventually rounded down to zero.To make the conversion as equivalent as possible, it could either be done at the midpoint between two halvings (the next one being Nov 2014), or, at the next halving (in Nov 2016), a "half of a halving", i.e., a reduction by the square root of 2 (0.70710678118654752440084436210485) could be performed.I'm surprised that this was not implemented in the original protocol by Satoshi. It just avoids a big abrupt event that will cause chaos.
tic toc...http://bitcoinclock.com/