Inquiring about the halving \ stacker news ~bitcoin

1434 sats \ 17 comments \ @RedNinja39 27 Aug 2023 bitcoin

Please forgive my ignorance, as I am still relatively new to learning about Bitcoin.

But I know that the next halving is approaching, and am still a little uncertain about how it all works, and the associated consequences.

If I understand correctly, the reward for mining a block will be halved. If this is incorrect, I would sincerely appreciate a correction.

My question is then: Is this a positive thing for bitcoin/bitcoin mining? If the reward is cut in half, will this theoretically make mining less profitable? If so, wouldn't this make it less attractive to mine bitcoin, and encourage a lot of miners to stop participating? Couldn't this then have an overall negative effect? I seem to hear a lot of people talking about this as a positive thing, but an sincerely confused as to how it would be. Any clarification and/or discussion would be sincerely appreciated 🙏🏽

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142 sats \ 3 replies \ @siggy47 27 Aug 2023

I have to ask, though, why you were asking the same questions at the end of last year and getting the same answers: #106616

?????

0 sats \ 2 replies \ @RedNinja39 OP 27 Aug 2023

Thank you, i appreciate the help. But I don’t think this is the same question. I do see the relation between the two. But my previous question was about a recommendation on a mining rig. This question was more a curiosity as to the effect that the halving would have on the performance of the network. While the answers may have been similar, the questions are quite different. I do appreciate your help. I hav purchased a copy of the bitcoin standard, and hope to find more answers there.

10 sats \ 1 reply \ @siggy47 27 Aug 2023

No, I was talking about this question:

Please forgive my ignorance, but what is this halving event that will occur in a little over a year?

No big deal. Just wondering. This site has gotten hit with so many bots and trolls lately I'm getting too suspicious.

21 sats \ 0 replies \ @RedNinja39 OP 27 Aug 2023

I see, thank you for clarifying. This was a little earlier in my journey, where I was asking “what the halving is”. Today I was wondering about the effect the halving might have on the network. I appreciate your vigilance though. Bots clog up good spaces and are much too prevalent these days, so I don’t blame you for being suspicious. But i’m just a noob tryna learn more about Bitcoin:)

21 sats \ 8 replies \ @siggy47 27 Aug 2023

It means half as much new bitcoin will be mined, or created, each block. Supply/demand thing.

20 sats \ 7 replies \ @RedNinja39 OP 27 Aug 2023

I see. Thank you for clarifying. So theoretically, if the demand stays the same, but the supply goes down, then value per Bitcoin should go up. But as far as miners are concerned, wouldn't this make mining less attractive?

31 sats \ 6 replies \ @siggy47 27 Aug 2023

Not if the price for bitcoin is going up. I'm not up on cycles, and there's no certainty to this, but historically bitcoin's price goes up post halving.

I know you're new. I've been there. May I suggest you read The Bitcoin Standard and learn all you can about bitcoin? Watch Andreas Antonopolos videos on YouTube. Try not to focus so much on price.

40 sats \ 5 replies \ @RedNinja39 OP 27 Aug 2023

Thank you. I’ll definitely give it a read and dig into the videos. I wasn't too concerned about price here, but moreso about the functioning of the network(wondering: if miners drop out then transactions might slow down/become more expensive which might theoretically have a negative effect on the network), but I suppose that might not be the case. Thank you for the recommendations. I’ll dig in there and work my way further down the rabbit hole :)

10 sats \ 3 replies \ @Relight_Motion 27 Aug 2023

The transaction speed and cost doesn't depend on the mining hashrate, the difficulty adjustment takes care of that.

So, no matter whether it's only one CPU in the whole world, or the whole world mining Bitcoin, there is a fixed amount of blocks created. The only thing that more mining power does is increases the network security against the 51% attack

0 sats \ 2 replies \ @RedNinja39 OP 27 Aug 2023

This makes a lot of sense, thank you. So if I understand correctly, more mining rigs does not necessarily increase the speed of transactions, and visa versa. Instead, it really only increases the security of the network, as it would make a 51% attack harder to achieve?

21 sats \ 1 reply \ @Relight_Motion 27 Aug 2023

Correct, they don't. The PoW Blockchain is, at a glance, a very inefficient system. Bitcoin could have been millions of times faster running on some AWS node and using a simple database.

But that's not very secure, is it? A single point of trust/failure is a bad thing to have for such an important thing as money. Hence, the point of PoW is to make it extremely costly for the attacker to get enough hashpower to add fraudulent transactions to the ledger, and having hashing power of 400000000000000000000 hashes/second certainly helps ;)

I'd recommend reading the Bitcoin Whitepaper, it's very short and explains a lot: https://bitcoin.org/bitcoin.pdf

0 sats \ 0 replies \ @RedNinja39 OP 30 Aug 2023

Thank you! I’ll give the whitepaper a read! I looked into it before hut I think i will have a deeper understanding reading it now.

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10 sats \ 0 replies \ @siggy47 27 Aug 2023

It's a deep hole! A lot of smart people on here will help you as long as they know you sincerely want help. I'm still learning myself.

10 sats \ 1 reply \ @quark 28 Aug 2023

It is a positive thing for holders of current bitcoins, because now there is less new bitcoins created each block. But for miners it is a bad thing. I was thinking about this. People will tell you, yeah. It price in dollars will increase so miners will be fine if they hold. Ok it is true, but on each halving, the price increase has been reduced. It is expected that this next halving will be the same. This, along with the fact that mining difficulty keeps increasing, doesn't look good for miners. At least for smaller miners. Which leads to centralisation of mining, which leads to something I don't really specially like much.

0 sats \ 0 replies \ @RedNinja39 OP 30 Aug 2023

Thank you. This is part of what I was wondering about. If mining becomes less attractive, then more miners may drop off, eventually diminishing the security if the network. I hope the price goes up this time too. But, this is only good for people already holding. If the price does not go up enough to account for the decrease in reward amount, then miners have less incentive to keep mining. Especially smaller miners, like you were saying, which would lead to further centralization of mining, and centralization of control of the network. I know the halving is necessary, but I though this was a consequence that I havent heard mentioned. Thank you for posting this

0 sats \ 1 reply \ @faithandcredit 28 Aug 2023

Halvings was used in the past to cause fomo. But in the future they will keep things on an even keel I think due to more realistic security model of being paid by fees/depending on use. All else being equal it is likely BTC peaked at $64k or whatever for a while still.

0 sats \ 0 replies \ @RedNinja39 OP 30 Aug 2023

I’m sorry, i’m not quite sure I follow. I agree that a fee model might be more sustainable, but is that even possible? How would it even be implemented? And who would be the “they” that would implement it?