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A key mistake is to think that mining rewards are measured in coins, whereas they are actually measured in fiat currency. Miners pay their bills in dollars/poun
by glitchc 2y ago
A key mistake is to think that mining rewards are measured in coins, whereas they are actually measured in fiat currency. Miners pay their bills in dollars/pounds/euros/etc. To them, the price of a coin matters as much as the mining reward. As Bitcoin becomes scarce to obtain, it's price will skyrocket, offsetting any reduction in mining incentives. It's designed to balance itself.
And of course if it becomes a real problem, the miners will update the codebase.
- spenvo 2y agoThe idea of skyrocketing value of BTC to make up for the "halving" effect is covered in the article, as "Scenario #1".
- AlexandrB 2y ago> As Bitcoin becomes scarce to obtain, it's price will skyrocket This kind of logic always reminds me of the Terra/LUNA fiasco. An economic model that works as long as nothing unexpected happens. For the price of bitcoin to skyrocket, you need a constant stream of new investors willing to buy bitcoin at these inflated prices. What if this just doesn't happen?
- ftlio 2y agoBegging the question. What makes the prices inflated today?
- Ekaros 2y agoSpeculation... And probably quite a bit of wash trading...
- ftlio 2y agoSpeculation would qualify almost everything, so that would be more of a statement on macroeconomics beyond Bitcoin. BTC is liquid enough while seeing billions of dollars in inflows a month to discount wash trading as a major factor.
- AlexandrB 2y agoAs with any investment, there's always the classic "Past Performance Is No Guarantee of Future Results". But with Bitcoin a significant downturn could be an existential threat if miners decide it's no longer worth their time and money to keep the blockchain running.