Bitcoin Halving 2024: How It's Different This Time, Myths Debunked, Bitcoin Bugs, and More
Summary
TLDRIn this video, Andreas Antonopoulos discusses the Bitcoin halving, a significant event that occurs every 210,000 blocks, reducing the block reward for miners by half. He explains the technical aspects, such as the block subsidy reduction and the binary division process, and dispels myths around the halving's impact on Bitcoin's price and network health. Antonopoulos also addresses common concerns like the 'death spiral' theory and the potential for price increases, highlighting the variability among miners and the market's delayed response to such events.
Takeaways
- 🔑 The Bitcoin halving is a regular event that occurs every 210,000 blocks, reducing the block subsidy miners receive by half.
- 📈 The first halving reduced the block reward from 50 to 25 Bitcoin, and subsequent halvings further decreased the reward.
- 💻 Bitcoin's smallest unit is the Satoshi (one hundred millionth of a Bitcoin), and rewards are calculated in whole Satoshis.
- 🛑 The halving process is a binary division, achieved by shifting the reward value's binary digits to the right.
- 🚫 Fractions of a Satoshi do not exist; the smallest unit is a whole Satoshi, except in the Lightning Network where it rounds up to the nearest whole Satoshi.
- 🔄 After 64 halvings, the reward will effectively reach zero, as the binary shift will result in a wrap-around effect, which was corrected in the Bitcoin protocol to avoid.
- 📉 The 'death spiral' myth suggests that halving will make mining unprofitable, causing miners to quit and the network to halt, but this has been debunked as miners have diverse circumstances.
- 📈 A common economic theory suggests that if supply is halved and demand remains constant, the price should double to rebalance the market.
- 🕒 The timing of the halving can vary due to changes in difficulty and hash rate, but estimates converge as the event approaches.
- ⏲️ The actual block interval is slightly less than 10 minutes due to how the Bitcoin protocol calculates the time between blocks.
- 🧐 Andreas Antonopoulos predicts that at the moment of the halving, there will be no significant immediate changes, contrary to media speculation.
Q & A
What is the Bitcoin halving?
-The Bitcoin halving is a regularly scheduled event that occurs every 210,000 blocks on the Bitcoin blockchain. It reduces the block subsidy, which is part of the reward that miners earn by mining a block of Bitcoin, by half.
How often does the Bitcoin halving occur?
-The Bitcoin halving occurs approximately every four years, as it takes about that long to mine 210,000 blocks.
What was the block reward at the time of Bitcoin's Genesis?
-At the time of Bitcoin's Genesis, the block reward was 50 new Bitcoin per block mined.
What is the significance of the block subsidy reduction during the halving?
-The block subsidy reduction during the halving is significant because it decreases the rate at which new Bitcoin is created, which can impact the supply dynamics and potentially the value of Bitcoin.
How does the halving process work in terms of Bitcoin's unit of measurement?
-The halving process is not a division in the traditional sense but a binary division that happens by shifting the binary digits to the right, effectively halving the reward.
What is the smallest unit of Bitcoin in the system?
-The smallest unit of Bitcoin in the system is the Satoshi, with 1 Bitcoin being equivalent to 100 million Satoshis.
What happens when the block reward reaches one Satoshi during a halving?
-When the block reward reaches one Satoshi and is halved, it does not become a fraction of a Satoshi. Instead, it wraps around to the maximum number that can be encoded as a binary number, but a patch in the Bitcoin software prevents this from causing an undesirable increase in the reward.
What is the 'death spiral' theory associated with Bitcoin halving?
-The 'death spiral' theory suggests that when the block reward is halved, miners will become unprofitable and stop mining, leading to a decrease in the network's hash rate and potentially grinding the network to a halt. However, this theory is generally dismissed due to the diversity among miners and the network's ability to adjust.
Why is the 'death spiral' theory unlikely to occur during the Bitcoin halving?
-The 'death spiral' theory is unlikely to occur because miners operate under a variety of conditions and not all will become unprofitable at the same time. Additionally, the network adjusts the mining difficulty every 2016 blocks, which helps maintain the 10-minute block time even if the hash rate drops.
What is the alternative theory to the 'death spiral' regarding the impact of halving on Bitcoin's price?
-The alternative theory suggests that if the demand for Bitcoin remains the same and the supply is halved, the price should double to rebalance the supply and demand. This theory is based on microeconomics and has been observed to some extent in past halvings.
How does the halving affect the countdown estimates provided by different websites?
-The halving affects the countdown estimates because they are based on the assumption of a constant block time and difficulty. Since the difficulty adjusts every two weeks, the estimates may vary until the next difficulty retargeting, after which the estimates should converge.
Outlines
🔑 Understanding the Bitcoin Halving
The speaker introduces the concept of Bitcoin halving, explaining it as a regular event occurring every 210,000 blocks on the Bitcoin blockchain. This event reduces the block subsidy, which is the reward miners receive for mining a block, by half. The speaker recounts their experience with Bitcoin since its inception, discussing the halving events that have occurred historically and the reduction in block rewards from 50 BTC to 25, then 12.5, and finally to 6.25 BTC. The explanation includes a discussion of the technical aspects of the halving process, such as the binary division that occurs within the blockchain and the implications for the smallest unit of Bitcoin, the satoshi. The speaker clarifies that the halving is not a traditional division but a binary one, which involves shifting binary digits to the right. They also address the misconception about the potential for fractions of a satoshi and explain that the blockchain only records integer values of satoshis.
📉 Debunking the 'Death Spiral' Theory
The speaker addresses common misconceptions and media speculation surrounding the Bitcoin halving, particularly the 'death spiral' theory. This theory suggests that when the block reward is halved, miners will become unprofitable and turn off their equipment, leading to a collapse of the network. The speaker refutes this theory by explaining the diversity among miners in terms of equipment efficiency and electricity costs, which means that not all miners become unprofitable simultaneously. They also discuss the network's ability to adjust through difficulty retargeting, which occurs every 2016 blocks, and how this mechanism ensures the network's resilience. The speaker humorously compares the 'death spiral' predictions to other sensational media stories, such as the world ending due to an eclipse, highlighting the cyclical nature of such unfounded speculation.
📈 The Halving and Market Speculation
The speaker discusses the various market speculations that arise during the Bitcoin halving, focusing on two main narratives. The first is the overly optimistic view that the halving will cause the price of Bitcoin to double due to a reduction in supply while demand remains constant. The speaker explains that this has happened in the past but is not a guaranteed outcome. They also mention the current market conditions, noting the all-time high hash rate and the involvement of institutional investors, which could influence the market's response to the halving. The second part of the paragraph is a prediction by the speaker, who humorously states that nothing significant will happen immediately after the halving, contrary to the dramatic predictions. They suggest that the halving will be a non-event in the short term, with the real effects being more gradual and market-driven.
Mindmap
Keywords
💡Halving
💡Block Subsidy
💡Satoshi
💡Genesis Block
💡Hash Rate
💡Difficulty Adjustment
💡Death Spiral
💡Supply and Demand
💡Institutional Investors
💡Off by One Error
Highlights
The halving is a regularly scheduled event on the Bitcoin blockchain that occurs every 210,000 blocks.
The block subsidy, part of the miner's reward, is reduced by half during the halving.
At the Genesis, each block reward was 50 new Bitcoins.
The first halving occurred in 2012, reducing the block reward to 25 Bitcoins.
The block reward was further reduced to 12.5 Bitcoins in 2016, and then to 6.25 Bitcoins in 2020.
The upcoming halving will reduce the block reward to 3.125 Bitcoins.
In the Bitcoin system, all values are recorded in integer Satoshis, not Bitcoins.
The halving is not a traditional division but a binary division achieved by shifting binary digits to the right.
Fractions of a Satoshi do not exist; the smallest unit is a whole Satoshi.
The Bitcoin network will not have fractions of a Satoshi; it will round up to the nearest whole Satoshi.
After 64 halvings, the block reward will reach zero, and no further reductions will occur.
The halving does not lead to a 'death spiral' as some media speculate; the network adapts.
Miners are not a monolithic block and have diverse circumstances affecting their profitability.
If the hash rate drops significantly, the difficulty retargets to maintain block times.
Some predict a doubling of Bitcoin's price due to the reduced supply during the halving.
Previous halvings have seen a delayed market response that can take up to six months.
This halving is different due to the all-time high hash rate and the presence of institutional investors.
The halving countdown estimates vary due to the difficulty in predicting the exact time until the event.
The Bitcoin network has an 'off by one' error in calculating the halving interval.
The speaker predicts that at the moment of the halving, nothing significant will change immediately.
Transcripts
as you all know uh I'm sure we are on
the verge of a having and this is the
fourth having so before I go into the
questions for this uh sequence I'm going
to talk a bit about the having and my
experience of it over the last um uh I
guess it's almost 12 years now U that
I've been involved with Bitcoin and
monitoring and paying attention to this
stuff so the having is a regularly
scheduled event that happens on every
210,000 blocks of the Bitcoin blockchain
every 210,000 blocks something changes
and what changes is the block subsidy
which is part of the reward that miners
earn by mining a block of Bitcoin the
the the block subsidy is reduced by half
so on Genesis when Satoshi launched the
network every block included 50 new
Bitcoin 50 50 new minted newly minted
Bitcoin as part of the rewards so every
block minded the minor who mind it would
earn 50 Bitcoin 210,000 uh blocks or
about four years after that um in 201 uh
2012 um the first having occurred and
the block reward was reduced to 25
Bitcoin and that was my first having um
so I was around for the first one uh
four years later in 2016 the block
having happened again uh at the
420,000 Block and uh the reward went
from 25 Bitcoin to 12 and a half Bitcoin
and then after that uh in um 2020 um it
went down to 6 and a quarter and then 5
days 10 hours 26 minutes is uh it will
go from 6 and a quter to 3 and8 or
3.125
Bitcoin all right let's uh dispel some
myths look at some of the questions that
arise around this time and talk about
some of the most common concerns that
people have around this special time so
first of all um we say for Simplicity
that the reward will be 3 and an e or
3.125 Bitcoin but of course on the syst
in the software in the blockchain
Bitcoin does not exist as a unit of
measurement what is measured instead is
Satoshi so in fact uh the reward will be
uh 312 mil 500,000 Satoshi that's the
new uh block reward uh because every uh
Bitcoin is 100 million satoshis and
satoshis are the only thing that exists
so values in Bitcoin in the system are
recorded in integer satoshis we use the
Bitcoin metric or unit uh for
convenience and of course that forces us
to put a decimal uh point and several
digits after the decimal points in order
to get any kind of accuracy um and but
in the system we only measure
soses so this is interesting because
this uh has some implications about what
happens during the having what happens
during the having is is not a division
um not in the traditional sense it's a
binary division which happens by
Shifting the binary digits to the right
so if you take a binary number and you
shift it right what happens is it
divides it by two
um so for example the binary number uh
the the decimal number two in binary is
one Z if you shift that right it becomes
01 and that's how you divide two by two
and get one as the result I don't know
if that made any sense um but that's how
it works so shifting rights in binary Is
How We Do the division which also
answers an interesting question we get
uh Queen doops asks uh by 2048 it looks
like the reward may get down to
fractions of a sedoi does it just round
up or round down down to the fullest
Satoshi so fractions of a Satoshi
fractions of Satoshi do not exist
Satoshi is always recorded as an integer
the only place where we do have less
than a Satoshi we go down to Billy
Satoshi is the lightning Network and in
that case in fact it is rounded up when
it hits the blockchain to uh integer
Satoshi so what happens when you take uh
the binary number one uh which is the
smallest integer one Satoshi reward at
some point and it's actually going to be
in the year 2142 approximately what
happens when you shift that right by one
position becomes zero that's all all
that happens now in binary arithmetic
actually it doesn't become zero and
here's an interesting bit of historic
trivia from the Bitcoin system because
Satoshi wrote this equation to Simply
shift right um what happens is after um
64 havs um the number shifts right and
it goes from one Satoshi and then in
binary if you shift right and there's
only one digit what it does is it wraps
around to the maximum number you can
encode as a binary number so so that one
ends up going to the other side to the
left um which if you uh have perhaps
already figured it out means that based
on the original implementation of the
formula that exists in the Bitcoin uh
Network in the last having the reward
would go from one Satoshi uh to um I
believe it would have been six billion
Satoshi uh 6.4 billion Satoshi um as the
reward of the very next block which is
not desirable not desirable some might
even call that a bug uh so that uh in
fact someone noticed this and a patch
was made to bitcoin core and has been
replicated in every other client that
has implemented this formula to make
sure that that doesn't happen so um the
last having will take us from one
Satoshi to zero Satoshi reward that's it
it's as simple as that right um so we
only count in integers there will not be
fractions of Satoshi recorded now
another strange things H happens during
the having and that is a flurry of
speculation especially among uh media
that is not Bitcoin Savvy about what the
impact of the having will be on the
price on the health of the network Etc
Etc and we see these uh this frenzy of
media speculation repeat every four
years and every four years is the exact
same story the first and uh most common
story we hear is known as the death
spiral so basically the story goes like
this um when the having happens and the
reward per block is reduced by half
miners will find that they are suddenly
unprofitable uh based on the current
price of Bitcoin and the amount of
energy they used to mine and the current
difficulty all of those are parameters
that go into whether they're profitable
or not when they discover they're
unprofitable they're going to go oh well
that was fun um I guess uh 14 years is
enough and then they will turn off their
Miners and stop Mining and um all of
them will do this uh simultaneously and
uh the result will be that uh there
won't be another block because the
difficulty will be too high there won't
be enough miners the hash rate will drop
it will take too long to mine the next
block which will reduce the
profitability for more miners who will
then turn off which will reduce the
profitability for more miners who will
turn off because we're never getting to
a difficulty adjustment have to mine
2016 blocks to get to a difficulty
adjustment and if miners are dropping
like flies we never even get to the next
block lot Al loone 2016 blocks to
actually get the difficulty to retarget
and so as a result the network grindes
to a halt and uh this is described as
bitcoin's death spiral has been
predicted um every four years uh before
the having people write uh articles all
about this it's a very exciting story
right it's a very clickbaity story um
here's why Bitcoin will crash um on
April 19th
now um I love stories like this in fact
um we had a similar type of scenario
recently on April 8th uh during the um
the annular Eclipse that was happening
over the continental United States and
um that story came with another
predictable media story and frenzy of
speculation that is probably as old as
eclipses which was that the world would
end um because of a shadow of um the
moon and so the world would end on April
8th uh I know in the US a lot of people
were preparing for the Rapture my
favorite story was one lady who spent
the previous few weeks uh going to her
favorite Diner and tipping uh hundreds
and hundreds of dollars on every meal
she wanted to get uh give out all of her
money um before the Rapture uh to kind
of swear her accounts with God and that
of course the Rapture didn't happen and
predictably on April 9th she went back
and asked for a refund uh claiming that
it was fraudulent um so the Rapture
didn't happen uh and neither will
bitcoin's death spiral uh the world did
not end um but despite the fact that
this is a story that simply based on
looking at the previous forcas you could
dismiss as fanciful U we are hearing it
again so a lot of people are worried
about the death spiral with Bitcoin now
the reason why this story doesn't make
sense is because miners are not a
monolithic uh block um they uh are
experiencing uh a very broad variety of
circumstances which will inform their
decisions on profitability so if all
miners were running the same equipment
with the same efficiency uh buying
electricity from the same electricity
provider at the same price um and the
Bitcoin price didn't change while the
rewards dropped by half yes all miners
would become unprofitable at the same
time and if they somehow failed to
notice that this was coming um but in
fact miners have a broad variety of
equipments even within a single mining
Fat Farm uh between miners there'll be
different equipments with different
efficiency they buy electricity from
vastly different um electricity
providers at vastly different prices and
so while some miners may become while
some miners may find that some of their
equipment in some of their locations has
become unprofitable and turned that
equipment off not all equipment at all
locations and not all miners will become
un profitable at the same time and so as
long as there are enough miners to mine
the next block uh and if you do the math
it's really simple if half the miners
disappeared all that means is that the
next block would come out in 20 minutes
instead of 10 um even if half the miners
turned off their equipment and the hash
rate dropped by half um we would then
have 20 minute blocks and we would have
20-minute blocks for 2,000 blocks uh
which would mean four weeks and then
after four weeks there'd be a difficulty
retargeting the difficulty would drop by
half um and all of the miners who hung
in there and kept their um systems um
would suddenly become very
profitable there's another story that
comes out around having and that is um a
a pure microeconomics story and that
pure microeconomics story looks at um
Bitcoin itself as a commodity that is
priced based on a supply demand curve um
as if it's a consumable commodity and
that story says well if demand Remains
the Same and Supply is reduced by half
the price equilibrium will have to um
rebalance at Double the price right so
if you have a fixed demand for a product
and Supply is reduced by half then the
price of that product should double in
order for supply and demands to um to
match again um that story is the overly
optimistic rather than the Doomsday
scenario and that story comes from a lot
of people who are looking at this as an
opportunity to profit so the having
represents a giant boost in the price
that story isn't so easy to dismiss uh
and it's not so easy to dismiss because
in the last three having that more or
less did happen um now it doesn't happen
instantly um um and it doesn't happen
predictably and it doesn't happen
linearly instead what happens is there's
a delayed response while the market
catches up to the news and sometimes
that delayed response is as big as six
months um the supply crunch certainly uh
puts a lot of pressure but um in many
cases all that does is suppress demand
um and people are waiting they will wait
to see what's going to happen with the
price um and then gradually it goes up
and usually it overshoots uh so instead
of doubling it usually goes a bit higher
than that now that's what happened in
the past will that happen this time
obviously I don't know and anybody who
tells you that they know is lying um but
interestingly enough things are a bit
different this having uh first of all um
in many of the previous
um the second thing that's different is
we're going in at an all-time high hash
rate again um preceding the event um and
we're going in with institutional
investors so all of those things are new
and who knows what happens next um we'll
find out so that's the story of the
having which happens in five days now if
you go online and you look for live
countdown or Bitcoin having clock or
Bitcoin having live countdown clock or
some combination of these you're going
to find five or six different websites
and those websites are going to tell
you um the estimated time remaining two
weeks ago those Clocks Were um had
vastly different um estimates and the
reason they had vastly different
estimates is because they didn't know
what difficulty and hash rate would be
um during this Epoch uh there's since
been a retargeting of difficulty which
happens every two weeks on average and
so now we know what the difficulty going
into this is and assuming that the hash
rate remains stable you're now going to
see that the estimates for when this is
going to happen are going to converge
and and now the difference you're going
to see in the estimates depends on how
they calculate um the 78 three blocks
that remain until having so what's the
obvious way you can count this you can
say well 783 blocks times 10 minutes
each that's 7 7830 minutes until having
it right easy peasy straightforward and
probably wrong um part of the reason
it's wrong is because U Bitcoin has
another bug that isn't often discussed
which is the having interval is actually
calculated across
2016 um uh blocks uh sorry every it's
calculated every 2016 blocks but it's
calculated on the time stamp and bis of
the past 2015 blocks um that's another
classic error that exist in programming
it's called an off by one error it's
when you forget to count zero as uh one
of the numbers in the sequence and you
think you're starting at one which in
programming is never the case so um as a
result of that um the difficulty adjusts
to be slightly faster every retargeting
period um and so if we look at the last
retargeting period we might assume that
instead of 10 blocks it's actually
closer to uh instead of 10 minutes it's
actually closer to 99 minutes 50
something um seconds uh in terms of the
actual difficulty so that's uh some
historical information about how where
we are why we're here and what happens
uh next um and now we wait and in five
days I have a prediction to make what is
going to happen in five days and the
answer is really um nothing uh none of
these scenarios are going to play out um
because usually at the moment of the
having nothing really changes except for
the block subsidy uh nobody turn starts
turning off um mining machines the
nobody dives into the markets and starts
buying that specific block um to Catch
the Wave in fact most uh every time
we've seen it everybody just holds their
breath um for a day or two to see how
things are going to play out um and so
my prediction five days 10 hours from
now nothing's going to happen other than
uh block 840,000 And1 is going to come
out and if you look in the coinbase of
that block you will see that the reward
is 3.125 Bitcoin hi thanks for watching
the video I'm Andreas antonoplos I'm the
author of mastering Bitcoin mastering
ethereum and the internet of money
series if you'd like to support my
mission of bringing education about
Bitcoin and open blockchains to as many
people as possible under open free
Creative Commons licenses please
consider subscribing to my channel and
supporting me on
patreon.com n t o n o p thank you
تصفح المزيد من مقاطع الفيديو ذات الصلة
Bitcoin Halved! What Happens When ALL 21 Million Bitcoin Are Mined?
Will Bitcoin Price Skyrocket Or Collapse Post-Halving? | Marathon Digital CEO Fred Thiel
Bitcoin Halving Explained Simple - Does it Affect Bitcoin's Price?
What is Bitcoin Cash? - A Beginner’s Guide
Bitcoin’s Biggest Bull Run with The Rational Root
What is Segwit? Segregated Witness Explained Simply
5.0 / 5 (0 votes)