The Bitcoin Halving Will Trigger a Fear of Missing Out
Akin Fernandez is the owner of bitcoin voucher service Azteco and an active technology blogger under the pen name ‘Beautyon’.
In this piece, Fernandez offers his take on the upcoming halving of the bitcoin network subsidy and what it means for those who risk “being left out”.
Very shortly, there will be an important scheduled change in the way bitcoin is generated. The rate at which new bitcoin is created will halve, an event popularly referred to as “the halving”.
At the time of this writing, 3,600 BTC ($2.4m) are generated every day. This will be slashed to 1,800 BTC per day ($1.2m), and the rate will never ever increase.
Taking this into account, and some basic economics, we should be able to make predictions about how the perception of bitcoin may change, but since the perception of bitcoin is almost entirely irrational, save for the thinking of a handful of very clever men, it is almost impossible to predict how people will react to the halving.
Bitcoin was designed to be released onto the market in a slow and predictable way. This was done to incentivize the security of the network through its generation as well as limit the supply of bitcoin so that it could attain a nominal value and not “flood” the market. This plan has worked spectacularly well, and is a further testament to Satoshi’s understanding of economics (The Austrian School) and human behavior.
From a plain utility perspective, nothing will change when the rate of bitcoin creation halves. You will be able to transact with your bitcoin normally and won’t notice any difference at all. As for the effect on the price of bitcoin, the price of bitcoin doesn’t matter if you are using it as a money transporter.
This post was published at Coin Desk on July 5, 2016.