Why is the impact of halving on the Bitcoin ecosystem gradually "weakening"?
Produced by | OKG Research
Author: Jason Jiang
According to OKLink data, Bitcoin successfully completed its fourth halving at block height 840000 (8:09 am Beijing time on April 20, 2024), and the Bitcoin mining reward was officially reduced from 6.25 BTC to 3.125 BTC.After this halving, the inflation rate of Bitcoin will also drop from 1.75% to 0.85%, which is expected to be only about 1/2 of the growth rate of gold supply, making it a more scarce commodity than gold in the true sense.Xiaobai NavigationMissing assets.
In theory, the short-term income of Bitcoin miners after the halving will be directly affected. However, due to the fact that Bitcoin Runes were launched simultaneously with the Bitcoin halving, the transaction fees on the Bitcoin chain have increased rapidly in the past two days. As a result, miners did not feel the negative impact of the halving in the first 100 blocks after the halving. On the contrary, they received more than before the halving:On April 20 alone, the transaction fees on the chain generated by the rune activity accounted for as much as 57.7%; the transaction fees generated by block 840000 reached 37.626BTC, which is about 6 times the block reward before the halving. Since the completion of the Bitcoin halving, the proportion of transaction fees in miners’ income has been close to 60%.(As of 18:00 on April 22, 2024).
Figure: Bitcoin miners’ income structure
Source: OKLink
But as time goes by and block rewards continue to decrease, miners are incentivized to continue participating and protectingBlockchainThe network problem remains urgent. There are two ways to increase miners' enthusiasm during the halving cycle. One is to ensure that the fixed block reward of Bitcoin can appreciate due to increased scarcity; the other is to improve the variable part of the miners' income structure, that is, transaction fees. The former is difficult to predict and cannot fundamentally solve the problem (Only continuous growth can meet the demand, which is obviously not realistic), the latter is a more reasonable and effective solution.
Satoshi Nakamoto mentioned in the Bitcoin white paper:Once a certain number of bitcoins begin to circulate freely, transaction fees will be able to fully generate incentives. At that time, the Bitcoin network will be completely immune to the stubborn disease of the traditional economic world - inflation."From this, we can see that the reduction of Bitcoin block rewards and the increase of transaction fees are the inherent logic determined by the Bitcoin protocol at the beginning of its design.
In fact, with the continued growth of the Bitcoin ecosystem since 2023, the activity of the Bitcoin network is very different from the last halving, and the proportion of transaction fees in miners' income has also been steadily increasing.According to OKLink data, Bitcoin Ordinals transactions account for approximately 40% of current Bitcoin network transactions. The transaction fees brought by Ordinals transactions have accounted for more than 20% of miners' income, and have brought more than US$200 million in income to miners to date.
Figure: Proportion of various types of Bitcoin on-chain transactions
Source: OKLink
Even though most of the time, the main part of miners’ income still comes from block rewards, the popularity of runes after this halving may not be able to be maintained for a long time, but the short-lived scene it created at least proves thatWithout considering block rewards, the growth in transaction fees brought about by Bitcoin on-chain activities is theoretically sufficient to generate sustained positive incentives for the miner community.
If you want this situation to continue, the necessary prerequisite is that the on-chain activities are active enough and that there are users willing to pay considerable fees for these activities.In the past, Bitcoin transactions solely for the purpose of payment transfer were obviously not enough to make up for the income gap of miners caused by halving. Therefore, more on-chain applications like Bitcoin Runes that can attract market attention and create incremental value are needed.Only when these valuable innovations with high traffic volume continue to emerge and the activity of the Bitcoin ecosystem continues to increase, can different groups including miners, users and institutions benefit.
From this perspective,The author believes that the Bitcoin halving will, to some extent, promote the development of the Bitcoin chain ecosystem and may become a "catalyst" for accelerating ecological innovation. However, as the Bitcoin ecosystem continues to prosper, the impact of the Bitcoin halving on the market will become smaller and smaller in the future.Although we will still pay attention to the halving, it may only become a landmark event that heralds the change of cycles rather than a key factor affecting price trends.
Figure: Bitcoin price changes after each halving
Source: OKLink
The article comes from the Internet:Why is the impact of halving on the Bitcoin ecosystem gradually "weakening"?
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