Bitcoin Halving 2024: How It's Different This Time, Myths Debunked, Bitcoin Bugs, and More

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