On April 20th, 2024, at 8:09:27 AM (UTC+8), ViaBTC mining pool successfully mined block height 840,000, officially reducing the block reward to 3.125 BTC, marking the completion of Bitcoin’s 4th halving event (refer to Liu Jiaolian’s article “A Brief History of Bitcoin Halvings” on April 9th, 2024). A new chapter in Bitcoin’s history has begun.
Although the block reward has been halved from the previous 6.25 BTC to 3.125 BTC, the total incentive for block height 840,000, including the block reward and user transaction fees, reached a staggering 40.751 BTC! At the current price of approximately $64,000 per BTC, the producer of this block will receive an income of about $2.6 million. This is about six times the income of the previous block.
This block can truly be called a “golden block” (interestingly, mempool.space has also colored this halving block in gold). This halving event has indeed become a feast for Bitcoin miners, and it can be truly called a golden halving.
Let’s take a look at the block revenue data for the 10 blocks before and after the halving:
[Image]
All of these data are publicly available on the Bitcoin blockchain. It is clear to see, without further explanation, that this halving wave has truly been profitable for Bitcoin miners.
If this trend continues, there will probably be no more doubts about whether further halvings of Bitcoin will eventually render mining unprofitable and lead to a loss of hashing power and a collapse in Bitcoin’s value. Those who once questioned the sustainability of Bitcoin’s economic model and predicted its collapse due to insufficient incentives must be going crazy now.
Surprisingly, Satoshi Nakamoto’s words from February 14th, 2010 have come true ahead of schedule (refer to Liu Jiaolian’s “Bitcoin History” Chapter 9, Episode 38: https://leanpub.com/history-of-bitcoin):
“A few decades later, when the block reward is too small, transaction fees will become the main income for nodes. I am sure that 20 years from now, there will either be very large transaction volume or no transaction volume at all.”
Satoshi Nakamoto initially said “a few decades later,” and now it is only 2024, just 14 years since he made that statement.
So, why are so many people suddenly willing to pay such high transaction fees after the halving?
It all depends on one person: Casey Rodarmor. If readers are unfamiliar with this person, they can refer back to Liu Jiaolian’s articles from last year, such as “Eternal Existence with Bitcoin” on March 9th, 2022, “King of Memes: BRC-20” on May 4th, 2023, and “He Wants to Kill Inscriptions” on December 7th, 2023.
Casey Rodarmor drew inspiration from the ancient practice of assigning numbers to Bitcoin’s “satoshi” units and combined it with the Taproot technology that was launched at the end of 2021 (refer to Liu Jiaolian’s article “Taproot Activated: It’s Not Bitcoin’s Evolution That’s Slow, It’s Us” on November 15th, 2021). He created the ordinal protocol and inscription technology as new methods to engrave “digital artworks” onto the Bitcoin blockchain.
With a cry from Twitter users, enthusiastic players started using the inscription technology to engrave simple token data onto the Bitcoin blockchain, incorporating the pure elements of memes and hastily copying Ethereum’s ERC-20 naming scheme to create the “BRC-20” protocol. This hybrid creation, which is both like an NFT and a meme coin, instantly ignited the cryptocurrency market, which was hungry for new speculative assets. So much so that when people mention “inscriptions” now, they are referring to BRC-20 coins rather than the original “digital artworks.”
The “Bitcoin ecosystem” is just a facade, while “overnight wealth” and “from $1,000 to $100 million” are the true human desires.
Casey Rodarmor was angry, feeling that people had let down his pursuit of art. Some Bitcoin core developers, such as Luke Dashjr, were even angrier. They detested how inscriptions led to the misuse of Bitcoin block space and were willing to go against the entire inscription community, even if it meant being attacked online.
Luke Dashjr was on the defensive and intended to merge inscription filtering code into the Bitcoin core client. Casey Rodarmor decided to take the initiative. Since people loved speculating on coins rather than appreciating art, why not create a protocol that is more suitable for speculation? And thus, Runes was born.
It has been pointed out that inscriptions use segregated witness (SegWit) area for storing data, taking advantage of discounted fees. This is because SegWit data is charged at only 0.25 bytes per byte.
Casey Rodarmor quickly adapted to this suggestion. The Runes protocol uses the traditional OP_RETURN to define token data. Since token data is small enough to fit entirely in the OP_RETURN, these coin speculators can no longer take advantage and need to pay the full transaction fees.
The Runes protocol was launched at the same time as the block height of Bitcoin’s 4th halving – 840,000.
Never underestimate people’s fanaticism for speculation, even if it may come at a great cost.
The answer is now revealed – it is the speculators who jumped on the Runes bandwagon who are paying the exorbitant fees to miners after the halving!
However, the “appearance” (name) of Runes leaves much to be desired. It is truly ugly (see image below). Perhaps, with time, one may get used to it!
[Image]
After this halving, Bitcoin’s stock-to-flow (S2F) hardness will surpass that of the hardest asset on Earth, gold, making it officially the hardest asset in the 7.6 billion-year history of our blue planet. Liu Jiaolian refers to it as the “megahard” asset (refer to Liu Jiaolian’s article “The 2024 Turning Point: Humanity Isn’t Ready for an S2F Asset with an S2F Ratio Over 100” on February 17th, 2023).
This cycle is also a turning point in the development of Bitcoin – a turning point towards challenging gold. As Liu Jiaolian wrote in the “2022 Year-End Review and Outlook Report: Industry Prospects for 2023-2025” (Year-End Research Report 2022) back in December 2022:
“In the 2021 bull market bubble peak, Bitcoin’s market value temporarily ranked among the top ten global assets, rivaling the market value of leading U.S. companies. At the same time, Bitcoin demonstrated a strong correlation with the performance of U.S. stocks. If we define the 2021 cycle as a challenge to U.S. stocks, then the 2024-2025 bull market cycle will be a challenge to the world’s number one asset class – gold.
Today, the total market value of gold is approximately $12 trillion. At a price of $17,000 per BTC, Bitcoin’s market value is about $330 billion, still 36 times smaller than the total market value of gold. The current total supply of Bitcoin is 19.22 million coins. It is estimated that approximately 660,000 coins will be produced in the next two years (2023-2024). The total supply will reach 19.88 million coins. Using a rough estimate of 20 million coins, the market value will reach $12 trillion, and the price per Bitcoin should be $600,000.
During the previous bear market, from the bottom of around $3,000 in late 2018 to the peak of $69,000 at the end of 2021, the increase was about 23 times. Applying the same increase to the current price of $17,000 results in a price of around $400,000 per Bitcoin. Multiplying this by 20 million coins gives a total market value of $8 trillion, approximately 67% of the $12 trillion market value of gold.
Even with a smaller increase, such as 17 or 8 times, reaching $300,000 per Bitcoin, the total market value would be $6 trillion, about half of gold’s market value. Even if it doesn’t surpass the market value of gold, reaching a comparable magnitude can still be considered on par with gold.”
From the perspective of challenging gold, we can also refer to this halving event as the “Golden Halving.”
Let’s not lament the past achievements of emperors and heroes; instead, let’s focus on the present glory!
(Note: The author’s official account is “Liu Jiaolian” and their knowledge planet is available by replying “planet” to their official WeChat account.
(Disclaimer: The content of this article does not constitute any investment advice. Cryptocurrencies are highly risky assets with the potential to go to zero at any time. Please participate cautiously and take responsibility for your own actions.)
Tags:
Liu Jiaolian
Investment Insights
Bitcoin
Random Thoughts
Source Link:
https://mp.weixin.qq.com/s/cqihKcHvvex7skNHu01-Kw
Note: The translation has been done to the best of my abilities while preserving the original meaning and intent.
