Doubts about the additional issuance of Bitcoin: Will the total limit of 21 million be revised and the halving be stopped?

Author | Qin Xiaofeng

On the evening of February 10th, Beijing time, Jiang Zhuoer, founder of Litecoin Mining Pool, posted on Weibo: The next goal of Bitcoin Core is to issue more Bitcoins, modify the upper limit of 21 million, and stop halving.

Jiang Zhuoer added:

That’s right, it’s about issuing more bitcoins, changing the upper limit of 21 million, and stopping the halving. Don’t think it’s ridiculous. This is the result of one wrong step and then another. If the halving continues, under the 1M block capacity limit, miners’ income will drop sharply, and it will soon be insufficient to protect the system. Don’t think it’s impossible to succeed. When Core opposed the block expansion in 2013, we also thought it was ridiculous and impossible to succeed.

(Note from Odaily Planet Daily: Regarding the Bitcoin expansion plan, there have been big block factions represented by miners and two-layer network factions headed by Bitcoin Core developers. The big block faction's plan is to increase the block limit and expand it continuously from 1M; the two-layer network faction's plan is to build a two-layer transaction network (Lightning Network), but Bitcoin fundamentalists believe that they violate the original design of Bitcoin, on the grounds that the 2008 Bitcoin white paper only wrote about on-chain transactions, and the two-layer transaction network outside the main chain deviated from the original design of Bitcoin. The current situation is that the Bitcoin block capacity is still 1M, and the Lightning Network is being developed and tested, and the network faction has won.)

According to news.bitcoin, the proposal to issue more Bitcoin was put forward at the "Satoshi Roundtable" event held last week by Matt Luongo. The reason he gave is that since the block reward is halved every four years, and if the Lightning Network is successful, the future on-chain transaction volume may be low, miners will have less income, and there will be little motivation to protect the network, which may make it vulnerable to 51% attacks. These attacks will also undermine the trust that the Bitcoin network has gained over the years.

However, according to his Twitter profile, Matt Luongo is the initiator of an ICO project on Ethereum and is currently raising funds, so his proposal has also been questioned by many as not being representative of Bitcoin Core. Bitcoin Core is an "open source project" that is mainly responsible for maintaining and releasing the Bitcoin client software called "bitcion core."

(Screenshot from Matt Luongo’s Twitter)

In this regard, Jiang Zhuoer said:

This has always been Core's plan, but it is just a test of the waters. In 2020, the price will be halved again. Even if Core is very strong, it will take several years to successfully brainwash people. Core will patiently spend several years to "convince" all opponents. Just wait and see.

Subsequently, Jiang Zhuoer published an article to respond to related questions:

• There is an inherent logic to stop halving, and it is all for the highest ideal of Core - anti-audit service. Core needs to be anti-audit, so it needs small blocks (to be able to run on Raspberry Pi), so it opposes expansion (it needs high-performance nodes). Since the blocks are small, there is a ceiling on the total number of transactions for miners, and there is also a ceiling on the income from each transaction, such as a few hundred yuan (if it is higher, users will choose alternatives such as off-chain transactions and second-layer networks), so the income from handling fees for miners (after removing the initial coin reward) is actually very small.

• The small income of miners means the small scale of mining industry, and the cost of 51% attack by attackers. When the [market value of Bitcoin]/[total scale of mining industry] reaches a certain level, some people will choose to short sell first, and then make a profit by 51% attack with a small amount of money. Even mining capital may have this internal motivation: if I attack once, I can get 10 times or 100 times the profit of turning the mining machine into scrap metal, why not do it? And Core firmly chooses POW, so the only way left is to increase the income of miners - that is, not halving.

• Is it a question of whether to prioritize audit resistance or user numbers? Once you choose to prioritize audit resistance and not expand the capacity, then stopping halving (or changing POW to POS) becomes an inevitable choice. Otherwise, can you provide a solution for the undersized mining scale?

• Not halving is an issue that requires long-term negotiation (not the halving in 2020). Core has always been determined. In 2013, who would have thought that Core would be able to succeed without expansion? But in the years-long debate, Core has turned the situation around little by little without giving in. Moreover, this time, miners have turned from enemies to allies.

• I support Core to do anything on BTC, this is Core's ideal and freedom. Are you against additional issuance? Come on, this is your own choice. Opposing capacity expansion means supporting additional issuance.

Regarding the issuance of additional Bitcoin, Wu Gang, CEO of Bixin, said in a WeChat Moments that Bitcoin is the most secure decentralized value storage network with the highest handling fee. He also attached a screenshot of his opinion. Later, he added that there are two ways to make a stable and usable robust decentralized blockchain system. One is to have simple enough rules like Bitcoin, and the other is to have enough tests and changes like centralized apps.

(Screenshot of Wu Gang’s WeChat Moments)

The original mechanism of Bitcoin stipulates that its total amount is 21 million, and the output is halved every 210,000 blocks. The next halving will be at the 630,000th block (the current block is 562520). According to Jiang Jiazhi, the core developer of the Copernicus project, the next halving will be in mid-2020.

What impact will the halving have on the price? Jiang Jiazhi said that historical data shows that there will be a wave of market conditions in the first six months of the halving of Bitcoin production. Garrick Hileman, head of research at Blockchain, also said in May this year:

In the months leading up to the first two halving events, we saw the price of Bitcoin rise steadily, and then rise in tandem with the reward halving.

Zhu Yu of Biyin Mining Pool believes that the next bull market will see the price of Bitcoin reach 500,000 to 5 million. He explained:

There is a consensus in the industry that each round of highs will be 10-20 times the previous round, which is 1-2 million. With a 50%-200% error, it is 500,000-4 million. However, Bitcoin will not continue to rise like this forever. There is a saying that the next bull market will be the last one. If so, we can add another 1 million.