Satoshi Samourai on Nostr: #[3]

quoting nevent1q…qnff

𝗕𝗿𝗮𝗰𝗲 𝗬𝗼𝘂𝗿𝘀𝗲𝗹𝘃𝗲𝘀: 𝗧𝗵𝗲 𝙈𝙤𝙨𝙩 𝗜𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁 𝗛𝗮𝗹𝘃𝗶𝗻𝗴 𝗶𝘀 𝗖𝗼𝗺𝗶𝗻𝗴

This Spring, the subsidy of new bitcoin in each block will be halved from 6.25 to 3.125 BTC. This halving event happens a little less than every 4 years:

- On 28 November 2012, the block subsidy was halved from 50 to 25 BTC
- On 9 July 2016, the block subsidy was halved from 25 to 12.5 BTC
- On 11 May 2020, the block subsidy was halved from 12.5 to 6.25 BTC
- And this Spring, the block subsidy will be halved from 6.25 to 3.125 BTC.

So why will 𝘵𝘩𝘪𝘴 upcoming halving be so historic?

It all comes down to 𝘁𝗵𝗲 𝗦𝘁𝗼𝗰𝗸-𝘁𝗼-𝗙𝗹𝗼𝘄 𝗿𝗮𝘁𝗶𝗼.

Let me explain⬇️



A lot has been said about the Stock-to-Flow ratio ("S/F ratio" from now on). Ever since PlanB (npub15wc…qy0q) designed the model in early 2019, some have contended that it’s a useful indicator of future price movements. Others would point to the price divergence starting in 2021 as evidence against that theory. Time will tell which view is correct.

Regardless, the idea of a S/F ratio for any asset is still a key part of economics. Essentially, 𝗦/𝗙 𝗶𝘀 𝘁𝗵𝗲 𝗿𝗮𝘁𝗶𝗼 𝗯𝗲𝘁𝘄𝗲𝗲𝗻 𝘁𝗵𝗲 𝗮𝗺𝗼𝘂𝗻𝘁 𝗼𝗳 𝗮𝗻 𝗮𝘀𝘀𝗲𝘁 𝘁𝗵𝗮𝘁 𝗵𝗮𝘀 𝗮𝗹𝗿𝗲𝗮𝗱𝘆 𝗯𝗲𝗲𝗻 𝗺𝗶𝗻𝗲𝗱 (the 𝘴𝘵𝘰𝘤𝘬), 𝗮𝗻𝗱 𝘁𝗵𝗲 𝗮𝗺𝗼𝘂𝗻𝘁 𝗼𝗳 𝘁𝗵𝗮𝘁 𝗮𝘀𝘀𝗲𝘁 𝘁𝗵𝗮𝘁’𝘀 𝗺𝗶𝗻𝗲𝗱 𝗶𝗻 𝗮 𝘆𝗲𝗮𝗿 (the 𝘧𝘭𝘰𝘸). By dividing the total supply by the amount mined in a year, you arrive at the number of years it would take to reach the total supply again.

Historically, 𝘵𝘩𝘦 𝘩𝘪𝘨𝘩𝘦𝘳 𝘵𝘩𝘦 𝘚/𝘍 𝘳𝘢𝘵𝘪𝘰 𝘪𝘴 𝘧𝘰𝘳 𝘢𝘯 𝘢𝘴𝘴𝘦𝘵, 𝘵𝘩𝘦 𝘣𝘦𝘵𝘵𝘦𝘳 𝘪𝘵 𝘪𝘴 𝘢𝘵 𝘴𝘵𝘰𝘳𝘪𝘯𝘨 𝘷𝘢𝘭𝘶𝘦. For example, the S/F ratio of gold is approximately 62, which means it would take about 62 years to double the total supply of gold, using modern methods for mining. In all of human history, no kind of money (salt, seashells, rai stones, etc) has ever had a higher S/F ratio than gold.

Now, 𝘯𝘰𝘵 𝘦𝘷𝘦𝘳𝘺𝘵𝘩𝘪𝘯𝘨 𝘸𝘪𝘵𝘩 𝘢 𝘩𝘪𝘨𝘩 𝘚/𝘍 𝘳𝘢𝘵𝘪𝘰 𝘸𝘰𝘶𝘭𝘥 𝘸𝘰𝘳𝘬 𝘸𝘦𝘭𝘭 𝘢𝘴 𝘮𝘰𝘯𝘦𝘺. Titanium, for instance, has a S/F ratio of about 107, but it was never used as money because it was first discovered as recently as 1791, and has always been too hard to mine to be useful as money.

Even though Bitcoin only started in 2009, it was easy to mine in the beginning, and it’s the first asset to have 𝘢𝘭𝘭 the desirable attributes of money. And no matter how many people mine it, Bitcoin follows a strict issuance schedule, and its S/F rises roughly every 4 years after each halving.

Currently, Bitcoin’s S/F ratio is around 59, which puts it pretty close to gold’s S/F ratio of 62. But thanks to the halving cycle, 𝗕𝗶𝘁𝗰𝗼𝗶𝗻’𝘀 𝗦/𝗙 𝗿𝗮𝘁𝗶𝗼 𝘄𝗼𝗻’𝘁 𝘀𝘁𝗼𝗽 𝘁𝗵𝗲𝗿𝗲.

After this next halving, BItcoin’s S/F ratio will jump to about 𝟭𝟮𝟬, and approach 𝟭𝟮𝟰 before the following halving. 𝘛𝘩𝘪𝘴 𝘮𝘦𝘢𝘯𝘴 𝘵𝘩𝘢𝘵 𝘢𝘧𝘵𝘦𝘳 𝘵𝘩𝘦 2024 𝘩𝘢𝘭𝘷𝘪𝘯𝘨, 𝘩𝘶𝘮𝘢𝘯𝘪𝘵𝘺 𝘸𝘪𝘭𝘭 𝘩𝘢𝘷𝘦 𝘢 𝘮𝘰𝘯𝘦𝘺 𝘸𝘪𝘵𝘩 𝘢 𝘴𝘪𝘨𝘯𝘪𝘧𝘪𝘤𝘢𝘯𝘵𝘭𝘺 𝘩𝘪𝘨𝘩𝘦𝘳 𝘚/𝘍 𝘳𝘢𝘵𝘪𝘰 𝘵𝘩𝘢𝘯 𝘨𝘰𝘭𝘥 𝙛𝙤𝙧 𝙩𝙝𝙚 𝙛𝙞𝙧𝙨𝙩 𝙩𝙞𝙢𝙚 𝙚𝙫𝙚𝙧. 🤯

No money has 𝙚𝙫𝙚𝙧 had a higher S/F ratio, and was therefore a better store of value, than gold. But this Spring, that changes 𝗳𝗼𝗿𝗲𝘃𝗲𝗿.



But what do 𝘺𝘰𝘶 think?

Is this halving going to be the most momentous of them all, or will another one be more significant? Perhaps the first block without any subsidy, block 6,930,000, will be more important, but what’s 𝘺𝘰𝘶𝘳 opinion?

Let me know in the 𝗰𝗼𝗺𝗺𝗲𝗻𝘁𝘀👇

And make sure to 𝗟𝗶𝗸𝗲❤️ and 𝗦𝗵𝗮𝗿𝗲🔄 this, to spread the word about the next halving!