Comment by digitailor | Hacker News Reader

Comment by digitailor | Hacker News Reader

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A critical relevant fact is missing to help explain this. It screws up currency analogies, and that may be why people have asked for clarification.

Bitcoin (BTC) is classed by the US Federal Gov't (IRS) as property, not currency.

That wasn't some kind of mistake or tax technicality on the IRS' part - a lot of analysis went into this in 2013, along with DHS and FinCEN. This is the definition for BTC in the US.

That means what happened today could be described as: The first and oldest decentralized, distributed, cryptographically-secured record of digital property ownership (Bitcoin as a network) is producing cryptographic keys (the property, BTC) at half the rate it was yesterday. There is now less of the digital property (BTC) being created by the network daily, and this is due to an artificial scarcity strategy built into the Bitcoin source.

Hope that helps

Another way to analogize: imagine the westward expansion of the USA also being subject to "halvenings" like this. In years 0-9, settlers were encouraged/allowed to settle on 1000 miles worth of land (counting linearly westward), then years 10-19 only 500 miles further, than yes 20-29 only 250 miles further, etc.

Early settlers are incentivized to grab large swathes of land quickly and cheaply, to get the system bootstrapped. Later settlers have to fight over smaller tracts of land, because after all the land is finite (you eventually reach the ocean). However, the land is also nicely divisible into smaller and smaller sub-plots, so units can be adjusted as needed.

The rules by which this "westward expansion" are governed are written into the Bitcoin protocol. But unlike land and the ocean which are natural facts for the most part that we take for granted a priori, with Bitcoin the "border"/limit here is also defined as a theoretical construct (and hence, could theoretically be changed, but this would be a hard fork and people would have to reevaluate the value of a new network with a new set of boundaries/rules).

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