…because you’re only looking at the immediate surface rather than the impacts the underlying change has on the whole ecosystem. The production of coins today is at its highest inflation rate, meaning the coins created on block rewards impact the cost of it the most right now, and a halving would reduce the pressure of that inflation to a much lower level, with the ideal reaction resulting in an increase of price as there are fewer coins to meet demand.
For the first three years there will be roughly 10,000,000 coins created, so if you continued that on into the 4th year it would be a roughly 33% inflation rate, but with the halving you now drop that down to a 16% inflation rate, so if demand remains the same while supply drops, price increases to meet demand by encouraging more people to sell coins at that higher price.
Now after six years with that halving rate there will be roughly 15,000,000 coins, so if you continued that expansion into the 7th year it would be a roughly 11% inflation rate, but with the second halving (every 3 years for the first 12) you now drop that down to a 5% inflation rate, so if demand remains the same… are you starting to get the picture?
You can fill in the gaps between and calculate the rate of inflation for each year and see the decreasing pressure over time, allowing demand to push price until enough farmers are convinced to meet it at that price, this is the strategy of the XCH HODLERS, to take advantage of the decreasing inflation rate, farmers are selling holding or a mixture of both depending on need, but the farmers who hold more longer will be able to amplify the benefits on halvings with pressure on the price from demand, aka events like the IPO, more governments joining the carbon markets for their international treaty, other businesses finally making the leap to Chia because they see their governments using it, etc etc.
So today the strategy with a higher inflation rate may be different from the strategy of tomorrow with a shrinking inflation rate, the only difference is the cost to get into the game later on compared to today, the instant gratification crowd wants it all today but the timeline is pretty clear so the longer you can hold the greater the potential if you believe demand will increase over time amplifying your rewards.
So am I worried, no, I see the potential, I see the things setting Chia up for success and plan to be a XCH HODLER for the above timelines. Does it sting a little seeing the all-time high price when few had access to exchanges and were able to take advantage of that, yeah, but I also see that happening again but with access to everyone amplifying it beyond what you saw in the beginning. If you believe Chia will succeed then its pretty darn clear what your timeline will likely be, thanks to halvings, especially when it dips to 5% thats going to be a VERY exciting time.
Now should you buy more farm or buy more coin, well, use what you got and don’t stop for sure, but whether you expand hardware or take the easier route of just buying coins is up to personal choice.
Seems Kevin has picked a number that would be stunning returns for any other 2 year investment.
I got my Chia jersey ready.