 You are watching the Daily Decrypt, where we never said currency competition would be easy, only that it would be worth it. I am your host, Amanda B. Johnson, and today's episode is brought to you by Black Halo Bithalo. Let's talk about the coming Bitcoin halving, which is set to take place this July, 2016, at which point the Bitcoin block reward will go from its current 25 bitcoins per block to a half, 12.5 bitcoins per block. This halving is set to continually take place roughly every four years until Bitcoin's coin creation reaches its cap of 21 million coins. Now basic economics dictates that if the supply of something goes down and the general demand for it remains even just the same, the price is going to go up. And a price increase is necessary for Bitcoin's miners to continue being profitable in light of a decreased reward. Satoshi Nakamoto envisioned that this scenario would work out just fine. And it should work out just fine, if it were not for one little thing. The persistent Bitcoin block size cap. See, every time there's a price spike in Bitcoin, the transaction volume on the network goes up too as people scramble to buy and sell based on the new increased price. But as we saw on February 29th of this year, when it is said that the Bitcoin network became unreliable for the first time, when that block size cap is reached, transactions begin to delay, confirmations don't come in for hours, even days, and it causes not good results. If this congestion, this backlog of transactions happens again at the Bitcoin having, because of a price spike, an expected necessary price spike, the results could actually be catastrophic. Here's why. If Bitcoin's price does not increase because enough people decide that they cannot deal with the block size cap problems any longer, it is likely that some or a lot of miners will turn off their machines and stop working on the Bitcoin network because it is no longer profitable for them to do so in light of the halved reward. If this happens, what is known as Bitcoin's hash rate, meaning how much mining power there is on the network, will drop, but the difficulty level of the hashing work that has to be done will remain the same for a period of time. This is because in Bitcoin, the difficulty level for the work that the miners must solve only readjusts every 2016 blocks. Because of this, during the time that some miners dropped off the network, and the time that it takes for the difficulty to adjust to reflect the new and accurate lowered hash rate, the work that existing miners have to do will be too difficult for them to continue to getting out blocks every 10 minutes as they are expected to as they always have. This could lead to 20 minute block times, hour long block times. And if the block times start getting longer, it will take even longer for the difficulty to reach the 2016 blocks it needs to accurately adjust back down. This means more transaction delays, which would likely lead to a lowered price, which would then lead to even more miners dropping off the network, resulting in what one redditor is calling a death spiral, and what another redditor has called the sinking of the Titanic. Now to be sure, I have just outlined a doomsday scenario. It may not happen. A lot of people don't want it to happen. Roger Vier, Bitcoin Jesus, believes it to be unlikely but possible. As he said in a quote I solicited from him, and as he also said, none of this would even have to happen. Would even be an issue if the block size cap were simply increased. And Bitcoin Classic has been trying to do that for two months now, with not very much traction. Why Bitcoin's miners seem utterly hell-bent on shooting themselves in the foot? No one is precisely sure. But luckily for everyone involved, this is currency competition. And there are options. And nobody has to go down with any ship that they don't want to go down with. Long story short, I hope it doesn't happen, but it might, and you should know about it. Today's episode is brought to you by BlackHalo Bithalo, a double deposit escrow client which is compatible with either Blackcoin or Bitcoin. In addition to double deposit escrow, the client also offers a built-in marketplace, and you can find the free downloads yourself at blackhalo.info or bithalo.org. Holy guacamole, friends. I can only say that when I started the Daily Decrypt, I never could have foreseen myself making a video with the topic of today's video. And as alarming as it might be, we have just got to remember that it is so good for we, the consumers, that things that don't work are allowed to fail. So that the wealth that they were using can be transferred voluntarily to things that do work for we, the consumers. And that is great. That is the opposite of the banking world. That is the opposite of fiat. And it is most righteous. Please leave your comments in the comment section below. Bye-bye. Who is in charge when nobody is in charge? Or in other words, how are decisions in a network of people made when there is no Shah or king or CEO or president in charge? This question has never been more relevant in cryptocurrency.