Home | Blog | ARK Adventure Vlog: ARK Inflation and Bitcoin Halving Comparison Venice Beach, CA
Justin Renken
Blockchain
Reading time: 6 min
Date: 4th Mar 2020

ARK Adventure Vlog: ARK Inflation and Bitcoin Halving Comparison Venice Beach, CA

We truly appreciate the strong and resilient community that surrounds ARK. That’s why we want to make sure you feel like you’re a part of the action! Follow me as I travel for ARK and document the team bringing our promising technology to people around the world. This is the eleventh episode of ARK Adventures, a vlog designed to give you a front-row seat to a day in the life of ARK.

Catch the first ten episodes here if you missed them:

Vlog Schedule

If you are wondering how often these vlogs will come out, they will be released as adventures happen. Because of this, they will be more spaced out than a standard vlog that may have a new episode every day or every week. However, you are welcome to subscribe to The ARK Crypto Podcast , hosted by me, which has new episodes out every Friday! Get vlog reminders and notifications by subscribing to Youtube.ARK.io .

ACTIVITES

This episode of ARK.io Adventures brings me to Venice Beach on Leap Day, which happens every four years, just like the Bitcoin ‘halvening.’ What better time to have the Bitcoin halvening easily explained and compare it to ARK inflation to see the similarities and differences?

Bitcoin Halvening Explained

Summary

Bitcoin is a cryptocurrency that uses a method called Proof of Work to introduce new coins into the system. In proof of work, computers all around the world try to solve complex computational problems to arrive at an answer that gives the winning machine the ability to add a block to the blockchain and get a reward of newly minted Bitcoins. This reward is issued every ten minutes on average. The ‘halvening’ refers to the reduction of the reward amount every 4 years, the rewards are cut in half. Let’s take a look at the halvening schedule:

  • Genesis: 50 Bitcoins Block Reward
  • 2012: 25 Bitcoins Block Reward
  • 2016: 12.5 Bitcoins Block Reward
  • 2020: 6.25 Bitcoins Block Reward
  • 2024: 3.125 Bitcoins Block Reward
  • Etc…

Block Height, not Date

The block reward for finding new blocks cuts in half not on specific dates, but by specific block height intervals. This means that with ten-minute blocks, and the halving block height interval being 210,000 blocks, the reward cuts in half approximately every four years. The next halving event is coming up this year sometime during May 2020. As each halving event occurs, the new coins entering the system become ‘twice as rare.’

Bitcoin Production Will End

With the Bitcoin reward always halving, does this mean new Bitcoins will always enter the system, even at increasingly smaller amounts? No, there will come a time when the Bitcoin Block Rewards will reach zero. This is expected to occur sometime around the year 2140, and the total supply of Bitcoin will be capped at 21 million. The reason the block reward will end is because near that time, the reward will become less than one Satoshi, or 0.00000001 Bitcoin. This amount is the smallest that can be expressed in the Bitcoin network.

ARK Inflation Mechanics

Summary

ARK is a cryptocurrency that has been running on a public network for nearly three years (March 21 will be the third birthday for the ARK Public Network). ARK’s network is lean and fast compared to Bitcoin, with 8 second block times instead of Bitcoin’s ten minute block times. ARK’s transaction fees are also very low compared to bitcoin, with most fees running well under a penny. The network also allows for more transactions per second many times over compared to Bitcoin.

Newly Minted ARK

On March 21, 2017, the ARK Public Network went live and 125 million ARK were created in the Genesis Block, or the first block of the blockchain. After that, the network began generating ARK in every block at a rate of 2 ARK every 8 seconds. This is not accomplished through Proof of Work like Bitcoin, but through Delegated Proof of Stake ( More on ARK DPoS in this video ).

This means that each year approximately 7,884,000 ARK enter the system. While Bitcoin supply increases each year until the year ~2140, ARK will continue to inflate indefinitely. However, the ARK inflation rate as a percentage is always in decline, approaching 0%. The key difference there is while Bitcoin will eventually reach 0%, ARK will continue inflating at ever reducing fractions ad infinitum.

For those deeply immersed in the crypto community, it stands to reason that inflation is frowned upon as Bitcoin stands as a hedge against fiat currency inflation (in the same vein as gold). With that in mind, how could ARK inflation be seen positively? To begin answering this, let’s compare it to fiat inflation.

ARK vs. Fiat Inflation

ARK inflation is system-controlled, which means it is locked to a max of 7,884,000 new ARK created each year. However, fiat inflation has a wildly varied quantity that is created annually. The amount of fiat currency created each year is determined by the few who operate the currency. They can decide to create any amount they wish. ARK however is bound by the code, which means more ARK cannot be created on a whim.

The creation of ARK and fiat currency results in percentages for a given year. While ARK’s inflation percentage is always declining towards zero, this cannot be said for fiat inflation percentages. They too will differ from year to year. Because of this, the future inflation of fiat is unknown, while the future inflation rate of ARK is known. This means that as people decide to use ARK, they know when and how often new ARK will be created. They know what they’re ‘signing up for.’

ARK inflation rate is predictable, system controlled. Fiat inflation is unpredictable and human-controlled.ARK inflation rate is predictable, system controlled. Fiat inflation is unpredictable and human-controlled.

When we remove the arbitrary nature of inflation, making it predictable and system-controlled through blockchain technology, we limit or remove many of the downsides people bring up when discussing inflation for fiat currencies.

ARK Inflation Has Advantages

Introducing inflation into the ARK Public Network is the means of compensating node operators. Inflation as a concept also stimulates economic growth, replaces loss due to damage or lost keys, and promotes the flow and movement of funds. ARK has a fair and predictable declining inflation rate.

Learn more about ARK inflation mechanics in this presentation: ARK Inflation Mechanics Presentation

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