Quote from: SiliconAlchemist on June 28, 2012, 02:39:19 AM

50% are sold right away? So wouldn't that mean that halving the block reward should decrease the supply and increase the price by 25%. Or is my logic derp?

The exchange rate is the balance of supply and demand at the markets. So a speculator might be holding onto coins with the same expectation as you (that lower daily production should mean an increase in the price) but then plan to cash out after the halving occurs. If there are many speculators with the same idea, there could be instead of an increase in the exchange rate a sharp decrease as many unload their previously hoarded stashes.

What is known is that today's valuation of the currency is about $60 million but there probably is not so much use of the currency as a currency that that valuation makes sense. Each day there is less than a million dollars of trading at the exchanges (to and from fiat) and the are no runaway commercial successes (e.g., revenue in bitcoins equal to a hundred million $s worth of revenue per year or more) yet. As a result, there could be made the argument that so much of bitcoin's current value is from speculators who may be holding out to see what happens after block 210,000, but then might unload large amounts.

Nobody knows, that's why it is called speculation.