ADSactly Crypto: What Is the Bitcoin Halving?
What Is The Bitcoin Halving
Many of us who are now in the crypto space were attracted by the news of Bitcoin and how it continues to grow in price every year. While it is an inflation rate like any other currency (meaning new coins are minted each day), it is still a deflationary system as the number of coins created become less and less with time up until the last Bitcoin is mined.
We recently hit the milestone of 18 million Bitcoin in 10 years and 3 million to go, as their will only ever be 21 million Bitcoin. However, the next 3 million BTC will take a total of 120 years to produce, with the last one being minted in 2140.
So how do ten years get you 18 million but 120 years will only add 3 million more? Well, a lot of it has to do with the Bitcoin having process.
Image source: - beincrypto.com
What is a bitcoin halving?
The Bitcoin halving or halvening as some like to call it is an event that happens once every 210 000 blocks. Once 210 000 blocks are added to the chain, the rewards miners receive for doing their work is cut in half. Miners will earn 50% fewer rewards for their work, meaning that less Virgin Bitcoin is created.
The current reward for completing a Bitcoin block is 12.5 Bitcoin, but it will be reduced in the next halving to 6.25 coins per confirmed block.
The history of Bitcoin Halving
Image source: - ig.com
When is the next bitcoin halving?
The next bitcoin halving is expected to occur in the week commencing 18 May 2020, when the number of blocks hits 630,000. However, the exact time of the halving is not yet known as the time taken to generate new blocks varies, with the network averaging one block every ten minutes.
If you want to keep track of the Bitcoin halving, you can check out the following site - https://www.bitcoinblockhalf.com/
Why are Bitcoin halvings important?
The theory is that as less Bitcoin is added to the system, the ones currently in circulation become more valuable over time. The limit on new supply means owners will charge higher prices if demand remains strong.
While we can see that as Bitcoin becomes more popular and having gone through two halvings, we've seen price growth, it's by no means a consistent uplift.
Looking at circumstances surrounding each halving, we see different behaviour due demand for bitcoin and prices can fluctuate wildly around this time.
Less is more
As current BTC owners continue to HODL, as we see more and more, BTC lost forever in wallets and cold storage. We will see the circulating supply continue to shrink as time goes by.
We will also see more Bitcoin locked up in the Liquid and Lightning side chains removing them from the main circulation. These side chains will require liquidity for the time being as they are used to settle specific smart contracts.
While there will always be 21 million Bitcoin with 18 million currently minted, the amount that is tradable and accessible by various owners will be far less.
All these reasons, along with the halving, will bring even more scarcity to the market. Couple with it the irrational FOMO in the crypto space and you have a recipe for real price action. We could see it be the catalyst for new all-time highs and continue to push the currency to new heights
Written b y @chekohler
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Very interesting and educational your bitcoin post.
I would like to ask the following (not specifically about your post but is very close): -why new cryptomonedas come so quickly? It has to do with the reduction of bitcoin?
A cordial greeting @chekohler
No it has nothing to do with the decrease in Bitcoin! People start other crypto currencies either because they see something lacking in Bitcoin that they feel is important and want to bring it to the market, they want to use it to fix a certain problem or they want to raise funds for a project not all crypto currencies are the same
Some are a store of value, some are a medium of exchange, some is stake in a company! They don’t really compete with Bitcoin
Thank you!!
My ignorance in financial matters in general, then in crypto currencies, and more in bitcoin, is capital. I'm a literary writer, and while some writers like Pound and Auden were good at those subjects, I'm not. My economic conditions as a Venezuelan do not allow but to survive, and almost with difficulty. Nevertheless, I recognize and thank you for your posts, very well elaborated and with very precise information and of great interest, @chekohler. Greetings.
I'm glad you found the post insightful. I think that Venezuela is a good example of what happens when you don't want to play ball with bigger countries and how much of the economy is tied to these deals with different countries like the US. It shows we cannot allow our economies to be tied to bureaucracy and I feel its ane example of why we need independent currencies like crypto.
My only hope is that the country becomes one of the leaders in crypto adoption and an example of how it can be done. Yes its a horrible situation but you guys have an opportunity now to build from scratch and create something the world really needs
Some interesting information here. This gives me confidence in continuing to buy small amounts of bitcoin (as I can afford it) and holding. Cheers mate!
Thanks I’m glad you found it interesting! I’m doing the same thing and buying in about $100 a month regardless of the price and just averaging it over time!
I’ve got around 0.4 BTC now and hoping to get to 1 BTC before it becomes unaffordable to do so! Getting into the 21 club would be epic for me
I think this halving could be one of the biggest now with the lightning networking growing and the liquid network side chains! Having only 3 million left to mint means there’s very little opportunity to get in with a big stake at an affordable price for a retail investor after 2020