Bitcoin Halving, Explained The last Bitcoin halving took place on May 11, , and the next halving will likely occur in What is the halving, how does it affect the price, and what does it. Next Bitcoin Halving Predicted To Significantly Explode Asset’s Value The Bitcoin halving is something that happens after every , blocks. This is approximately a four-year interval and sees the block reward Bitcoin miners receive for every block, cut by exactly half. This directly means that the production of Bitcoin is significantly reduced. Dec 31, · With the next bitcoin halving expected to happen in May , the time has come for investors to start paying attention to this pattern. Historically, the halving starts getting priced in Author: Pascal Thellman.
Next halving bitcoinBitcoin's Next Halving Rally: Coming Soon in - CoinDesk
Another unique aspect of Bitcoin is Nakamoto programmed the block reward to decrease over time. This is another way in which it differs from the norm for modern financial systems, where central banks control the money supply.
Nakamoto left clues that they created Bitcoin for political reasons. If widely adopted, Bitcoin could potentially reduce the power banks and governments have over monetary policy, including bailouts of struggling institutions. As shown with the block reward, no central entity can create bitcoin outside of the strict schedule.
A bitcoin halving grabs so much attention mostly because many believe it will lead to a price increase. As it turned out, the price began to rise shortly after the halving. The second halving in was highly anticipated, as is the one now approaching, with CoinDesk running a live blog of the event and Blockchain.
While the immediate impact on the price of bitcoin was small, the market did tally a gradual increase over the year following the second halving.
Some argue this increase was a delayed result of the halving. The theory is that when the supply of bitcoin declines, the demand for bitcoin will stay the same, pushing the price up. If that theory is correct, then we could observe similar price increases after future halvings, including the one scheduled for this year. Traders have long known the bitcoin block reward will decrease, giving them ample time to prepare.
As pseudonymous independent researcher Hasu put it, there are two parts to making Bitcoin work. Only the owner of a private key which is like a secret access code can spend the bitcoin. The game theory that secures Bitcoin requires that a miners have an incentive to mine honest blocks [and] b miners have a cost Without the block rewards, the network would be in chaos.
Hasu explains that if they have enough computing power, miners can attack the network in two ways: By double-spending coins or by stopping transactions from going through. But they are strongly incentivized not to try either, because then they would risk losing their block rewards.
The more computing power miners direct towards Bitcoin, the harder it is to attack because an attacker would need to have a significant portion of this processing power, known as the hashrate, to execute such an attack.
The more money they can earn by way of block rewards, the more mining power goes to Bitcoin, and thus the more protected the network is. Miners need an incentive to do what they do. Due to these, it is almost ridiculous for anyone to assume that the next halving will not also have a significant effect on the value of the asset. Also, based on the traditional laws of supply and demand, the next halving will, like the others, create some scarcity that will shoot the price up. According to a letter by Satoshi:.
If the supply of money increases at the same rate that the number of people using it increases, prices remain stable. If it does not increase as fast as demand, there will be deflation and early holders of money will see its value increase. On the heels of the recent Bitcoin price rally, many experts and analysts have predicted even without the halving in mind that Bitcoin will still surge further before the year is over.
The popular enthusiast has expressed a longing for the event, insinuating that it will push prices very high. Now imagine what they're going to do when the daily Bitcoin supply is cut in half for one of the scarcest assets in the world. Another Bitcoin bull, Brian Kelly also thinks that the halving will have an interesting effect on the price. However, not everyone has a bullish opinion.
Kyle Samani, the co-founder of Multicoin Capital Management, believes that halvings are becoming a lot less important. According to him:. The next halvening is going to reduce it from about 3. On an absolute basis, each halvening is becoming increasingly less relevant. Tolu is a cryptocurrency and blockchain enthusiast based in Lagos.
He likes to demystify bitcoin stories to the bare basics so that anyone anywhere can understand without too much background knowledge and add in social research and feedback insights. As of now, the block reward is 6. Bitcoin was designed as a deflationary currency. Like gold, the premise is that over time, the issuance of bitcoins will decrease and thus become scarcer over time.
As bitcoins become scarcer and if demand for them increases over time, Bitcoin can be used as a hedge against inflation as the price, guided by price equilibrium is bound to increase. On the flip side, fiat currencies like the US dollar , inflate over time as its monetary supply increases, leading to a decrease in purchasing power. This is known as monetary debasement by inflation. A simple example would be to compare housing prices decades ago to now and you'll notice that they've increased over time!