What is Bitcoin Halving and Why Is It Important?

Business » FINANCE | July 23, 2020, Thursday // 15:37
Bulgaria: What is Bitcoin Halving and Why Is It Important? pixabay.com

Bitcoin is a cryptocurrency that has taken the world markets by storm. Not only did it paved the way for other digital cryptocurrencies like Ethereum, Tether, Monero, but it created space for a transparent, decentralized online payment system.

It also has become one of the hot topics around the world since its value has skyrocketed and reached $1,000 in January, and then it rose again and reached a value of more than $19,000 in December 2017.

Although the currency is still associated with high volatility, as the price has dropped significantly (and then soared on numerous occasions) since then, still many people around the world are looking to learn more about bitcoin, invest their money, and start trading. That being said, in this article, we provide useful information about bitcoin halving and why you should learn more about it, especially if you're new to the world of cryptocurrencies.

Bitcoin Halving

You can obtain bitcoin, generally, by mining, accepting bitcoin for goods/services, or you can also buy BTC on exchange platforms. In fact, there are many reliable online exchange platforms that allow users to buy or sell bitcoin using different currencies. Furthermore, there are also apps that you can download on your phone, and thus trade on the move, whenever it's convenient for you.

A good example is the bitcoin Up trading app, where you can potentially earn up to $1,200 per day. The platform is very easy to use, and it has a user-friendly design while you can sign up with a free account. Another advantage of having an account on the platform is that the algorithm of the app can potentially help you increase the return of your investment.

Otherwise, you can mine BTC, and with that new bitcoin enter the market. Here, it should be mentioned that there is a limited number of BTC. More specifically, Satoshi Nakamoto limited the supply to a total number of 21 million bitcoin. To this date, there are 18.38 million.

Miners have an important role because they verify and process the transactions on the network; next, their devices' computing power contributes to securing the network. They also need to solve difficult mathematical problems, while a compensation or reward for their work is a bitcoin, which they receive when they add a new block of transactions to the blockchain.

However, this reward is halved approximately every four years, or after 210,000 blocks. The first halving occurred in 2012. Then the reward was halved from 50 bitcoin to 25 bitcoin. The last halving was in 2016, where the reward dropped from 25 bitcoin to 12.5 bitcoin. And recently, on May 11, 2020, the halving has reduced the reward from 12.5 to 6.25 bitcoin. The next halving is expected to happen in 2024.

Why Is It Important?

This event reduces the reward of bitcoin per block in the mining cycle, and the demand is likely to stay the same, while the number of mined bitcoin will fall. So, as there's a demand for bitcoin and essentially halved supply, the price is expected to rise. However, whether the price will increase or not depends on the ratio of the supply and the demand of the market. But, historically, the price has gone up after a halving.

After the first halving, the price went from $11 to $12 and reached a price of $1038 on November 28, 2013. Then in 2016, it climbed from $576 to $650 on July 9, 2016. Finally, this year we have witnessed a surge of the price of bitcoin again, as it went from $8,500 to $9,500. Afterward, it stayed within that range between $9,500 to $9,820. In contrast, days leading to the event the price has risen from $8,000 to $10,000, and then it decreased again to $8,500.

The Future

We can not predict for sure how the price will react to the next halving in 2024. Especially now as we live in uncertain times, and we don't know if history will repeat itself. But, one thing is for sure, the market has matured since its inception, and there is increased public awareness about cryptocurrencies. Also, there are many opportunities for individuals today to learn more about bitcoin and obtain BTC.


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