Is this your first Bitcoin Halving?
Updated: May 28, 2020
I've been reading everywhere about bitcoin halving. Honestly, I really didn't know much of it, and why would I. The last bitcoin halving occurred in 2016, and the first time I began investigating bitcoin was December 2017, and honestly, it is not a subject that people bring up all the time. Once I started studying about this event that occurs within the bitcoin protocol, it all made sense, and it is ultimately great when it comes to regulating the market. Still, we also don't know what can exactly occur within the market after such an event, sure some may speculate, but we can’t be sure.
There are no stupid questions, sure for those who have been part of the community for a long time, Halving may not be news, but for a newbie, this might be their first halving experience. I’ve even been told that someone thought Halving was cutting bitcoin in half.
So, what is bitcoin halving?
For a bitcoin transaction to be confirmed on the blockchain, Satoshi Nakamoto, came up with the idea to give this task to bitcoin miners. These miners can be anywhere in the world, and the plan was to reward people bitcoin for verifying transactions into a new block within the blockchain, being able to do this operation with computer power. Miners charge a fee for this process, and it is usually included once you make a transfer, or you can select a preferred fee for your transaction. Nakamoto had a clear intention to make bitcoin a scares commodity such as gold, where such a commodity can't be continuously made. The opposite of how fiat cash works where entities decide to print as much money as they wish; printing money nonstop will eventually have a negative impact upon particular fiat cash dropping its worth significantly. Bitcoin restricts inflation; the latter is done by slowing its distribution that otherwise called halving event.
“The effect is that the supply of bitcoin coming onto the market is reduced. Previous halving events, which happen every four years, have preceded big price increases in bitcoin.”
Bitcoin is based on supply and demand; there is no central entity that decides upon it. To ensure this, Nakamoto made a limit of bitcoins that would be made; every 210,000 blocks miner reward fee would be reduced by 50%; this happens approximately every four years; event called Halving. The first Halving event occurred in 2012, cutting the reward from 50 BTC to 25 BTC and so these events will keep on going until 2140 when it reaches 21 million mined BTC.
“For the past few weeks, we have seen additional players enter the BTC market as prices have trended upward in anticipation of the halving event as bulls saw this as an opportunity to buy BTC ahead of a price pop and what many expect will be significant price appreciation,” Matthew Dibb, co-founder of Stack, a bitcoin index fund provider, told CNBC. BTC refers to bitcoin’s currency code like USD for the U.S. dollar.”
And we have also seen this:
“With monetary easing policies and ‘unlimited’ economic stimuli being recently unveiled across the world, fiat currencies seem set to weaken substantially. This has, in turn, led to bitcoin’s narrative as a ‘store of value’ to gain added traction amongst investors who are seeking to hedge against volatility in traditional markets.”
In the 2016 Halving, not much happened. The variation was low. Nonetheless, our circumstances are entirely different now. Bitcoin has come a long way since 2016, reaching its max peak in 2017, media attention, being used on different economies worldwide, and now we have been dealing with a pandemic that has also had an effect on the digital markets. Some say bitcoin will pump high, and others say it will drop significantly. Nonetheless, bitcoin is hanging in there, and prices have gone up since last month.
So, invest now, I know I will!
By: Carolina Perez