Bitcoin’s halving is slated for next month and it has generated a lot of buzz in the crypto community and the world at large. How will this event affect Bitcoin transactions and more importantly, Bitcoin’s price?
If you’ve had your ear to the ground you must have heard about the upcoming Bitcoin halving.
The event is due in less than 3 weeks and everyone is talking about it. Google searches for Bitcoin halving hit an all-time high last week.
There is a general feeling of expectation in the air and people are curious about how it will affect Bitcoin and its price.
In case you don’t know, the halving is an event in which Bitcoin block rewards are slashed by 50%. This split is ingrained in the fabric of the Bitcoin ecosystem and it is Satoshi Nakamoto’s way of ensuring that Bitcoin remains scarce and valuable.
It happens every 210,000 blocks (roughly four years).
Currently, Bitcoin miners are rewarded with 12.5 BTC per block (down 50% from 25 BTC/block in 2017, which in turn, is a reduction from 50 BTC/block in 2013).
This reward will be cut in half to 6.25 BTC per block soon.
Apart from block rewards, Bitcoin halvings have always affected Bitcoin’s mining difficulty, network hashing power, and price. The last 2 halvings have been associated with a massive rally in price after a temporary dip.
In November 2012, Bitcoin was hovering at around $12. By November 2013, the first halving, it had climbed to as high as $1,100- a 7,562% price increase.
A year after the second halving, Bitcoin began a strong rally that culminated in its highest price ever, close to $20,000.
This price surge is the major reason most people are interested in the next halving, but you can’t be sure that history will repeat itself. What you can be sure about, to a reasonable extent, is how the halving will affect other aspects of Bitcoin.
For one, there will be a sudden drop in hashing power immediately the halving is activated as miners exit the network because the mining reward of 6.25 BTC is unprofitable for them. This exodus of miners will, in turn, reduce transaction speed as the remaining miner's strain to find a new block every 10 minutes.
So, what you can definitely expect is a hike in transaction fees. So, if you need to send BTC, do it soon before the halving is activated.
It may be more expensive afterward. The mining difficulty is adjusted every 2 weeks though, so it won’t last.
Although Bitcoin’s price is highly speculative and you can’t be sure how it will move, all indicators point to a Bitcoin bull market. The current COVID-19 pandemic has had a devastating effect on global commerce and has forced world governments to print more money from thin air.
The effect of this is inflation and some experts are predicting a global recession.
Amidst the fallout of this monetary policy, Bitcoin can emerge to be the currency of choice for many because it is backed by mathematics and electricity. So, if you’ve got some BTC, HODL it closer to your chest.
The next few weeks and months will be fascinating and potentially profitable.
News From
Emmanuel O.
