Come 2020: bitcoin halving will take place for the third time throughout its history. If you have recently purchased bitcoin, you need to take this as very important. Bitcoin halving simply refers to a reduction in bitcoin amounts gotten us rewards by bitcoin miners whenever a bitcoin block is discovered. The value of the bitcoin mined is reduced by half.
Bitcoin halving has an effect. Apart from the fact that it has an impact on the Bitcoin amount being rewarded to miners whenever they mine the block, history shows that it has a positive impact on bitcoin prices in the long run. Remember that only 21 million bitcoins are available for mining. A halving can help to curb the occurrence of inflation. In reality, central banks will just have to print more money, but this is different for bitcoin as it is limited.
More knowledge on the pre-2020 halving
Think about Bitcoin mining as a race. You receive a Bitcoin for being the first to complete any block. In the past, the reward was 50 bitcoins, but with two previous halvings in its history, you now get 12.5 bitcoins for every block mind. A halving in 2020 will see that reward come down to 6.25 bitcoins, which is worth up to $68k currently. Miners will be impacted by this halving because the feeling is that the reward is not worth the effort. There are still some who are keeping hold of their bitcoins because a rise in demand is expected with increased mining activity.
A halving only serves to remind us that supply is nearing its end. Even if it is expected that mining might culminate in 2140, a halving only creates a limit in how much bitcoin that can be created. This increases the value of bitcoin even more as newly mined bitcoins take time to be introduced in the Bitcoin pool. With a rise in bitcoin prices, there is a higher incentive for miners to compete. More miners simply translate into increased security, and this security increase gives more value to Bitcoin in the world of monetary instruments. What we get to see is a bitcoin demand increase.
What the future holds
Bitcoinblockhalf.com puts the 2020 halving date to be on May 21.
It is only rational that a halving will cause a rise in bitcoin prices. This is in compliance with the law of demand and supply. With bitcoins supply set to run out at the 21 million thresholds, it only means that they will continue to be scarce. Scarcity means a rise in value. Keep in mind that people have become even more aware of cryptocurrencies and how valuable they are within the past decade. This means that one can expect to see soaring demand figures and a corresponding rise in prices.
Are you contemplating purchasing Bitcoin? The earlier you do so, the better for you because prices will only rise slowly pending the halving come 2020.
photo source: © shutterstock.com by Beautyimage
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