For investors and enthusiasts who have been following Bitcoin lately, you have probably come across the talk about “Bitcoin halving,” which is coming soon – in just 112 days. This will be the first time an event like this takes place after the first-ever cryptocurrency emerged and became a household name. The subsequent BTC halving is in all prospects to occur in May 2020 that could have an intense impact on Bitcoins price. Bitcoin is a popular digital currency that has a maximum supply cap of 21 million. Halving means, it will take longer for all Bitcoins to achieve circulation. On the other hand, this also means that due to its limited supply, less new Bitcoin will be created over time, making it become increasingly scarce.
What this ultimately means is “scarcity will enhance the value of Bitcoin.” Historically, BTC halving has proven to be a critical catalyst that drives the cryptocurrency into a new Bull Market.
However, it is too soon to jump into conclusion without considering all the aspects. With that said, we have created this post that talks about Bitcoin halving in detail including other factors like will it have any effect on the miners, and more.
Without further ado, let’s get started with
What is Bitcoin Halving?
Since the creation of Bitcoin in 2009, the cryptocurrency acts as a better way to exchange value. However, certain rules had to be established to make it more beneficial and effective than the traditional methods like bank transfers or fiat currency. One of the rules was to cap the supply of Bitcoin.
New Bitcoins are created in new blocks and new blocks are created every 10 minutes. Simultaneously, a Bitcoin miner will find the hash of blocks that fulfills the proof of work required for a legitimate block. The first transaction made in a block includes the block reward for the Bitcoin miner who found the block. The block reward is the charge that investors pay for transactions in that particular block and the newly created cash. The newly created cash also known as the subsidy instigated with 50 Bitcoins and is halved every 4 years (210,000 blocks).
This unique mechanism is something that you will not see getting implemented anywhere unless it is Bitcoin. This process is crucial for the value of Bitcoin. Bitcoin halving drives the supply growth rate to be stepped.
So, BTC halving is an event where the reward for mining new Bitcoin blocks is halved, meaning that the Bitcoin miners will only get half fewer Bitcoins for authenticating transactions.
The first block reward began at 50 Bitcoins. In 2012, it was halved to 25 BTC followed by another halving in 2016. At present, the block reward for Bitcoin miners is 12.5 BTC, which will further go down to 6.25 BTC in 2020 halving that’s about to take place.
BTC halving is planned to take place once every 210,000 blocks, which is roughly every four years until the system creates the final 21 millionth Bitcoin and the block rewards for the miners reach 0 BTC.
For investors and traders, Bitcoin halving is a significant occasion as it reduces the number of new Bitcoins being created by the system. As a result, the supply of new coins is restricted, so prices could increase if the demand remains high.
Although the value of Bitcoin has increased quickly in the past halvings, the conditions surrounding each halving are overwhelming and the interest for the digital currency can change uncontrollably.
Talking about BTC’s cost representation, it has 8 decimal places. It is only after the 33rd halving that the cost of the block reward will hit exactly 0 BTC. It adds up to 132 years in total to hit the 0 BTC mark. So the last Bitcoin will be mined in the year 2140.
Bitcoin Halving Countdown – when will it happen?
Looking back in time, we have already seen two BTC halvings, and we are now in the third reward era. As said before, Bitcoin halving occurs roughly every four years. So, if we follow the timeline, the next Bitcoin halving is just 112 days away in May 2020. According to reports, the next BTC halving will occur in the week starting on 18 May 2020 where the block reward will tumble from 12.5 BTC to 6.25 BTC. In simple words, the number of blocks will hit 630,000. Still, it is unknown the definite date of the BTC halving because the time taken for creating new blocks varies based on the circumstances.
The history of Bitcoin halving
The halving event will take place every 210,000 blocks till 2140 when the 21 millionth coin will be mined. Consider the following table to understand the history of Bitcoin halving:
|Event||Block Reward||Block Number||Total New Bitcoins between Events||Date|
|Launch of Bitcoin||50 BTC||Genesis Block (0)||10,500,000 BTC||January 3, 2009|
|1st Halving||25 BTC||210,000||5,250,000 BTC||November 28, 2012|
|2nd Halving||12.5 BTC||420,000||2,625,000 BTC||July 9, 2016|
|3rd Halving||6.25 BTC||630,000||1,312,500 BTC||May 18, 2020 (expected)|
|4th Halving||3.125 BTC||740,000||656,250 BTC||Expected 2024|
|5th Halving||1.5625 BTC||850,000||328,125 BTC||Expected 2028|
How Bitcoin Halving Affects its Price?
Now that you clearly understand what BTC halving is, what should you expect from the price of the cryptocurrency influenced by halving? According to experts, Bitcoin halving doesn’t really have a significant impact on the price of Bitcoin. Theoretically, BTC halvings should ultimately lead to a rise in the Bitcoin price, as less Bitcoin flows into the crypto market reaching its 21 millionth cap.
But, since BTC halvings are anticipated years in advance by miners and investors, whether the price of Bitcoin in halvings prior to the proceedings occur remains unclear.
If we take a look at the previous events to predict the future, during the 2012 halving, the BTC price was around $11. Just after a year, it reached a peak of $1100. There was an astonishing price hike by 10,218%, which is impeccable.
During the 2016 BTC halving, Bitcoin was trading sideways consequently between $500 and $800. During this time, the price of BTC didn’t immediately go up. In the first few months after the halving, nothing happened. However, as 2016 came to an end, the BTC bull market broke the $800 mark and ended with an all-time high of $20,000 in December 2017.
How the 2016 Bitcoin Halving did Affect the Price?
Bitcoin BTC saw massive growth after the 2016 halving. In July 2016, the 2nd BTC halving took place. During the first few months after the halving, BTC maintained a price range of around $600-$700. However, by the end of 2017, the price reached a whopping $20,000. Before the second halving, the cryptocurrency had grown over 33-times. And before the first halving, the price has grown over 1818 times.
So, you can imagine how halving BTC has influenced the price of Bitcoin.
What to Expect after the Bitcoin Halving 2020?
When we talk about the third halving, we believe that it will follow the previous halving trends. Bitcoin could probably hit a 10-times the price, reaching a new all-time high of $100K (possibly).
Investors and miners are optimistic about the Bitcoin price reaching the all-time-high after the BTC halving.
Well, the halving is still four months away. It is better for the miners and investors to look into past experiences and make calculations accordingly. It is important to follow the trends since Bitcoin is one of the few entities that fluctuate overnight without signaling.