The Bitcoin community is highly anticipating bitcoin halving, a crypto event that is expected to happen around May 2020. Bitcoin halving or happens every once in a while, and splits the bitcoin reward by half. Once the halving happens, the prize associated with mining the leading cryptocurrency gets divided into two.
While the anticipation levels are over the charts as a result of the previous similar event, there is a lot of confusion surrounding the particular bitcoin event. Many investors don’t know how this event will impact the crypto market in general, while others fear it will affect their investments negatively. This article will explain to you what Bitcoin halving is.
What is the halving of Bitcoin?
Bitcoin halving refers to a process when the standard formula of rewarding miners for mining a new block is split into two. The result is that miners earn half the regular amount every time they verify a transaction. This process happens approximately every four years until all the Bitcoin Network generates all the 21 million bitcoins.
This is a significant event among traders since it significantly reduces the number of new coins the network generates. If the demand coins remain stable as a result of fewer coins, this could trigger a price surge, as has happened before. However, the value will be determined by the market demand and the prevailing situation, which isn’t yet clear in 2020.
What can you expect?
Bitcoin halving has always had a significant impact on the price of BTC. Bitcoin hit its first-time price surge reaching $1000 in 2013 just a few months following the first-ever bitcoin halving in 2012. The next massive price hike happened in 2017 when the leading cryptocurrency hit the all-time high of $20,000, which again happened just following the second bitcoin halving that took place in 2016.
From the preceding, bitcoin halving has been seen to be a catalyst that has, in the past, propelled the bitcoin price via a massive bull run. Whereas there could have been other factors that contributed to the Bull Run, it is clear that the halving event also played a significant role. The cryptocurrency market is subject to several prognostications that are related to different behavioral patterns. It means some concepts are assumed to have helped in enhancing the price of bitcoin, with halving being one of them.
What you need to know
Bitcoin mining is comparable to finishing a race where the first person to complete the lap (read complete a block) gets rewarded with a bitcoin. When Bitcoin was worth a few pennies, the prize was 50 bitcoins, but after two halving events, the price has reduced to 12.5 bitcoins per block. After 2020 halving the price will reduce further to 6.25 bitcoins.
Every halving is also a reminder that the supply of bitcoin is running out with the last bitcoin expected to be minded around the year 2140. Every time bitcoin is halved, it creates a limit to the number of new bitcoins being created, thereby making it more valuable. There are all chances the market is in for another bull run after the next halving event.