If you follow bitcoin news regularly, you might be aware that bitcoin halving took place in 2020. It is a coincidence that digital currency began to climb to new heights, with the third bitcoin halving. If you want to invest in this premier currency, you need to know about bitcoin halving and how and why it matters.
The newest halving took place on 2020 May 11. Through this informative article, we have come up with every bit of detail that you need to know about bitcoin halving.
What is Bitcoin halving?
Every block that is stored on the blockchain is a file of 1 MB. All miners involved in the bitcoin mining process have to compete to add the following block of bitcoins using specialized hardware to solve challenging mathematical problems. First, the miners create a 64-character output known as the hash. Once the hash is created, the task is completed. Miners also earn money once they complete these blocks.
Immediately after the release of cryptocurrency in 2009, miners used to earn more than 50 bitcoins after mining per block. Thus, they used to get considerable incentives to mine. At that juncture, no one knew that the process would be such a big success.
Bitcoin halving is a simple process as per which the pace of new bitcoin creation is reduced to half. Bitcoin halving happens when almost 210,000 blocks of bitcoin are mined. The process takes place every four years till 21 million bitcoins are mined.
The primary halving took place in 2012, and it reduced the reward from 50 bitcoins to 25 bitcoins. The next halving happened in 2016, and it cut the rewards to 12.5 bitcoins. The most recent bitcoin was this year, as per which the miners will get just 6.25 bitcoins when each block of bitcoin is mined.
Miners should plan for bitcoin halving because halving leads to an instant drop in revenue. The system of bitcoin halving is a built-in feature. Since the beginning, the system has had this feature, and it has had a dramatic impact on all other aspects of cryptocurrency.
Why does bitcoin halving matter?
If you have thought about buying bitcoins, you should try to be aware of the systematic features; before investing, try to know that bitcoin halving comes with a large amount of turbulence for the digital currency.
As per a Coindesk analyst, it is visible that there is a surge in bitcoin trading volume just before and just after the bitcoin halving occurs. A prominent reason behind this can be that the supply of the available bitcoin becomes smaller, increasing the value of new bitcoins that are mined. The fluctuation in the price also benefits investors.
What about the recent bitcoin halving?
The most recent halving was in May 2020. At that time, the value of bitcoin was around $8787. But, after the bitcoin halved, the price of bitcoin exploded. So, in the last few weeks, cryptocurrency has witnessed an all-time high. At this moment, the value sits at $48,000.
But, several other factors lead to the bitcoin boom after halving. Some of the primary reasons can be increased media coverage and people’s fascination due to the anonymity of cryptocurrency. In addition, people’s growing interest in digital currency can be an important reason for the growing price after halving. When you compare bitcoin to any other stock’s value in the past, you will come to know that bitcoin halving for the last two times has been a bullish catalyst for the rise in the price of the cryptocurrency.
The third bitcoin halving of 2020 has a different impact on the bitcoin ecosystem. After the 3rd halving, the number of miners has dropped significantly. The primary reason behind this is that miners don’t get the expected bitcoin mining reward.
The bitcoin halving that took place in 2020 saw bitcoin halving and has also seen many other events. The years saw how The US increased its money supply in the economy. The country printed trillions of dollars of money to avoid a deep crisis. If you plan to invest in bitcoins, it is essential to consider all these factors. The bitcoin halving will undoubtedly impact your investment. For more essential cryptocurrency tips click here.
