One of the most popular crypto-centric questions today is about Bitcoin (BTC) halving. While Bitcoin has also hit the news over the recent surge in market value, there’s a lot of debate on what Bitcoin reward halving means for the cryptocurrency industry.
The big Bitcoin reward halving day will fall on May 11, 2020, or thereabouts. If you are a cryptocurrency investor or you have a passing interest in this market, you should always stay on the lookout for such development and trends.
The biggest mistake you can make today as a cryptocurrency investor is to ignore anything that happens in the market. Now that all eyes are on the big day of Bitcoin halving, you should try to get the hard facts. This post highlights some important facts about this big day.
What is Bitcoin Halving?
There’s so much information about BTC halving online and many investors risk getting lost in this information deluge. Bitcoin halving is a feature programmed into Bitcoin by its founder Satoshi Nakamoto. This entails cutting the rewards for mining new blocks in half after every 210,000 blocks.
Six blocks on the blockchain are found every 6 hours. Now that halving happens once every 210,000 blocks, it means the halving event will occur every four years or thereabouts.
What will Happen during Bitcoin Halving?
At the moment, Bitcoin miners receive 12.5 Bitcoins per block. After the 2020 Bitcoin halving day, the reward per block will reduce to 6.25 BTC.
Bitcoin Mining and Bitcoin Halving
Bitcoin mining is an integral component in the cryptocurrency’s protocol. Bitcoin miners solve mathematical puzzles using special software and they receive a certain number of Bitcoins in exchange. Bitcoin miners are essential in verifying transactions and thus keep the Bitcoin network secure.
Why is Bitcoin Halving Necessary?
This is the most common question raised by cryptocurrency investors. To find the answer, you have to appreciate that Bitcoin has a finite supply of 21 million Bitcoins.
If mining were to continue without any regulation such as halving, the cap of 21 million BTC would be breached in no time. This would lead to a loss of value for the digital currency. In essence, Bitcoin halving keeps inflation under control.
History of Previous Bitcoin Halvings
There have been two Bitcoin halvings, the first in 2012 and the next in 2016. During the 2012 halving, the Bitcoin mining reward reduced from 50 to 25 Bitcoins per block. In 2016, the reward per block dropped from 25 to 12.5 BTC.
What Will Happen to Bitcoin Market Value?
As a Bitcoin investor, what should worry you most is the effect of the Bitcoin reward halving day on the Bitcoin price. While the halving affects the miners directly, the history of Bitcoin reward halving shows an impact on the BTC market prices.
When the first halving happened in November 2012, the price of BTC was around $11. After the halving day, the price started rising dramatically before crashing.
However, after the second halving on July 9, 2016, there was a similar price movement. The BTC price started climbing towards the end of 2016. This is a trend that many analysts expect to see after the big BTC halving day in May 2020.
Effect on Hash Rate
The hash rate is crucial in assessing the security of the bitcoin network. After the first halving in 2012, the hash rate fell as Bitcoin miners were receiving half the reward. However, this was only temporary as the hash rate picked up with time.
The 2016 BTC halving has a legible effect on the hash rate. However, with the expected price increase after the May 2020 BTC halving, more miners are expected to enter the network, which will boost the hash rate.
The BTC halving is coming around May 11th or 12th, 2020. If you have an interest in cryptocurrency, this is a big event to watch. There could be a change in BTC pricing and this makes it an important day to watch. With these hard facts, it’s now easier to await the big day and also prepare to capitalize on any BTC price movements.