The third will take place today Halving in network history Bitcoin. According to CoinMarketCap the change of the prize will take place at 21:00 Polish time. Why is this so important? And what exactly is halving? In this text we will try to respond to those bothering especially the initial users BTC, questions.
Halving is …
To explain what halving is, we must first understand what the process of issuing new Bitcoins looks like.
As you probably know, the basis of cryptocurrency networks is technology blockchain. This decentralized (i.e. not having only one issuer) register (or in other words: database) containing various information, e.g. transaction histories. Some blockchain systems (including, e.g. blockchain Bitcoin) are closely related to cryptocurrency excavators that allow you to keep your network secure and functioning. When explaining what mining Bitcoins and other cryptocurrencies is all about, you can use the metaphor for “solving mathematical puzzles”. These puzzles, grouped into data blocks (hence the name blockchain), allow verification of transactions occurring in the network.
However, what is important for the mining market is the network BTC automatically changes the degree of difficulty of tasks, depending on the speed of their resolution. also cyclically changes – and specifically reduces – the size of the prize that the owner of the excavator (digital miner) receives, which solved this mathematical puzzle. It is also noteworthy that the more people join the network with their equipment, the more it increases difficulty digging.
Yes, the key is the sentence we have bolded above. This cyclical change in the size of the mining reward is halving. Each time the prize drops by 50% This time it will fall from level 12.5 to 6.25 Bitcoins per excavated Unit
“>Unit on the Web. This will result in an annual reduction inflation Bitcoin up to 1.8 percent For comparison, we remind you that it is annual inflation gold is 3% Not to mention the inflation of fiat currencies …
How does this affect the price?
However, how does this affect? course BTC? It’s quite simple. First, excavators operate on electricity. So if miners for X consumed electricity could now receive Y Bitcoins, in a few hours this value will fall by half. In other words, for the same amount of electricity consumed, they will receive only half of the units kryptowalutyas before. So they will try to sell coins at the most expensive prices. However, this is not the end …
You certainly know the law of supply and demand. Bitcoin is – like any currency, asset or money – in a sense a product. He is therefore subject to this law. If the supply of new Bitcoins on the market now decreases dramatically and demand increases, we can assume that the cryptocurrency exchange rate will increase significantly. This has happened before, during previous halvingów. Approximately a few months after them, the famous speculative bubbles took place, which led to a jump in price for 1 BTC and increased interest kryptowalutami. Now the period is special ….
Third, most important prize distribution in BTC history
One could risk the thesis that this year’s halving is the most important in Bitcoin’s history. Why? We partly mentioned it above.
Yes, it’s about fiat inflation. These, in turn, will be deepened by the policy of central banks. These institutions decided to fight the economic crisis starting by printing money. And it’s really on an unprecedented scale. In the long run, it even ends with high inflation, and in some countries it can even cause hyperinflation.
It is not surprising then that individual investors are beginning to see BTC, which cannot be artificially printed, a safe haven for the recession. Examples? Paul Tudor Jones, billionaire and founder of the hedge fund Tudor Investment Corporation, has recently suggested that Bitcoin is part of his investment portfolio.
“The best strategy to maximize profit is to have the fastest horse […] If I have to predict, I bet it will be Bitcoin. “
He noticed a few days ago.
Tim Draper, who has long believed that BTC can help us survive the recession, has a similar view. In turn, Mati Greenspan, a fairly sober and cold-thinking analyst, claims to be “100% loaded”. at BTC.
However, it may turn out that this is just the beginning of the influx of “big fish” to this market. – Expect many beta fund managers to start [iść drogą Jonesa] – said Arthur Hayes a few days ago CEO BitMEX exchanges, reminding you that Paul Tudor Jones is most likely entering the BTC market.
– Arthur Hayes (@CryptoHayes) May 7, 2020
Something for dessert
If you want to learn even more about halvingu, we recommend the debate on this phenomenon in which he took part Paweł Bińkowski, our editor-in-chief. More information can be found at this link or watching the video of the debate:
We also recommend the following video: