We heard about Halving Bitcoin very often, I read sensible things and others less so, especially regarding the consequences of halving the rewards for miners on the value of the Bitcoin currency.
So, let’s clarify and try to predict what the repercussions of this event could be on BTC prices.
Halving Bitcoin, what is it?
HALVING refers to a scheduled event after which the reward for miners for mining new blocks of the cryptocurrency blockchain is halved.
To understand this, it is necessary to know that the public register of BTC transactions requires that “miners” validate these passages between one wallet and another. The miners receive a reward for this “job” and therefore, in even simpler terms, Halving means that the “miners” receive 50% less Bitcoin for verifying transactions through their computing power.
Halving Bitcoins are programmed to occur every 210,000 blocks. This occurs approximately once every four years and for this reason it is possible to predict when this event will take place,
Why cut your rewards in half?
But why did Satoshi Nakamoto choose to program a series of Halving every 210,000 blocks, and until the network has generated the maximum supply of 21 million Bitcoins?
The reason is simple: bitcoin halving are important events because they reduce the number of new bitcoins generated by the same network. This means that every (approximately) four year the supply of new BTC is limited, and with the same demand, the prices of the cryptocurrency “should” increase. In other words, halving’s are useful to be able to sustain cryptocurrency prices, and prevent an excessive offer from depressing Bitcoin’s valuations.
When will the next halving happen?
Bitcoin’s next halving is for May 12, 2020. On this approximate date, the number of blocks will reach 630,000 units. One thing is certain: after this event, the miners will see their reward for the extraction of the blocks go from 12.5 to 6.25 Bitcoin.
What happened the last time?
The last halving took place on 9 July 2016 and the reward for the block extraction went from 25 new bitcoins per block to 12.5 bitcoins. At the same time, Bitcoin’s price rose from $ 576 on June 9, 2016 (one month before halving) to $ 650 at the time of the event itself. Prices continued to rise over the following year, reaching $ 2,526 on July 9, 2017.
The IG graph shows what happened every time there was a Halving (Source: IG.COM)
A similar trend occurred on the first halving on November 28, 2012, when the reward for mining Bitcoin blocks dropped from 50 to 25 new bitcoins. Cryptocurrency prices at the time increased from $ 11 a month before halving to $ 12 on the day of the event, continuing to rise over the following year to $ 1,038 on November 28, 2013.
Bitcoin halving trend in search engines
In recent weeks, searches on the topic have grown dramatically on Google and everything suggests that the trend will continue until May 12, when the well-known “halving” is planned, and even beyond.