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What Is Bitcoin Halving And Its Impact In The Blockchain Network?
Imagine that I was given an elegant chocolate cake with milk droplets all over it and lovely sky-blue icing. I had to divide this cake in half when I chose to share it with my friend. Some people might ask why I’d have to share my favourite snack with a friend, but my cake is only worth more when I divide it in half.
Is that not ironic?
We will learn how a Bitcoin is halved, why this halving is significant, and how this halving affects the price of cryptocurrencies on the March 2023 episode of my Crypto Crush Wednesday series.
Preview
What is Bitcoin halving?
What occurs following the halving of Bitcoin?
The past and future halving of bitcoin
Reasons why you should resist buying the newest fashion item with your last $1,000 savings.
Bitcoin miners receive half of the reward for completing translations on the blockchain network as a result of the “Bitcoin halving” process. The halving of the miners’ reward occurs when 210,000 blocks have been fully mined, which takes about 4 years. This reduces the quantity of Bitcoin in circulation by cutting the mining rate in half.
Every 10 minutes, the blockchain mining algorithm is programmed to complete a block. The blockchain network’s Bitcoin mining difficulty reportedly hit a new peak a few days ago. Since there are new miners every day, this is done to preserve the 10 minutes allotted for a block to be finished. This would result in fewer active miners and the 10-minute timeframe maintained by making the mathematical puzzles challenging for miners before completing a transaction.
Would this procedure or cycle go on forever?
Keep reading this
- The initial block reward for mining Bitcoin was 50 BTC.
- 2012 saw a halving of the mining reward, with miners now receiving 25 BTC for completing a block on a chain. As a result, the price of Bitcoin rose from approximately $12 to $1,000.
- In 2016, the reward for mining and completing a block was halved to 12.5 BTC. As a result, the price of Bitcoin rose in 2017, rising from roughly $670 to about $2,550. Price rallied in December 2017 and reached roughly $19,700.
- In May 2020, The Bitcoin mining reward was halved to 6.25BTC per block. Bitcoin price rallied from roughly $8,787 to $10,943.
- Can you predict when the next Bitcoin price halving will occur?
- In 2024, Bitcoin will be halved to 3.25 BTC.
Imagine being a miner today and getting paid a whopping 50 BTC to finish a block. Don’t you believe that would imply that Bitcoin is abundant and available to all?
You might be amazed as to why miners would take pleasure in mining Bitcoin if the rewards were to be halved. Mining requires a lot of time, energy, and power. This is the reason why some mining companies are looking for innovative ways to use new mining technologies to cut down on the time and cost of mining.
Why have there been new miners despite the reward being halved?
This is due to all of the effects of Bitcoin halving. Let’s learn a few of these.
- Increase in Bitcoin price due to decrease in the amount of Bitcoin in circulation
- Increase in price of other altcoins due to the increased Bitcoin price.
- Increase in Bitcoin value
- Increase in Bitcoin use cases
- Increase in Bitcoin purchasing power
You may be wondering why this headline caught your attention. Why not invest in yourself rather than stockpiling luxury with your last savings?
After the halving, which would take place in 2024, the price of bitcoin and other cryptocurrencies is expected to increase dramatically. Would you rather sit back and smile at the choice you made to use the sound risk management and analysis to invest before halving, or would you rather sit back and watch the market chart go in a massive rally with no cryptocurrency balance?
Your choice is up to you!
#DYOR
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