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Bitcoin halving 2020! Are you ready for the next big move?

If you’re here, you probably know what Bitcoin is and you will have the answer for the next question… Do you really know what Bitcoin halving is?.

 

As you may know, Bitcoin was created in 2008 as a peer-to-peer (P2P) electronic cash solution (Check out its whitepaper, Jack said it is poetry, and it is! https://bitcoin.org/bitcoin.pdf). These Bitcoins are produced as a result of block validation (mining), giving as a reward to those who do so, 50 BTC for each block mined. In total, 10.5 million BTCs were mined in the first four years.

At the current rate of mining, a total of 21 million BTCs would be reached in less than 10 years, so a new standard was included, which would reduce the creation rate by 50% for each block for every 210,000 blocks. This is known as ‘halving‘. 

In this way, Bitcoin is able to control its supply. It also demonstrates that it is a deflationary system since, as it reduces its production, it has to distribute more BTC in circulation, and its value increases as it approaches its maximum production limit. This was designed with the scarcity principle in mind, giving more value to the current circulation and creating a kind of digital gold.

The next halving is expected to take place on May 11, 2020, reducing the reward per block to 6.25 BTC, with 18,375,000 BTC already created out of its maximum of 21 million. 

How does this affect miners?

This can be seen negatively to miners as they will see their reward reduced by half but it has been seen that each halving has increased the value of BTC so they have also benefited from this price increase. 

The miners are needed because they are responsible for maintaining the safety of the network by validating the blocks. 

What has happened in the previous Bitcoin halvings?

The first time a BTC halving was executed was on the 28th of November of 2012, by which date the first 210,000 blocks that we have named above had already been created, reducing the reward per block from 50 BTC to 25 BTC. 

At the time of the mining of this 210,000 block, the BTC price was only $12.35, rising to $127 just 150 days later. As a curiosity, according to bitcoin.it (https://en.bitcoin.it/wiki/Halving_day_2012), this block was mined by a Radeon HD5800 miner in SlushPool.

The next block reward reduction took place on the 9th of July of 2016, reducing again its reward by 50% to 12.5 BTC per block mined. In this case, the price on the day of the halving was $650.63, rising to $758.81 over the next 150 days. It is important to mention here that a year and a half later, each Bitcoin was worth $19,665.39, which implies a 3000% increase in value with respect to the day of the halving. 

What can we expect?

Nobody has a crystal ball to see the future (maybe yes 😅), but we are sure that this halving is different from the rest. The market is at a stage of maturity never seen before, with products and platforms created in recent years resulting in much more information for the community. This has made it possible to try to calculate the exact date of the halving and to anticipate this type of characteristic events. 

Regarding the price, it would be anticipated if we say that the price of BTC will rise because today other factors influence that before not (we have seen how the crisis of the COVID-19 affected the value of BTC and the entire crypto market), the fact that fewer bitcoins are mined or that more people hold their BTC (HODL!) 

Next Bitcoin halvings!

We already know what’s going to happen in a few weeks, but when is the next one? The fourth halving is expected in 2024 and it won’t be the last one! The last block of BTC is expected to be mined in 2140 although 98% of the 21 million BTC are expected to be mined by 2030. So don’t worry, there are halvings to come!

As the time approaches, do not forget to play our Bitcoin trading tournaments and try your best tacts! Huge rewards are coming! Play now!