The 2020 Bitcoin halving is here. The halving event has been a major topic in the past and is a highly anticipated one this year too. The fundamental view that describes the Bitcoin halving is when the number of Bitcoins in the market gets halved. They are reduced to 50 percent. This directly affects miners, as the rewards after the halving become half, but the effort to earn the same amount stays intact. Sounds negative, right? Well, we beg to differ. This article will walk you through all the factors involved and why the 2020 Bitcoin Halving is so important.
The ‘why’ behind Bitcoin halving:
Bitcoin was created in 2008. During that time cryptographically validating every block, the miner used to earn 50 BTC. This mining gradually, in the time span of 4 years, created 10.5 million BTC. Here a technical aspect came in, which is that the upper limit of BTC supply was 21 million BTC. Therefore, continuing with the BTC mining of 10.5 BTC in 4 years, this threshold of 21 million would have soon reached and stopped BTC supply altogether.
That is where BTC halving caught importance. It reduces the rate of BTC creation by 50 percent every time 210,000 blocks created.
How did the concept of Bitcoin halving perform?
- The first BTC Halving (2012): The first-ever BTC halving took place on November 28, 2012. The halving event pushed the block reward from 50 BTC to 25 BTC. The halving event dictated the future generation of BTC to be 5.25 million BTC for the next 210,000 blocks creation.
- The second BTC Halving (2016): Soon, when the BTC reached 420,000 blocks creation (which was the next 210,000 blocks), the halving took place on July 9, 2016. The block rewards were reduced to 12.5 BTC from 25 BTC.
- The third anticipated BTC Halving (2020): In the past 4 years (from 2016 to 2020), 2.625 million BTC are expected to be created, which calls for another BTC halving. Reports suggest that the halving event is expected to take place on May 6, 2020. The date is tentative, as the block creation upper limit will really decide when the halving event will be needed. And that is why all sorts of anticipated dates are floating in the market.
The 2020 BTC Halving:
This time when the BTC block height reaches 630,000, the block reward will get reduced to half. It is currently 12.5 BTC and will drop to 6.25 BTC post halving. It will lead to 18,375,000 BTC. And continuing with the same calculation, the next BTC halving, which will take place in 2024, it will lead to 1,312,500 BTC creation.
Predictions and affects of BTC halving:
Spike in BTC Price: Market experts believe that BTC halving can shoot-up a spike in BTC prices and shows a sort of Bitcoin Era. The prediction is based on last time’s (2012) price-spike. There was a rise in the BTC prices, which happened 12 months after the last halving. The rise was from $11 to $1,100 in the value of BTC. Similarly, the second having (2016), the growth was $600 to $20,000 within 18 months, reports reveal.
BTC Price-Spike history can’t be referred: Some market analysts say that the BTC price spike history can’t be referred when predicting this year’s BTC price. The school of thought says that the reason is a multi-layered one. They point that the crypto market has matured since the past halving vent. There are better chances that the halving impact of the crypto has already been taken into account into the existing BTC prices.
Experts reflect the BTC price prediction the best. Changpeng Zhao, the founder and CEO of Binance, said: “I personally believe the halving has not been priced in.”
Whereas, the serial venture capitalist- Mike Novogratz, who is famous for his bullish remarks on BTC, said:
Right now, Bitcoin feels a little frenzied and we could see it surge up, but I think that by the end of the year, we could certainly take out the old highs, or at least we go to the old highs. […] We might be there literally by the halving, which is in a couple of months.
Therefore, whatever pattern BTC price shows in the coming time, an inflection point is assured.