Bitcoin Halving 2020: What You Need to Know
Cryptocurrencies are quickly becoming the talk of the town throughout the world. In Canada, bitcoin is especially seeing immense popularity which is poised to lead the Canadian cryptocurrency market to prominence. It’s already one of the most important bitcoin markets in the world.
However, every new piece of technology comes with its own set of systems and to invest in it, it is better to understand the nitty-gritty of it. One of the most significant events for Bitcoin that is about to take place soon is called the “halving”. It relates directly to the economics of Bitcoin and it’s quite important to understand.
What Is Bitcoin Halving?
The bitcoin blockchain was created with some hard coded rules that all execute at the pre-fixed blocks and at particular milestones. For instance, there will only ever be 21 million bitcoins and the process of generating new bitcoins with each new block will stop after that.
Likewise, after every 210,000 blocks, the number of new bitcoins generated with each new block gets cut in half. For reference, a new block is mined every ten minutes on average. This is important to ensure the reduction in supply as time goes by. This also makes mining new bitcoin much more difficult which guarantees the security of the blockchain.
Bitcoin Halving History
In bitcoin’s history, there have only been two halvings until now. The first halving took place on November 28, 2012, at block height 630,000. Before this date, 50 bitcoins were being mined with every new block. After this first halving though, only 25 bitcoins started being generated with each new block. As per the protocol of the blockchain, the inflation was cut by 50%.
The second halving took place on July 9, 2016. This halving cut the rate of new bitcoin generation to 12.5 bitcoins, which is the current rate that bitcoins are being mined. This was also a 50% cut and was seen as a significant drop in supply.
The trend till now has been that halving takes place roughly every four years, although it doesn’t actually depend on time. It depends on the number of blocks and is executed after every 210,000 blocks (except the first one). It’s intriguing to note that the last halving might happen sometime around the year 2140.
When Will The Next Halving Happen?
The next halving is scheduled to take place within the next 100 days. It is important to note that blocks do not get generated at a fixed speed. They can sometimes be mined faster and sometimes they are mined at a slower pace. It all depends on the amount of computing power that the network has at any given point in time.
If you visit this countdown site, you will see that it’s scheduled for sometime in the second week of May. That means there are less than 100 days left for the next halving. After this, the rate of new bitcoin generation will be cut to 6.25 every new block.
This is a really important milestone for bitcoin. For the first time in history, bitcoin’s inflation will drop to 1.8% which is lower than the US dollar’s inflation rate of 2%. In fact, the central banks of the most important countries in the world have an inflation rate of 2%. Canadian dollar experiences inflation of just above 2%. This makes bitcoin an incredibly attractive investment opportunity for investors.
How Does It effect Prices?
Bitcoin halvings have historically been quite significant for its price. The main reason is the basic economic principles that apply to every asset or commodity. The market decides on the price of any asset based on its demand and supply. If the demand increases, the price increases as well. And if the supply decreases, the price increases again.
Bitcoin halvings literally cut the new supply in half. That means there is less and less bitcoin available over time. This causes people to buy more and this increases the prices substantially. To put this into perspective, out of the 21 million capped supply of bitcoin, 18,198,712 bitcoins have already been mined at the time of writing this.
When the first halving took place in 2012, the price of bitcoin was $12.35 BTC/USD. Only 5 months later, the price had shot up to $127 BTC/USD, ultimately reaching a high of around $1100 USD. When the second halving took place in 2016, the price was $650 USD and five months later, it was $760 which eventually reached a new all-time high of $20,000.
The same is expected to happen after the next halving as well. Many traders have speculated that bitcoin’s price could easily surpass its previous all-time high post halving and make new highs soon thereafter.
Best Times To Buy Bitcoin
Historically, the times when the bear market bottoms out and the times before halving have been the best to buy bitcoin. This was apparent in the previous halvings and bear market cycles as well. Previously, Canadian bitcoin market and Canadian cryptocurrency exchanges saw huge volumes and the same can be expected this time around.
To capitalise on the next halving and the bull market phase that might follow it, you can log onto a Canadian bitcoin exchange and start accumulating as per your own strategy. If you are looking to understand how to buy bitcoin or sell bitcoin or just invest in Bitcoin and other cryptos in Canada, there are resources readily available for you to check out.
Post halving, it will be exciting times for bitcoin and the entire crypto landscape as for the first time there will be an asset with limited supply and with lower inflation than most currencies.
You can Buy Bitcoin in Canada directly from PCCEX Cryptocurrency Exchange by signing up or registering. Buy, sell and trade Bitcoin and other cryptocurrency on PCCEX, Canada’s best cryptocurrency exchange.
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