In recent times, cryptocurrencies have been on everyone’s lips thanks to their significant economic growth and the highly anticipated Bitcoin Halving, which is expected to occur on April 19th.
BUT WHAT IS THIS HALVING?? The Bitcoin halving is an event that occurs every 210,000 blocks, roughly every four years, which involves the reduction of the reward for mining new blocks in the Bitcoin blockchain.
This event, made possible by the Proof of Work protocol of the currency, essentially halves the amount of Bitcoin that miners receive as a reward for confirming transactions and adding new blocks to the blockchain.
This event is programmed by the Bitcoin protocol to ensure that the circulating supply of the currency grows in a controlled and predictable manner over time, and to create competition among miners, making it more difficult to be profitable through mining the currency. The halving reduces cryptocurrency inflation, making it harder for miners to generate new Bitcoins and theoretically increasing its long-term market value.
There has been much misinformation circulating about this event, among the most absurd being the notion that the halving halves the entire circulating supply of Bitcoin or that this phenomenon is directly created by the Bitcoin founder to drive up the price.
These absurdities arise because the halving generates significant speculation in the market since historically it has always marked a positive period for the price of Bitcoin, attracting media attention very easily.
Speculation has been amplified this year due to the presence of new assets such as Bitcoin ETFs, which are expected to bring in an inflow of money way bigger compared to previous years.
Historical analysis suggests that following each halving, the price of Bitcoin tends to follow an upward trend, although past performance is not a precise indicator of future value, but expectations are positive.
Comments
Comments are closed.