Bitcoin Block Halving – History And Price
Basically, Bitcoin halving is an event that occurs every four years on the Bitcoin network. It is the reduction in the number of BTC coins that are released annually. You probably know that BTC coins are finite, that is there is a stipulated amount of it that will be released to the market. With a finite number of BTC to be released to the market, one day its release will stop. To prevent that from happening soon, the Bitcoin halving policy has been introduced.
Currently, over 85% of the 21 million BTC coins to be released have already been released into the market. As stated earlier, to reduce the number of coins that are released into the market annually, there has to be a cut in the number of coins released. This is exactly how the Bitcoin halving works. Every four years, block miners receive 50% fewer rewards than they are ordinarily used to.
What Is The Estimated Time For Bitcoin Halving
On average, 6 blocks are added to the Blockchain within 60 minutes on the Bitcoin network and according to the community rules, halving occurs when 210,000 blocks are found and added to the network’s Blockchain. Going by this estimate, give or take, Bitcoin block halving occurs every four years.
With the block halving expected to happen this year, miners will receive fewer rewards than they ordinarily would. Currently, miners on the Bitcoin network receive 12.5 BTC coins for every block they add to the network’s Blockchain. With the halving expected to happen, miners will receive 6 25 BTC coins as a reward for each block that is added. This is actually one of the main characteristics of Bitcoin block halving.
Why Does A Block Halving Occur?
This is one of the most asked questions when the issue of Bitcoin block halving comes up. Some have questioned the motive for every block halve and how it affects miners on the network. While there is no direct answer to this question, the answer lies in demand and supply.
If for example Bitcoins are created without a finite amount to be released into the market, do you think the price of the crypto will still be the same? Certainly not. According to the laws of demand and supply, if there are too many Bitcoins in circulation, the value of this coin will drop drastically.
To explain this concept clearly, founder and CEO of the Ethereum network Vitalik Buterin in his article for Bitcoin Magazine stated that there is a need to slow down the number of Bitcoins that are actually to be released into the market. To further buttress his point, Buterin used fiat currencies and Gold as an example. For fiat currencies, the government of a Nation may decide to print as many notes as they want. This will lead to a drop in the value of the currency.
Vitalik Buterin revealed that Bitcoin is exactly like Gold in the sense that there is only a limited number of Gold bars in the world today. This limited supply of this commodity will lead to a rise in value. This is exactly how Bitcoin should be.
How Bitcoin Block Halving Will Affect The Price Of The Coin
This is another pertinent question that is asked when the issue of block halving comes up. While you’re probably expecting an answer, the fact is that nobody actually knows the answer.
The first Bitcoin block halving took place in 2012 and at that time, the price of Bitcoin was $13.42. Initially, the block halving did not seem to affect the price of the crypto but after a couple of weeks, the price of the crypto rose to $230. While most people will say the block halving had an effect on this price, the truth is that the increase in price was a result of the Cyprus bailout.
The second Bitcoin halving took place in 2016 and clearly not much happened after the halving occurred. Before the block halving occurred, Bitcoin was trading at $650 and a week after the block halving, the price rose to $675. That’s not much of a change if you ask me.
With the next Bitcoin block halving expected to occur this year, most experts and crypto analysts are of the opinion that the price of the crypto will experience an unprecedented increase. Only time will tell how it will work out but most people seem optimistic.
Date Of The Next Bitcoin Block Halving
Going by the community rules, the next Bitcoin block halving is expected to take place in May 2020. While various dates are in speculations, it is not yet sure as the time for verifying new blocks vary.
Bitcoin Mining Statistics
Currently, about 144 blocks are mined daily on the Bitcoin network. Going by the block time of the network (10 minutes), an average of 1,800 BTC coins are mined daily.
With roughly 85% of the total number of Bitcoins already in circulation at the moment, most people have asked if Bitcoin mining will end once every Bitcoin has been released into the market. According to the community rules of the network, Bitcoin mining will never be stopped. Since there are no more coins to be released, miners will receive transaction fees paid by users on the network to make transfers.
The previous Bitcoin block halving that has occurred has not really affected the price of the crypto but for some reason, experts in the industry are optimistic about this halve. Some have predicted an increase of up to $200,000. However most predictions are between 55k and 200k.
Generally, the Bitcoin has been designed to have a finite end. According to the pseudo developer of the network Satoshi Nakamoto, Bitcoin is similar to Gold in the sense that there is only a limited amount of it in circulation.
With the Bitcoin halve expected to take place in May, there may be an increase in price or not. We can only wait to see how things unfold after this block halving takes place.
However time will tell. Something will have to go up. Price of the coin? Or maybe just the price for transactions? No one seems to be talking about the price of transactions. Maybe one day when all the coins are mined, transactions costs may go through the roof causing no one to want to use bitcoin past the mining phase? How much will costs be for transactions once the mining benefit is gone? This is still many many years away, however, something to think about. Like a gold mine that eventually empties, and the stock becomes worthless because there is no gold left to mine.