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What is Bitcoin halving?
Halving (Halving, “Creative”) – this is a reduction of two times the size of the remuneration of miners for adding a new block to the blockchain. Satoshi Nakamoto programmedly laid halvings in the Bitcoin network every 210 thousand blocks, that is, every 4 years – until the moment when the extraction of 21 million coins (presumably in 2140) will be completed by the emission of cryptocurrency.
How many times have a halving?
Halving was held on the Bitcoin network twice: November 28, 2012 and July 9, 2016. If at the beginning of the history of Bitcoin for adding to the blockchain of the new block miners could earn 50 BTC, then after the first halving, their remuneration was reduced to 25 BTC, and after the second – to 12.5 BTC.
When will the next halving occur?
The third Bitcoin halving took place on May 11 at 22:23 Moscow time on the block #630000. The next is expected in 2024.
Why need halving?
The main task of halving is to control the emission of cryptocurrencies and restrain its inflation.
Even before the first halving was held in 2012, the creator of Ethereum Vitalik Buterin explained its need, comparing Bitcoin with gold: “The gold reserves in the world are limited, and it becomes more difficult and difficult to get the remaining gold with each gramma obtained. As a result of such a limited offer, gold retained the value of the international means of exchange and accumulation of more than six thousand years, and there is hope that Bitcoin will do the same ”.
How halving affect mining and miners?
To ensure the stability of the network, the creator of Bitcoin provided for that, with a decrease in mining activity, its complexity also decreases. If, after halving, part of the miners considers the mining of coins unprofitable and refuses it, and the hashrate of the network will decrease, after that it will go down and the indicator of the complexity of mining. This means that the intervals through which new blocks are added to the blockchain will remain the same, and the rate of processing of transactions from the departure of a number of miners will not suffer.
In addition, the profitability of bitcoin mining also affects the price and volume of transactions on the network: if these indicators are quite high, the negative effect of reducing remuneration for miners will be more pronounced.
How halving affects the price of bitcoin?
The first two halvings on the Bitcoin network were accompanied by increased coin volatility over the next 1-1.5 years: the price of the asset could rise from $ 11 to $ 1100 or $ 230 to $ 20,000-and fall 5 times 5 times. Regarding the influence of the third halving on the price of the flagship of the cryptorrian, the opinions of experts were divided. Some expect growth, others – the lack of significant changes.
Digital Asset Research believes that in May 2020, bitcoin can grow to $ 60595 per unit. The assumption is based on the analysis of Bitcoin price behavior in cycles between previous halvings. It turned out that at the end of the cycle it grows due to the growth of demand for cryptocurrency and reaches peak values in the first third of the cycle, each time rising to the new historical maximum. Researchers believe that if the model they identified are repeated, the new Bitcoin price peak will be in September 2021, and at the next halvings in 2024 it will reach $ 732,256 per unit.
In the German bank, Bayerische Landesbank came to the conclusion that the upcoming halving will allow Bitcoin to get closer to gold in such an indicator as the ratio of reserves to growth (Stock-to-Flow, S2F). In gold, S2F is 58 and by May 2020 it will not be much more, while Bitcoin will grow from 28.5 to 53, which will make the price of a coin at a level of $ 90 thousand per unit. If the model proposed by experts is true, the halving of 2024 will increase the strength of bitcoin to unprecedented in the history of mankind: more than 100 levels.
On the other hand, Analysts by the American company Strix Leviathan notes that on the eve of Halving Media, users are actively recommending to hold bitcoins, and prices in the period related to this period can be explained by the illusion of an increase in the value of the asset against the background of an increase in speculation.
Can halving cause Bitcoin’s “death spi”?
The difficulty of mining is recalculated once every two weeks – every 2016 blocks. That is why in a crypto environment they fear situations when a temporary gap is formed between the decrease in the hashReit and the next recalculation of the difficulty of mining, during which the Bitcoin network can be included in the so -called “death spi”.
How it looks: the difficulty of mining remains high, the profitability of mining is reduced – miners turn off their computing power, the hashrate falls, transactions on the network slow down.
However, the Blockchain Expert Andreas Antonopulos believes that the Bitcoin Network does not threaten Bitcoin, since miners initially go to the cryptosphere with a long-term strategy and will continue to work in anticipation of a new recalculation of the complexity of mining and restore the usual work of the network.