Bitcoin halving, an event which can be amounted to the New Year in the cryptocurrency world, occurred on the 11th of May and marked a new milestone in the cryptocurrency’s 11-year history. While the halving was very much anticipated by the Bitcoin miners, the majority of ordinary investors could only catch wind of it with #BitcoinHalving shortly booming on Twitter and the media whetting appetites with speculations around the future of Bitcoin.
Safello celebrated this event with The Safello Show Bitcoin halving party, where we talked about previous bitcoin (BTC) halvings and shared thoughts on the post-halving era. At the same time, we realized that the topic still leaves a lot of questions worth addressing in follow-up article.
Being the largest and most influential cryptocurrency by market capitalization, Bitcoin has a significant impact on the rest of the cryptocurrency industry. At Safello, we believe that Bitcoin is the future of money. Thus, the interest around the Bitcoin halving, an event that has only occurred twice in its history (this was the third), deserves proper attention.
What is a bitcoin halving?
To understand what halving essentially is, let us get back to the Bitcoin basics. Unlike fiat money that are issued and approved by central governments, bitcoins are generated by a competitive and decentralized procedure called mining. You can read more about bitcoin mining here. After completing a new block, each miner gets a bitcoin (BTC) reward, or a financial incentive for participation in securing the network and executing transactions on the blockchain.
Offered by Satoshi Nakamoto with the goal to slow down the introduction of new coins to the Bitcoin ecosystem, halving is meant to cut the rewards for mining each block by half every 210,000 blocks (approximately every 4 years). In November 2012, the reward was reduced from 50 to 25 BTC per block. Following the second halving in July 2016, it went down to 12.5 BTC per block. In 2020, the mining reward was cut by half again to 6.25 units.
In theory, everything is clear. But most of us are not miners. We are ordinary people interested in selling and buying bitcoin securely on a daily basis. Thus, we are more concerned about the impact that the halving potentially has on the bitcoin price and cryptocurrency market. In seeking for answers, you probably came across some controversial headlines that Bitcoin mining will shut down and that the price will drop or rise significantly. At Safello, we do not give financial advice or speculate on outcomes. Instead we look at the longer term benefits of the technology for society and encourage everyone to read up on this to make their own investment decisions.
This Bitcoin halving is not simply the mining of the 630,000th block. It is a powerful social event which signifies the growth and strengthening of a new and viable alternative to money. Given the lockdown we celebrated the 2020 halving in Bitcoin’s home - the Internet, which made the event even more special to all of us.
Bitcoin's genesis block includes Satoshi’s famous remark “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”, which ultimately became the first step towards the new monetary order. The Bitcoin halving block included its own message that the mining F2Pool added.
NYTimes 09/Apr/2020 With $2.3T Injection, Fed’s Plan Far Exceeds 2008 Rescue. - Bitcoin halving block
It is a reminder to the cryptocurrency community to herald Bitcoin's values and a sign of traditional money losing its dominating positions.
Being more symbolic than the previous two halvings, the event signified the start of a new decade and manifested the power of a decentralized world.
It's the way to go.