Bitcoin mining is more complex than it sounds. You require advanced and expensive equipment in order to compete to verify transactions through a process called “mining”. Transactions are then be verified in a group or “blocks” and the network is coded to halve the reward received by miners every 210,000 blocks. For every successful transaction, miners will be rewarded with Bitcoins which refers to “mining reward”.
So, what happens now?
2020 Bitcoin Halving
This year marks the 3rd Bitcoin Halving in history that officially took place earlier than expected – May 11. But, what does that mean? Here’s the gist of what you should know:
- 1. Mining reward has been reduced to 6.25 bitcoin per block from 12.5 bitcoin per block.
- 2. The total amount of bitcoin mined is currently at 18 million, closer to the limit of 21 million.
- 3. Current bitcoin value is $8,926.75 as of May 13th.
This is where it gets interesting. Since there is a limited supply of bitcoin, prices are theoretically expected to rise if demand remains strong. Though the Law of Supply & Demand seems to be a perfect fit during most times, unfortunately, the truth is, the situation is different during all 3 bitcoin halving. But that shouldn’t be a surprise as Bitcoin is generally a wild card – you never know what exactly might happen.
Will history repeats itself?
The value of bitcoin before the 1st halving in 2012 was $2.01 while 2nd halving in 2016 was $664.44. Before the first halving, miners receive 50 coins and later reduced to 25 coins per block. Then, the second halving was shaved down to 12.5 BTC per block. A similar pattern that can be observed is the price surge after bitcoin halving even years after.
Speculations, speculations and more speculations
Every day, thousands of videos and articles are published about bitcoin’s price speculations. Some even think that they have cracked the code about bitcoin whereas some are convinced that bitcoin is a scam. The truth is, no one knows for sure.
Let’s rewind to a couple of decades back, specifically when “electronic mail” or email was introduced. Sure, everyone is reluctant at first. But look at the world now – Evolving with technology to equip ourselves better with current challenges. Hence, blockchain technology might be the next stepping stone that would revolutionize the digital era.
What’s your prediction?