How Halving Affects Bitcoin

The halving becomes effective when the number of bitcoins credited to miners after the new block was successfully created is halved. Therefore, this phenomenon reduces the awarded bitcoins from 25 coins to 12.5. It is not a new thing, but it has a lasting effect and it is not yet known if it is for & # 39; Bitcoin & # 39; is good or bad.

People unfamiliar with Bitcoin usually ask why the halving takes place when the effects cannot be predicted. The answer is simple; it is preset. To counter the problem of currency devaluation, Bitcoin mining has been designed to spend a total of 21 million coins. This is achieved by halving the miner's reward every four years. Therefore, it is an essential element of Bitcoin's existence and not a decision.

Acknowledging the occurrence of halving is one thing, but evaluating "retroactive effect" is quite another matter. Those who are familiar with economic theory will know that either the supply of “Bitcoin” will decrease when the miners stop operating, or the supply restriction will push the price up, making continuing operations profitable. It is important to know which of the two phenomena occurs or what the ratio is when both occur simultaneously.

In & # 39; Bitcoin & # 39; there is no central recording system because it is based on a distributed general ledger system. This task is assigned to the miners. For the system to work as planned, there must be diversification between them. A few "miners" will lead to centralization, which can lead to a number of risks, including the likelihood of a 51% attack. While it would not happen automatically if a "miner" was given control over 51 percent of the emission, it could happen that such a situation occurs. This means that anyone in control of 51 percent can either take advantage of the records or steal the entire "Bitcoin". However, it should be clear that trust in & # 39; Bitcoin & # 39; would be affected if the halving takes place without a corresponding price increase and we are approaching the 51 percent situation.

This does not mean that the value of "Bitcoin", i.e. H. The exchange rate against other currencies, must double within 24 hours if a halving occurs. The at least partial improvement in BTC / USD this year is due to the pre-event purchase. Part of the price increase is already priced in. In addition, the effects are likely to spread. This includes a small loss of production and an initial price improvement, whereby the course is set for a sustainable price increase over a certain period of time.

This is exactly what happened in 2012 after the last halving. However, the risk element remains because "Bitcoin" was in a completely different place than today. Bitcoin / USD was around $ 12.50 in 2012 just before halving, and it was easier to mine coins. The power and computing overhead was relatively low, making it difficult to achieve 51 percent control because miners had little or no access barriers and the dropouts could be replaced immediately. On the contrary, with “bitcoin” / USD over $ 670 and the option of no longer funding from home, this could happen, but according to some calculations, it would still be an attempt to cut costs. Still, there could be a "bad actor" who would initiate an attack based on motivations other than the money.

Therefore, one can say with certainty that the actual effects of "The Halving" are likely to be favorable for the current holders of "Bitcoin" and the entire community, which leads us back to the fact that "Satoshi Nakamoto" designed the code that "Bitcoin" was smarter than any of us when we look to the future.

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