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Bitcoin Halving 2024: What to expect?
Bitcoin is the only virtual currency with the lowest inflation rate and highest returns. On average, it has grown by 671% per year, with the strongest returns in 2013, when it went up by 5000%—from a mere $13 to a staggering $1,100.
Currently, Bitcoin’s inflation rate is 1.69% and is expected to decrease even further over time. Ever wondered what keeps Bitcoin’s inflation in check, even during widespread pandemics and economic crises? It’s a phenomenon called Bitcoin halving. This blog explains everything about halving, its significance, impact on Bitcoin’s price, and much more. If that sounds exciting, let’s get going.
Bitcoin was designed to be a currency that never inflates. This is why the anonymous creator of the currency, Satoshi Nakamoto, limited Bitcoin’s supply to 21 million coins only. As of now, over 19.39 Bitcoins are in circulation, and the remaining are expected to be mined by the year 2140.
Mining is the only process through which new coins are introduced into the Bitcoin ecosystem. It is highly complex and resource-intensive. Miners use high-end computers to solve extremely intricate mathematical puzzles and verify transactions.
As a reward for their work, miners receive newly minted Bitcoins for every block they add to the Blockchain. This reward is cut in half after every 210,000 blocks have been mined, which happens roughly every four years.
The process through which the reward for mining is slashed by 50% is called halving. It prevents inflation and helps Bitcoin retain its value over the long run.
Bitcoin’s value is significantly determined by its supply and demand. Halving reduces its supply at regular intervals, boosting Bitcoin’s value (assuming the demand rises or remains constant).
The past halving’s have seen high volatility and a significant increase in Bitcoin’s price, making it an attractive asset to investors. After such events, Bitcoin also receives ample press attention, solidifying its status as a stable store of value. Let’s look at the past halving’s and their impact.
Bitcoin halving is encoded in the software to control its supply. So far, three halving events have occurred since Bitcoin’s inception in 2009. After each such event, Bitcoin’s price shot up significantly. Let’s look at the halving schedule and its impact on Bitcoin’s price:
| Halving Date | Block Reward Before Halving | Block Reward After Halving | Pre-Halving Price | Post-Halving Peak Price (Year) | Peak Price Increase |
| Nov 28, 2012 | 50 BTC | 25 BTC | ~$12 | ~$1,170 (Nov 2013) | ~9,750% |
| Jul 9, 2016 | 25 BTC | 12.5 BTC | ~$650 | ~$19,400 (Dec 2017) | ~2,900% |
| May 11, 2020 | 12.5 BTC | 6.25 BTC | ~$8,590 | ~$67,450 (Nov 2021) | ~750% |
| 2024 (expected) | 6.25 | 3.125 | ~$42,727 (Dec 2023) | ~$100,000 (expected) | ~134.044% |
Halving events mean different things to different people. For instance, investors and HODLers (a term used to describe people who hold Bitcoins for the long term, regardless of market conditions) look forward to halving events because this means their investments are likely to grow after each event.
Previous halving’s have caused Bitcoin’s price to surge significantly as they create scarcity and drive demand. However, depending on the market sentiments, Bitcoin’s price may vary.
For miners, halving means a reduction in their rewards. As a result, many miners may quit their operations if they are unable to recoup their operational expenses from the rewards. Usually, the increase in Bitcoin’s price compensates for the reduction in rewards, allowing miners to continue their operations seamlessly.
The first, second, and third halvings occurred at 210,000, 420,000, and 630,000 blocks, respectively. As halvings occur every 210,000 blocks, the next event is expected to occur at 840,000 blocks, which will be mined by April 2024. This means after halving 2024, the reward for mining will be slashed by 50%, from 6.25 BTC to 3.125 BTC. Here are a few outcomes of halving:
The past halvings have caused significant price swings in Bitcoin’s price, making it highly volatile in the months following the event. This year won’t be an exception. Bitcoin’s price may see high volatility for a few weeks/months, depending on the trading volume.
The mining rewards will be halved. And if the increase in Bitcoin’s price won’t compensate for the reduced rewards, several miners may quit their operations. If this happens, the network may become vulnerable to attacks. However, miners can adopt efficient models to lower mining costs to ensure seamless operations.
Halvings boost Bitcoin’s value significantly. After each halving, Bitcoin’s price has skyrocketed. The third halving cycle, which occurred in 2020, increased Bitcoin’s price by a staggering 750%. This year, it is expected to rise by approximately 134%.
Bitcoin is one of the most stable ‘store of value’ and the only currency with an inflation rate of less than 2%. It is highly divisible, easily transferable, and widely accepted.
Bitcoin is the future. Being a decentralized digital currency, it empowers millions of unbanked and underbanked citizens. If you are looking for a reliable alternative to traditional currency, it’s about time you embrace Bitcoin.
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