What Are the Advantages of Bitcoin Halving?

  • Bitcoins
  • 25.03.2021 07:34 am

Bitcoin has been in the spotlight for the last year due to its massive bull market phase and, it's the previous halving that happened on May 11th, 2020. It should be noted that one of the contributing factors for this bull run is Bitcoin halving, so here we explain why this event is very important for the entire blockchain network and what are the main advantages that Bitcoin users can expect when bitcoin halving happens.

What is Bitcoin Halving?

The infrastructure of the blockchain system is a decentralized, peer-to-peer network, or in other words, the blockchain operates as a public database. The blocks of transactions are recorded, linked through cryptography, and distributed on a cluster of computer systems around the world. What makes the blockchain system special is that the data is viewable to any user, everything stays transparent, and the transactions are processed within minutes in the network. 

But, the main reason why the network operates successfully is the mining. When miners work on the network, they approve blocks of transactions, and with that, they prevent the double-spending problem from happening; and also, when they validate the block of transactions, a new Bitcoin enters into circulation. For everything they do, they get a block reward.

As we said earlier, the blockchain system operates without any intermediaries. This is why bitcoin halving was a necessary event that controls the inflation rate in the network and also the supply of BTC. Bitcoin halving is an event that was created to reduce the block reward of the miners by halving the reward every four years or when 210,000 blocks are added to the network. Consequently, after each halving, the price of Bitcoin was going up.

Advantages for Investors 

This is a huge advantage for investors because they expect the price of Bitcoin to increase after halving. You can invest in BTC on many different exchange sites.                                                                

One great site is the-bitcoinpro.com.  The advanced trading system uses AI and blockchain technology to provide consistent performance for its members in fast-paced online trading.  Plus, if you're new to trading, they offer access to your own demo account to prepare you for live trading. It is required to make a minimal deposit of $250 before you can trade here.

Rare Currency

As we mentioned earlier, bitcoin halving affected the supply of BTC. First, you should be aware that there are only 21 million BTC that can ever be discovered through mining. Or in other words, there is a restricted supply of Bitcoin. Bitcoin halving takes into account the fact that mining is the only process through which we gain access to new BTC, and that's why when the reward is halved, there is a decreasing number of miners that want to mine on the network. Hence the current supply of BTC is also decreasing. This makes Bitcoin an extremely scare asset, which also impacts the price of Bitcoin in a positive way when there is an increasing demand for the cryptocurrency

Bull Run

Namely, bitcoin has reached a price of $20,000 in December, which marked an increase of 224% from the beginning of the year. Furthermore, the price of Bitcoin had further increased in January 2021 when it exceeded $50,000, and currently, in March, it has climbed over $60,000. If you also compared the data from other halvings, you will notice that after each having or even a year after the halving, there was a dramatic rise in the price of Bitcoin. 

For example, the bull market phase in 2017 happened after halving in 2016, and the price of Bitcoin surpassed $18,000. As a result, today, there are many predictions about the price of Bitcoin. In fact, some financial experts expect Bitcoin value to surpass $100,000 by 2030.

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