What is Bitcoin halving?

“Half” is not a well-known phrase in investing because it evokes fears of investment losses that are the equivalent of half their value.

Yet, Bitcoin halving is an entirely different matter. While there isn’t any general agreement among crypto experts, research suggests that Bitcoin’s reduction in value results in an improvement in Bitcoin value for trading.

To comprehend halving, you must first know how Bitcoin is created. Anyone can make Bitcoin. However, it is a huge investment in processing capacity. Both of these resources are utilized to create the blockchain.

Blockchains are digital public ledgers that confirm the authenticity of every Bitcoin unit. Each transaction or trade made using Bitcoin Bitcoin can be added to the chain, expanding it and increasing its security. This complexity is vital for the security of the whole Blockchain ecosystem.

On average, huge computers with special software functioning 24/7 worldwide can produce just 150 blockchains daily.

The miner who has succeeded in creating the future blockchain is awarded the token known as the block reward. The amount for the reward in block form is encoded into the core Bitcoin system.

When Satoshi Nakamoto first announced the launch of Bitcoin in 2009, it was established that the reward for block creation would be 50 Bitcoin. But, the reward is reduced by a halving every time 210,000 new blocks are made. This is the reason why the event is referred to as the halves.

The first halving was in 2012, reducing blocks’ value to just 25 Bitcoin. The second halving, in 2016, decreased its value by 12.5 Bitcoin.

The upcoming halving cuts the amount down to 6.25 Bitcoin. But they are considering that Bitcoin cryptocurrency is trading at more than $9,000, and 6.25 coins are still very lucrative.

Halving influence on Bitcoin’s price  

Nakamoto developed Bitcoin to be restricted to 21 million coins per person. This is a vastly different concept from fiat currencies used in traditional ways because federal monetary agencies can print unlimited cash. This allows adding more cash to circulation, causing inflation and devaluing the currency.

But Bitcoin’s internal volume limit protects you from the possibility of a long-term decline, no matter the amount you trade.

The scarcity factor is predicted to cause an increase in value up to 2140 (when it is believed that the final Bitcoin will be produced). Halving is a factor in this issue because it prevents prospective miners from investing too much energy in mining new coins due to decreasing profits. This slows the production of new coins and decreases trading volatility.

The previous halving events have led to an increase in Bitcoin’s trading price. There are several reasons to believe that the trend will change this time. It could be possible that a general fear of conventional currencies due to the coronavirus epidemic could drive an increasing number of investors into Bitcoin and put upward pressure on the value of trade.

When is Bitcoin’s halving going to happen?  

The Bitcoin protocol creates halving events each time 210,000 new blocks have been created. It is not dependent on Bitcoin’s volume of trade and price. However, the time it takes to make the new block is subject to the various numbers of miners, the technology, and other equipment.

Due to this, the system cannot determine a day or hour. Based on the pace of Bitcoin creation up to now, however, experts believe the next half-halving event is likely to be in May 2020, around mid-May.

It may be possible that the rush to generate new Bitcoin before the lower rewards start could result in more time before the beginning of May.

Conclusion of halving process  

It is not difficult to see that there’s an anticipation of May 2020’s Bitcoin cutting in half. The crypto market is expecting this period to see value increase; however, there are no guarantees for trading during this time of slow economic activity. The fork could be either the other way.

In any case, Bitcoin is currently considered a reasonable investment choice. If you’re considering making a bet on Bitcoin, Fondex offers you the chance to trade options for credit. Fondex’s network also allows you to trade in specialized areas such as securitization.

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