Personal Finance

How Is the Halving Affecting the Cost Of BTC?

Bitcoin is the only cryptocurrency that is widely used around the world. It exists as a digital currency hosted on a blockchain network whose prices are generally laid down by the strength of requisition and supply. If we talk about two decades ago, there was only one type of money spent by the people, which is known as fiat currency and after the economic bump in the year 2008, people have switched to option means of storing costs.

Started searching and bitcoin turned out to be a solution. However, if we talk about some important aspects of this digital currency, then it is completely unclear. Like where is BTC obtained and by whom is its production controlled? Can it be utilised as an instrument of any kind of legal tender? If you want to know more check the pros and cons of non fungible tokens.

Today we are going to tell you about some important parts of you in this blog, to explain the bitcoin structure completely. Here we will cover the BTC halving and how it can affect the price of the cryptocurrency.

What is bitcoin mining?

 Before knowing about bitcoin halving, it is necessary to understand bitcoin mining. Proof of work is usually used to run BTC. Whenever a miner relentlessly puts in enough work and effort on the blockchain system, that miner is rewarded by the system with BTC. In general, the power system and the put-up computer come together to produce the hardware by the miners. Which can drive complex equations to complete mining triumphingly. After fully verifying the validity of each transaction, the transaction is added to the block, and once this block is completed the miners are rewarded with BTC. This method is considered more profitable, mostly for areas where electricity is very cheap.

Bitcoin Halving

If we talk about successfully mining a block of bitcoins, then it used to consist of about 50 bitcoins. According to the white paper, once the 211,000 blocks have been successfully mined, the reward for each block is halved. It takes about 4 years to complete the mining of 211,000 blocks of bitcoin and if we talk about its first halving, it was seen in the year 2013. As of 2013, all BTC mined successfully carried a reward of 25 for each block. And then the year 2017 saw another halving where the reward for successfully bitcoin mining at this level was around 12.2 blocks. And the last halving took place in May 2022 and now the reward for each block mined is up to 6.25.

How does halving play an important role in influencing the price of bitcoin?

With each halving, the number of BTC created may decrease and coins are sold by the miners to the highest bidder. If we talk about halving BTC in the past, it has seen a gigantic jump in the price of cryptocurrency.

Generally speaking, in the event of this halving period, the price may also stabilize, but the trend is mostly that the stability of the bitcoin price increases substantially a year after the event. One of the causes for such halvings is the fact that the insolubility of the system continues to skyrocket, making it further, arduous for miners to Build a new uniwest. On the other hand, it does not exist by any means, and there is no reason to even think that the price will certainly increase immediately after the next halving. One of the reasons why it is expensive is that it can make BTC short after this process.

Posted by Dragan Sutevski

Dragan Sutevski is a founder and CEO of Sutevski Consulting, creating business excellence through innovative thinking. Get more from Dragan on Twitter. Contact Dragan

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