Bitcoin is scheduled to have its third halving event this May, and if history repeats itself, an increase in Bitcoin is sure to follow.
As the most popular form of cryptocurrency (and the blockchain technology that powers it) Bitcoin is now widely accepted around the world and has a growing number of applications.
Since there is nothing backing Bitcoin other than what people are willing to pay for it, the cryptocurrency can experience such huge swings in its value, and one of those ways is through halving.
If you’re new to Bitcoin or unfamiliar with the term, we’ve broken down what to expect next month during the third Bitcoin halving.
Bitcoin halving is essentially when the number of Bitcoins rewarded for processing transactions is cut in half, which maintains the fixed supply of Bitcoin.
Bitcoin halving is a reduction in the amount of Bitcoins rewarded to miners for completing a set of Bitcoin transactions, known as a block. Bitcoin halving events happen approximately every 210,000 blocks.
Bitcoin halving has so far happened every four years since the cryptocurrency came about in 2009. Halving has taken place twice, the first being in November 2012, according to Forbes. That halving saw an increase from $11 to $1,000, although the growth didn’t occur until a year later.
A second Bitcoin halving happened again in July 2016, which saw Bitcoin increase a year later from $700 to $20,000.
These two halvings suggest that when the future supply of Bitcoin declines during a halving, the demand for Bitcoin will usually stay the same, which pushes the price up. Based on this, we could observe similar price increases from past halvings in the upcoming one.
Tim Draper, an entrepreneur who has made billions from Bitcoin, told BlockTV in a December interview that next month’s Bitcoin halving could result cause the price of a Bitcoin to jump to $250,000, which would be the most significant halving increase in Bitcoin’s history. Draper added the increase could happen in a time frame from six months to a year after the halving.
Those that are interested in Bitcoin should consider buying right now before the next halving event. Theoretically, you should purchase new Bitcoin now since the number of new Bitcoins put in circulation every day will be cut in half as the halving approaches.
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