If you’re interested in Bitcoin or cryptocurrency in general, you have probably heard about the notion of Bitcoin halving, which is going to happen in the near future. This event has happened since the first cryptocurrency appeared and became popular. The next Bitcoin halving will happen in May 2020, and it could influence the price of Bitcoin (BTC).
BTC is a cryptocurrency, and it has a supply cap of 21 million. Halving indicates the fact that Bitcoin won’t achieve its’ circulation as fast as expected. It also refers to the fact that less of this digital currency will be generated because of the limited supply, which will make BTC more deficient. Logically, this deficiency will increase the cost of Bitcoin. What is more, the halving has become a vital catalyst that drives the digital currency into a new bull market.
Before jumping to conclusions, it’s important to think over all the facts. In this article, we’ll cover the notion of Bitcoin halving and the factors that can affect the mining process.
Let’s take a closer look!
The Definition of Bitcoin Halving
The Bitcoin was initially created in 2009, and since then, it has served as the best way to exchange value. Nevertheless, it was important to set certain rules to make it more efficient than traditional financial operations or currency. One such rule was capping the Bitcoin supply.
To create new Bitcoin, the system has to create new blocks in which the coins be placed, and the new blocks are generated every ten minutes. At the same time, miners will find a hash of blocks that performs the proof of work that is required for a legitimate block. This process is vital for Bitcoin’s value.
Bitcoin halving has caused an increase in production levels. During the BTC halving, the mining rewards for new Bitcoin blocks will be cut by half, which means that Bitcoin miners will achieve only half of Bitcoins for authenticating transactions than they achieve now.
The first halving of block rewards started with 50 BTC, then it was decreased to 25 BTC in 2012, and then another halving happened in 2016. Right now, the block reward for miners is 12.5 BTC, and that will decrease to 6.25 in 2020.
Usually, Bitcoin halving happens every 210,000 blocks, which usually takes four years, and it will continue to happen until the system generates 21 million BTC. Then, there will be no block rewards at all.
Halving is a very important event for investors and traders because it lowers the amount of BTC that the system creates. The supply of coins is limited, and the price can skyrocket if the demand stays at a high level. However, even though the price of BTC increased quickly during the previous halving, the level of interest to cryptocurrency changes unpredictably.
The cost representation of Bitcoin has eight decimal places. It will take 33 halvings for Bitcoin to reach the 0 BTC block reward, which will take 132 years. All in all, the last bitcoin will be generated in 2140.
When Will the Next Halving Happen?
If we look back on the history of BTC, we can see that we have already witnessed two halvings, and the third is coming this year. As we have already mentioned, it happens once every four years. Having analyzed the past, we can see that the next BTC halving is set to occur on the 12th of May, 2020, at about 4:00 p.m.
That being said, it’s hard to name the exact date of the halving because many factors influence the creation of blocks. Some sources claim that the coming halving will take place the week that of May 18, 2020, and the block reward will decrease from 12.5 BTC to 6.25 BTC. Long story short, the number of blocks will be 630,000.
Bitcoin Halving: How It All Started
Undoubtedly, BTC halving influences the price enormously. Therefore, it’s logical to analyze the past to see how the price will behave in the future. To understand the idea and the history of the halving, take a look at this table:
| Event | Date | Block Reward | Block Number | New Supply |
|---|---|---|---|---|
| Bitcoin Launch | Jan 3, 2009 | 50 BTC | Genesis Block (0) | 10,500,000 BTC |
| First Halving | Nov 28, 2012 | 25 BTC | 210,000 | 5,250,000 BTC |
| Second Halving | July 9, 2016 | 12.5 BTC | 420,000 | 2,625,000 BTC |
| Third Halving | May 18, 2020 (Expected) | 6.25 BTC | 630,000 | 1,312,500 BTC |
| Fourth Halving | 2024 (Expected) | 3.125 BTC | 740,000 | 656,250 BTC |
| Fifth Halving | 2028(Expected) | 1.5625 BTC | 850,000 | 328,125 BTC |
The Influence of BTC Halving on the Price
By now, you should have a clear idea of what a halving is. Let’s try to understand the influence of it on the price of BTC.
Experts claim that the halving’s impact on the price is not significant at all. In theory, the price of BTC should increase dramatically as the amount of BTC in the market decreases, and it’s slowly coming to its 21 millionth cap.
However, as BTC halvings are predicted years beforehand by miners and investors, so it remains unclear whether the price of Bitcoin in halvings before the proceedings happen or not. If we look back on the past, we can notice that during the halving of 2012, the price of BTC was about $11 per unit. A year later, it rose to $1,100, so it increased by 10,218%. That’s impressive!
What Happened to the BTC Price During the Halving of 2016?
During the Bitcoin halving of 2016, the price was between $500 and $800. It didn’t increase drastically because nothing special occurred during the first few months of the year, but the price reached its record high of $20,000 in December 2017.
Before the first halving, the price had increased 1,818 times, while during the second halving, it grew 33 times. Thanks to these events, you can clearly understand the impact of the halving on BTC.
Prediction for the Coming Halving in 2020
It wouldn’t be fair to give some exact numbers, but the past events tell us a lot about the coming halving. The coming event will have the same or similar bullish effect on the price. Crypto analyst Tom Lee claims that BTC investors should expect a 100% return in 2020.
Anyway, stay tuned to BitForex to track price fluctuations on time!