We all have heard of the phrase bitcoin-halving along-side bitcoin mining. Oh, sorry, am I repelling you by using two core concepts in a single sentence. Let’s make it a piece of cake for you. Deal?
What’s Bitcoin:
Bitcoin is the money of the internet. Created by a person with pseudo-name Satoshi Nakamoto. The founder is never seen publicly.
Bitcoin is special because of its limited supply which is 21 million. It can not exceed this amount because it’s mentioned in its algorithm. Its concept was to be like Gold but more of a Digital Gold and was to center the problems of traditional financial sector where the fiat currency was printed as the government feels the need to.
Tip: Bitcoin’s short form is BTC
Bitcoin transactions are difficult to track and was mainly used in Dark Web for illegal activities in its initial years. Don’t get me wrong but people misused its biggest strength in a bad way, simply put.
Now Bitcoin is widely known as a hedge against inflation and as a store of value. Shewww, I had a moral duty to keep my definition of bitcoin explained in a positive emotion.
How a Block chain works?
Now, we shall understand how the Bitcoin algorithm works. Bitcoin is based on Block-chain technology. A unique and one of its own kind.
Whenever, a bitcoin is transferred this data (who transferred BTC to whom, when and how many) and previous transactions are stored in digital sheet of paper called ledger and then this paper is put into the vault/safe called a block. This block is put in a correct sequence according to the timing of every transaction with the help of a chain, hence, the name is used block-chain is used.
The data or transaction history stored via block chain is immutable, practically. The reason is the data is not stored in single building or a few locations as in the case of centralized companies like Google, Microsoft etc. The hackers will have to hack every node(computer) individually which can be in a NEW YORK and the next one could be in the jungles of Africa. So, you see how it is difficult. All this hacking needs to be done till 51% of total computers are hacked to approve a change and to win the majority of voting just like in parliament.
Bitcoin Mining or Proof-of-Work (POW)
In a block-chain, there are number of computers called nodes that run bitcoin algorithm to verify each and every transaction being made with bitcoin by solving complex mathematical equations(cryptography). In return, the computer which solves the equation first receives new bitcoin from the algorithm as a reward for showing proof of work and time.
Tip: Minting means Creating in Crypto world.
So, the question is where is the term BITCOIN HALVING? Let me explain.
In Bitcoin algorithm, every new block is minted after 10 minutes as the capacity of every block is limited to a specific number of transactions it can store.
Simply put, every new block is created after 10 minutes. It is mentioned in the software to reduce the reward of miners after 4 years (calculated by using 10 min reference) which means the reward that the computer gets by acting as transaction validator will be reduced to half.
In brief
· The Bitcoin halving is an event where mining rewards are cut in half.
· The event takes place every four years, according to pre-set rules in Bitcoin's code.
Ref. DECRYPT.com
History of Bitcoin Halving
The first BTC halving was done in 2012.Bitcoin Miners were receiving 50 BTC per block as reward before this halving. After this it was reduced to 25 BTC.
Ref. DECRYPT.com
Price effect of Bitcoin Halving on BTC
Now I am going to share a chart of price action of Bitcoin halving n bitcoin.
Why it effects the price of Bitcoin?
As we know the price of a rare item is much more than a common item. Compare the price of GOLD and COPPER. So, this halving creates a sense of limited supply and helps in its demand.
One thing I want you to take note of is that the price of BTC does not increase exactly after the date of Halving but has a dormant period with no price action or even a down trend for few hundred days, this can be dure to slow awareness and spread of news by media.
First Halving
Start Date: November 28, 2012
Halving Duration: 368 Days
Price Variation During Halving: $12.22 - $1,178 in 368 Days
Dump: After 368 days of First Halving
Dump or Bearish Trend Duration: 408 Days
Price Variation During Dump:$1,178 – $163.65 (86% Down After ATH
Then after 408 days dump, BTC keeps accumulating and consolidating before second halving. And BTC reaches $657.61 before second halving.
Second Halving
Start Date: July 9, 2016
Halving Duration: 525 Days
Price Variation During Halving: $657.61 - $19,800
Dump: After 525 days of Second Halving
Dump or Bearish Trend Duration: 365 Days
Price Variation During Dump: $19,800 - $3,180 (84% Down After ATH
Then after 365 days dump, BTC keeps consolidating before Third halving. And BTC reaches $8821 before third halving.
Third Halving
Start Date: May 11, 2020
Halving Duration: 372 Days
Price Variation During Halving: $8,821 - $64,854 Dump: After 372 days of Third Halving (May 18, 2021) Dump Duration Prediction: 386 Days
Price Variation During Dump (Its just a prediction according to the previous record, it can be true or false) : $64,854 - $9,728 (85% Down After ATH).
Prediction of Fourth Halving
Start Date: 2024 (Before May expected)
Halving Duration: 421 Days (By taking average of previous durations)
Dump: After 421 Days
Dump Duration: 386 Days
I can’t predict that how much BTC will grow during 2024 Halving and how much dump we will see after 2024 Halving.
Note: Prediction can be true or cannot be true.
Actually, when the 840,000 the block of Bitcoin will be mined then the next halving will begin in 2024.
LIVE COUNTING LINK FOR BTC HALVING:
: https://coinmarketcap.com/halving/bitcoin/?fbclid=I wAR3244AADB44mYzMz35uULbpyQyB2K2cNlcj VG2DWIn8HxmnhcbWE9JBbQY
