Bitcoin halving: Volatility coming our way?
Virtual digital currency image via Shutterstock
Bitcoin halving has come and gone; what’s left is a smaller reward for mining bitcoins and the promise of future volatility. Let’s see what happened this past weekend and what changed for Bitcoin miners and enthusiasts.
Bitcoin has just experienced its second halving and, just like the first time, it did not have a substantial effect on the cryptocurrency’s price. Some voices claim that many Bitcoin miners will stop mining in the wake of the reduction, which would result in a Bitcoin blockchain slowdown and a price collapse.
The Bitcoin halving was celebrated by many because it showed that this digital currency survived its second struggle. The hashrate continued to run at 1,547,796,830 GH/s on Sunday even as the Bitcoin community was prepared to embark on an emotional roller coaster. Nothing happened after the reward was cut from 25 bitcoins to 12.5 bitcoins, but some miners fear that the repercussions will reveal themselves to us in the following months.
When Andreas Antonopoulos, author of Mastering Bitcoin, was asked during an Ask Me Anything about the results of the halving, he replied:
I can’t predict price. No one can. Anyone who does, even for 10 minutes, is lying.
The reward halving will change the inflation rate in bitcoin. How that affects the overall economy depends on the conditions of all the other parameters in the economy: price, adoption, transaction volume, hash rate, difficulty, investments, other currencies, world market conditions, etc.
What does the Bitcoin halving mean for us?
Now that the Bitcoin halving has occurred, it will get harder for Bitcoin miners to win the reward because they have to compete with one another (in the code) to win the reward —this is what Satoshi Nakamoto, the father of this cryptocurrency, did to slow things down and make sure the 21 million cap is not reached so easily.
As more hardware is added to the network, the difficulty increases too. As we stated last week, a devastating hashrate reduction was highly unlikely since the 2012 halving was not the end of the Bitcoin world either; this time, people knew what to expect and acted accordingly.
If anybody had any doubts that Bitcoin is not like other commodities, here is the proof: the price should have gone up as the supply was reduced, but this did not happen. Let’s see what the Bitcoin halving has in store for us.