The long-awaited Bitcoin event called a halving, which happens approximately every four years in the digital currency world, has just taken place.
At a pivotal point for the Bitcoin industry, this occurrence signifies the decrease of the reward given to miners for each new block from 6.25 BTC to 3.125 BTC. Consequently, the daily production of Bitcoin has been cut in half, now amounting to approximately 450 Bitcoins as opposed to the earlier estimated 900. This reduction will persist until around 2140 when the last Bitcoin is mined.
Why Does Bitcoin Halving Matter?
At block height 840,000, Bitcoin undergoes its fourth reduction in supply. This occurrence carries importance due to its influence on Bitcoin’s volatility, which typically increases following each instance. The reason being, the shrinking pool of available Bitcoins causes the value of yet-to-be-mined coins to rise, making them more attractive to investors.
The increasing excitement is clear as large amounts of Bitcoin have been transferred to wallets intended for long-term storage before the halving. In the days prior to the event, Bitcoin experienced significant price fluctuations, dipping below $60,000 and then soaring to $65,000 within a week’s span. At present, Bitcoin is being traded at approximately $65,000.
Normally, the Bitcoin supply growth slows down due to halving, but this comes at a cost for Bitcoin miners who see a decrease of 50% in block rewards. As a result, there might be a short-term decrease in the Bitcoin network’s hash rate as miners using outdated and less energy-efficient equipment may find their operations unprofitable and choose to shut down.
At the moment, the bitcoin network’s hash rate is around 630 Ehash/s, which is a 13.3% decrease from its previous peak of 727 Ehash/s reached in March, as indicated by BitIinfoCharts data. The mining difficulty for bitcoin has reached an all-time high of 86.39 trillion after the recent adjustment, making it more difficult to mine new blocks.
Satoshi’s Last Words
After the halving event took place, the final messages from Bitcoin’s enigmatic founder, Satoshi Nakamoto, echoed throughout the cryptocurrency community. Nakamoto, the elusive inventor of Bitcoin, incorporated the halving mechanism as a protective measure against the gradual devaluation of traditional currencies. His innovative concept aimed to rectify the inherent issue of trust in fiat money systems.
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”
Bitcoins have evolved greatly since Satoshi Nakamoto’s final messages. The entire sector has experienced notable progress, characterized by significant upgrades and groundbreaking innovations.
In contrast, the arrival of Bitcoin spot and futures ETFs has made it easier for investors to invest in Bitcoin, increasing its popularity and acceptance among traditional financial institutions. Essentially, these advancements demonstrate how Bitcoin has transitioned from a new and intriguing idea into a respected global asset class that is shaping the future of finance.
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2024-04-20 03:22