The May 13th Bitcoin halving has been one of the hottest topics of 2020 for the cryptocurrency community. The third BTC halving in the short history of cryptocurrencies comes at a time during which the world economy is looking for ways to bounce back, after all the negative economic developments at the end of 2019 and the first few months of 2020. Both the seasoned cryptocurrency investors as well as those who only recently started adding Bitcoin in the investment portfolios are hoping to see Bitcoin begin a new rally that will be similar to that of 2017. However, not everyone understands what cryptocurrency halving really means.
Cryptocurrency halving is a pretty straight-forward process, which is done in order to protect the longevity and the value of the asset. The reason why Bitcoin halving is necessary is because it restricts the units earned when a block is mined. In the case of the 2020 halving, miners will see their BTC reward drop 50%. So, instead of earning 12.5 units, they will now earn 6.25. Although this feels discouraging, it is absolutely necessary and it is something that is expected to help Bitcoin become more valuable. The third halving is just one of the many that will follow in the years to come. This process is going to be taking place until the asset reaches its maximum supply of 21 million and it will be in cycles of 4 years, just like the Olympic Games. With the current calculations, it seems like Bitcoin has another 80 years of halving ahead of it.
An example of how the halving can help Bitcoin become more valuable is the performance of the asset during April 2020. Leaving the collective economic panic aside, Bitcoin was traded heavily and it increased in value. For the lucky ones who bought Bitcoin in the beginning of March, the period before the halving took place was a time to simply enjoy playing blackjack switch at www.mansioncasino.com/uk. In less than two months, the asset doubled in value and now, everyone is waiting to see how the halving will affect the performance of Bitcoin. Most investors, regardless of experience, level of influence or level of trading knowledge believe that the halving can only mean good news for Bitcoin.
Many successful investors are expecting Bitcoin’s value to increase more than it has even increased before. For example, Michael Novogratz is confident that Bitcoin is going to outperform every other asset in the months to come. Some like Tim Draper, are more optimistic, expecting Bitcoin to reach record highs in the next couple of years. Although some of the scenarios lack realism, the nature of Bitcoin and cryptocurrencies, in general, allow for over-optimistic expectations. Could somebody in 2009 expect that a digital asset not regulated by any authority, would end up being worth as much as a car only a decade later?
All optimism aside, it does not hurt to be careful when investing in cryptocurrencies. These assets have gone a long way and they have proven to be as valuable as many real economy assets. However, crypto economy is still a work in progress and this comes with both expected as well as unexpected risks. A negative development during this period could turn a cryptocurrency from heavily traded to absolutely lethargic. Both the new as well as the experienced traders will need to put in hours of research before investing in any of the available cryptocurrencies out there.