Here’s what you should know about the Great Bitcoin Halving, how it will affect your wallet, and your virtual wallet.
On May 11th at 8:30 pm GMT, the Great Bitcoin Halving will be upon us.
This is the third halving in the history of the world’s leading cryptocurrency, which in the past has raised the price of bitcoin.
Here’s what you need to know about the epic-sounding event, how it will affect your wallet, and your virtual wallet.
What is halving?
Bitcoin relies on creating “modules” to run the network. Miners, working on building blocks, do so by running software to solve increasingly difficult math problems. Miners are often a complex set of computers.
Whenever one of these mathematical problems is solved, a block is created that contains data on the latest bitcoin transactions. This module has been added to the list of existing modules, known as blockchain.
Each new module found is rewarded to ensure that the system continues. Rewards are offered in Bitcoin (BTC), and the moment before this half, the reward is 5,000 115,000 per new volume.
The reward for creating a new constituency refers to the day that was cut in half. Today, the reward will drop from 12.5 BTC to 6.25 BTC.
Halving require long-term
Creating new bitcoins is expected to only go on for a limited time. The site is designed to produce a total of 21 million bitcoins – 18.3 million BTC already.
Bitcoin mining has become a hugely saturated venture, as the price of BTC has risen from a few dollars to over $10,000. This ensures that the half does not reach the 21 million limit at any time. Experts estimate that bitcoin mint will end in 2140.
Are there any steps that bitcoin owners should take?
No, half will not have a direct impact on the bitcoins you already own. This only directly affects the reward for a new module. However, there could be a long-term effect on the price of bitcoin.
Impact on price
Over the last few days there has been a lot of fluctuations in the price of bitcoin. Prices on Sunday rose to 7 9,700 BTC, down from today’s 4 8,466. This short-term volatility is not so significant, but as almost all experts agree, half of it actually causes a huge increase in BTC prices over the long term.
Reducing the incentive for creation reduces the supply of new BTC by half. Reducing supply increases the deficit, resulting in making each individual bitcoin more valuable.
But it does not happen overnight. It took a full year after the first half and a year and a half after the second half for BTC to reach its new peak.
Experts predict that the BTC will reach its next peak from October 2021 to May 2022.