Approximately a few hours ago, we witnessed the fourth Bitcoin halving event, which occurred at block number 840,000. This significant economic process plays a crucial role in regulating the Bitcoin (BTC) supply by reducing the reward given to miners for each new block created, thus increasing the asset’s scarcity.
The Bitcoin network experienced its fourth reduction in the reward for mining a new block, decreasing it from 6.25 Bitcoins to 3.125 Bitcoins. This change results in Bitcoin being issued at half the previous rate.
According to Dopamine App’s CEO, Karim Chaib, Bitcoin’s scarcity and market value are significantly influenced by the process of halving.
“Scarcity is a fundamental economic principle that affects the value of an asset. By programmatically ensuring that the supply of Bitcoin increases at a slower rate over time, the halving events underscore Bitcoin’s scarcity.”
In Bitcoin’s source code, the process of reducing rewards for miners, known as halving, is permanently set. This event occurs approximately every four years when 210,000 blocks have been mined.
The Bitcoin network experienced its initial reduction in new coins created per block from 50 Bitcoins to 25 Bitcoins in 2012. Subsequent reductions took place in 2016 and 2020, bringing the current rate down to approximately 3.125 Bitcoins per mined block.
According to Chaib’s perspective, shared with CryptoMoon, Bitcoin’s limited supply, which is programmatically set and not subject to change, distinguishes it from conventional store-of-value assets.
“This programmed scarcity is a key feature that differentiates Bitcoin from traditional assets like gold, which can become less scarce as new means of extraction and production are developed. Bitcoin, by contrast, has a capped supply of 21 million coins, making it fundamentally inflation-proof.”
Is Bitcoin the next gold?
According to Jonas Simanavicius, co-founder and CTO of Syntropy, Bitcoin’s economic structure and halving mechanism are clever mathematical approaches that make Bitcoin a deflationary currency. This feature sets it apart as a dependable substitute for gold. (Source: Interview with CryptoMoon)
“Gold has served for thousands of years as the primary store of wealth because it is difficult to increase its supply and it is global… Nothing else came close to having a predictably slow-growing supply—until Bitcoin.”
In simple terms, the cost of a Bitcoin unit surged by 122% in the previous year, whereas the price of gold grew by only 19%. As of now in 2024, the value of Bitcoin has gone up by more than 51%, compared to the 15% rise in gold prices since the beginning of the year, based on TradingView data.
Throughout history, precious metals and real estate have been popular choices for safeguarding wealth due to their enduring value. However, with the advent of the digital era, there’s a growing preference for assets that can be easily bought and sold quickly. According to Simanavicius, this trend is likely to favor Bitcoin in the long run.
“Over time, Bitcoin has not only survived, but its backing power of extensive computation and decentralization has also grown so strong that more people and institutions recognize this security, and the benefits such as immediate transactability, geopolitical decentralization, and ease of carry outweigh those of other asset classes.”
Read More
- BCH PREDICTION. BCH cryptocurrency
- TRU PREDICTION. TRU cryptocurrency
- OKB PREDICTION. OKB cryptocurrency
- WRX PREDICTION. WRX cryptocurrency
- GFI PREDICTION. GFI cryptocurrency
- I’m a Celebrity voting figures revealed after Danny Jones crowned winner
- FIL PREDICTION. FIL cryptocurrency
- TRAC PREDICTION. TRAC cryptocurrency
- CTXC PREDICTION. CTXC cryptocurrency
- RIF PREDICTION. RIF cryptocurrency
2024-04-20 22:58