Bitcoin halving is when the current rate at which new Bitcoin is released into circulation gets cut in half. This process of “halving” occurs when 210,000 blocks of bitcoin are mined– roughly about every 4 years on a time scale. This has been the case since Bitcoin started in 2009 and is scheduled to continue until sometime around 2140. So far, there have been three halving occurrences taking place in 2012, 2016, and most recently in 2020 on May 11th. This means that 12.5 Bitcoin is now worth 6.5. This strategy is Bitcoin’s way of controlling inflation. Because there is a finite supply of total Bitcoin to be mined, roughly about 21 million and much like any existing natural resource, once all bitcoins have been completely mined the total supply will essentially be tapped out. This creates more scarcity for the currency when you cut the value in half. Supporters of bitcoin argue, just like gold, this finite supply of the currency will keep banks in check.
What does this mean for investors? It’s all speculative. The cryptocurrency was not originally taken seriously as a store of value, however, more recent events like that of 2017 proved otherwise for the crypto industry as a whole. Subsequently, many more investors are now rushing in to cash in on the gaining potential of the crypto world. Moreover, due to the current climate overcast by the Coronavirus, some investors are beginning to use cryptocurrencies like Bitcoin as a hedge against the stock market– much like gold has been used traditionally. Some believe this a great opportunity; others see it as a panic move.
One thing that is certain though is that, these are uncertain times and most people are trying to make sense of everything going on at the moment. Crypto halving is just the latest channel for doing just that. At a time like this, it won’t be surprising to see cryptocurrencies skyrocket as more and more investors continue to seek cover in hopes to weather the storm of what some believe to be an economic recession looming around the corner.