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The upcoming Bitcoin halving is shrouded in speculations of a similar market trend witnessed in 2017, which saw Bitcoin rising to an unbeatable price of $19,780 in December 2017.

Will the upcoming Bitcoin halving beat December 2017’s record of $19,780? How can you profit from the next Bitcoin halving scheduled to happen in less than a year from now? What is the implication of the upcoming Bitcoin halving?

These are the issues that will be addressed in this article.

Complete Guide to Bitcoin Halving

What is Bitcoin halving?

Bitcoin halving is a reduction in the number of new bitcoins (by 50%) earned by each miner (reward for mining). This happens when a block is added to the blockchain (a block of Bitcoin transactions is validated and added to the existing blockchain). 

Bitcoin halving is a crucial occurrence programmed to take place for every 210,000 blocks added to the blockchain.

Here is a chart showing what has happened in the past when Bitcoin halves and what you can expect next time.

bitcoinHalvingChart

Twenty-one million Bitcoin is expected to be in circulation, and until the number of bitcoins mined hits this target, Bitcoin halving will continue to happen. The last Bitcoin will likely be mined in the year 2140 when the Bitcoin in circulation has hit the 21 million benchmark.

Importance of Bitcoin halving

Bitcoin halving is a mechanism designed by the creator(s) to prevent bitcoin from falling under the inflationary force. 

Bitcoin halving prevents bitcoin from decreasing in value with time as experienced by fiat currencies subject to inflationary forces when the supply of currency keeps increasing with time.

BTC-Halvenings-and difficulty

As explained by Vitalik Buterin in Bitcoin magazine, Bitcoin is designed to simulate gold. The market value of gold keeps increasing due to a continuing reduction in the amount of gold mined. 

Therefore, bitcoin halving is a mechanism put in place to drive the value of Bitcoin upward, while the supply of new bitcoin is reduced by half.

When is the next Bitcoin halving?

when is bitcoin halving

Forecast of the next bitcoin halving is predicted to happen on the 18th may, 2020 (30 weeks from now, give or take.).

By May 2020, the number of blocks mined is expected to have risen to 630,000 blocks, which will amount to an estimate of 18,382,525 (more than 18 million!) bitcoins in circulation. This value represents 87.54% of the total bitcoin expected to be in circulation by 2020.

This will result in a 50% reduction in the amount of new bitcoin earned for every block added to the blockchain from 12.5 bitcoins to 6.25 bitcoins.

How to trade 2020’s bitcoin halving

If you’re thinking of profiting from the next coming halving, there are two ways you can go about it.

  • Buy, hoard and sell bitcoin from an exchange platform

  • Buy CFD. CFD (Contract for Difference) allows you to buy or sell Bitcoins based on the upward or downward price prediction. For every point the price of Bitcoin goes up in your favor, you make gain based on the number of CFD units you purchased.

With CFD,

  • You don’t need a wallet or an account before trading

  • You can make predictions on the value of bitcoin

  • You can Leverage on CFD by depositing to gain exposure to a broad market spectrum

  • You enjoy a tax-free profit

This is not investment or financial advice but this is what I am doing…

buy bitcoin halving

What happened the last time bitcoin was halved?

The last bitcoin halving happened on the 9th of July 2016. This period ushered in the era of the second halving that saw the number of bitcoins earned for every block added to the blockchain reduced by half from 25BTC to 12.5BTC.

Exactly one month before the halving, the price of Bitcoin rose from $576 to $650. This value represents a 12.85% increase in value.

The price of bitcoin rose steadily (although suffering brief losses) to a value of $2,526 exactly one year ago since the date of halving.

The second halving followed a pattern established by the first halving based on the law of demand and supply.

On the 28th of November 2012, bitcoin reward for new blocks halved from 50BTC to 25BTC. This saw an increase in bitcoin value from $11 to $12, starting from the 28th of October, 2012. The price rose continually to $1,100 in 2013, an amount that represents a hundredfold increase in price.

Bitcoin value fell to about $220, an amount which represents a 20-fold increase from $11. The price fluctuated in a range of less than $1000 before experiencing a surge in value in the second halving.

How will the next bitcoin halving affect the price of Bitcoin?

Count down to the next halving stands at ten months away. It is expected that the price of bitcoin will rise to a ten-fold increase in value, amounting to $100,000 per bitcoin.

Anthony Pomp, the co-founder of Morgan Creek Digital Assets, and Jesse Powell, the CEO of Kraken, believes that the price of bitcoin will surpass the $100,000 benchmark prediction.

Both Pomp and Powell based their predictions on the demand-supply law, which continues to dictate the market price of commodities.

The halving is expected to have a direct effect on the miners as this will see a 50% cut in the amount of bitcoin earned for every block mined. The complex computational algorithm required to be solved by every miner is expected to get tougher; hence, requiring more computational power.

This might eventually make bitcoin mining unprofitable for miners, who will increasingly rely on transaction fees charged per transaction and also force the upward increase in the value of bitcoin.

How does Bitcoin halving work?

The-Bitcoin-Halving-Is-Coming

The bitcoin halving was programmed by the creator(s) of bitcoin (Satoshi Nakamoto, a man of unknown origin) to reduce the rewards of miners for every 210,000 blocks of validated transactions added to the blockchain. This happens once in four years (give or take depending on how fast the mining target is met).

Miners compete to solve complex computational algorithms (maths problems) on the bitcoin blockchain network.

Two things happen when miners solve complex computational algorithms (a miner is said to have mined when he solves this complex maths problem).

  1. New bitcoins are added in the circulation as rewards for mining. An average of 144 blocks is mined per day. When multiplied by 12.5 bitcoin rewards per block, a total of 1,800 new bitcoins are added to the bitcoin circulation daily.

  2. By mining bitcoins, the miners make a bitcoin blockchain network more secure by validating bitcoin transactions. The more the number of miners, the stronger the bitcoin blockchain network gets. It is estimated that a hacker will need 51% of the total hash power (computational power) to hack into the bitcoin network.

What is the fate of miners when bitcoin mining reward is halved?

Bitcoin Halving: Why It May Be The Best Time to Buy Bitcoin 1

When bitcoin halving takes place, the bitcoin blockchain network increases the complexity of the computational algorithms miners solve. (mining gets increasingly difficult in a similar way mining gold from a gold mine keeps getting harder and deeper)

This will require additional computational power to mine (solve the increasingly complex computational algorithms) blocks.

At this stage, more miners will have to pool together computational powers to mine blocks and share the profit. E.g., a pool of 10,000 miners combining computational powers will share 12.5BTC for every block added to the bitcoin blockchain.

If the anticipated bitcoin halving does not force the bitcoin value up, bitcoin blockchain mining becomes less profitable for miners as a direct result of a 50% decrease in reward for every block of validated transactions added to the blockchain. This will also translate to an increase in the cost of electricity consumption and hardware upgrading. This can make some miners leave the bitcoin blockchain.

Bitcoin blockchain network automatically adjusts the speed at which blocks are added to the bitcoin blockchain in relation to the computational power required to mine a block – by adjusting the complexity of the computational algorithms needed to mine a block. 

In the early days of bitcoin, mining was done with CPUs, which was upgraded to GPU (Graphics Processing Units) due to the increasing difficulty of solving computational algorithms. Presently, the ASIC (Application Specific Integrated Circuit) used in mining has a computational power of roughly 700 GPUs.

The more the power available on the network to mine a block, the more challenging it gets to solve computational algorithms validating a transaction.

What happens when all 21 million bitcoins have been mined?

bitcoin halving coming soon

When all 21 million Bitcoins are in circulation by the year 2140, miners will no longer profit by receiving new bitcoins for every block of transactions validated and added to the blockchain. Instead, miners will profit only from transaction fees charged for transactions done with Bitcoins.

When this happens, Bitcoin becomes a deflationary currency.  This result in

  • A decrease in ‘spendable bitcoin supply,’ which can be caused by several factors, one of which is losing bitcoin to an invalid address.

  • This will increase the demand for bitcoin due to restricted supply.

Why does bitcoin halve?

The idea of bitcoin halving was programmed into the bitcoin blockchain network to prevent the bitcoin from developing inflationary tendencies like the fiat currencies.

Satoshi Nakamoto explained the idea of a deflationary bitcoin (bitcoin halving) in his words:” “If the coinage does not increase as fast as demand, the opposite of inflation will occur, and early holders of the currency will see its value increase. In an economy, money has to be distributed and produced somehow, and a constant rate seems to be the best formula.”

However, critics argue that a deflationary bitcoin will be subject to price volatility as experienced in the upward-downward of bitcoin as witnessed in the past years.

Which is the easiest cryptocurrency to mine?

There are several cryptocurrencies you can mine easily with your system or mobile phone as the case may be.

Electroneum

Electroneum is one of such coins you can mine easily using your mobile phone. Electroneum is a reasonably new currency with a promising future. 

ByteCoin

ByteCoin is a trending cryptocurrency for its ease of mining. You can mine ByteCoin by downloading, installing, and running the ByteCoin wallet on your system. You can choose to mine ByteCoin using a GPU or joining mining pools.

Steem Coins

To mine, Steem coins, you don’t need technical knowledge to do so. All you need is the ability to write good articles.

Steem coins reward writers with coins for writing good-quality articles on any topic of choice. That makes it one of the easiest coins to mine without technical knowhow.

Monero

Monero is a digital currency gaining popularity because of its strong privacy policy and security. Transactions done on/with Monero are traceless, secure, and anonymous.

 Mining couldn’t have been easier with Monero. To mine, Monero, you need to download and install the Monero mining software on your system. The software does the rest of the work.

Aeon

Aeon is also a relatively new cryptocurrency quite profitable to mine due to its Cryptonite-light proof-of-work. This offers miners three times the average hash rate for every block mined.

RavenCoin

In terms of the PoW algorithm based on the X16R algorithm, Raven coin is one of the easiest cryptocurrency to mine. The X16R algorithm is a combination of 16 different algorithms meaning that you will need a GPU to mine RavenCoin.

How many bitcoins are there, and when will they all be mined?

21-million-bitcoins

There are 21 million Bitcoins, of which 17,982,925 BTC is in circulation. This figure represents 86% of the total bitcoins.

Although this number increases by 12.5BTC for every block added to the blockchain.

It is estimated that the last of the 21 million BTC will be mined somewhere in 2140, 120 years from now.
How many bitcoins are left?

Presently, there are approximately 3 million bitcoins left to be mined (3,014,075BTC), Representing about 14% of the bitcoin left to be mined 120 years from now.

This sweeping new regulation is so intrusive… even the New York Times has said:

An unprecedented power grab hiding in plain sight:

The window to safeguard your money and financial privacy is closing. And it’s rapidly closing fast. I don’t enjoy it one bit but I have been left with little choices. I refuse to standby and let Washington’s control-freak sociopaths confiscate everything I’ve built up over the years.

For this reason, I’ve spent the past several years researching and determining simple, doable techniques that ordinary citizens may use to preserve their money and financial privacy. I highly recommend this Financial First Aid Kit if you are looking for a complete guide to preserving your wealth and financial privacy.

Patrick Moore
Patrick has been a part of the cryptocurrency community since 2014 and created CryptoWhat in 2015 to help new users learn more about cryptocurrencies. Despite not being a financial expert, his passion for cutting-edge technology drives him to share knowledge and information with as many people as possible about the potential of cryptocurrencies and how they will change the financial sector.