Bitcoin Reward Halving, And Its Impact On Bitcoin Price In 2020
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Many of those who are new to cryptocurrency, especially Bitcoin, find the concept of Bitcoin halving, and why it has investors preparing to pile up on Bitcoins, perplexing. In this article, I’ll try to break it down for the uninitiated.

So what is this Bitcoin halving?

It is the programmatic reduction in the number of new Bitcoins that can be mined and brought into circulation. This reduction occurs every four years. Bitcoin was designed to behave much less like fiat currency that we are accustomed to using today that are susceptible to inflation. The virtual currency was meant to behave more like precious metals such as gold which cannot be counterfeited or have its supply artificially increased. Bitcoins, similarly, are scarce and can be considered the digital equivalent of gold. This has also earned it the moniker “digital gold” because the underlying Bitcoin blockchain ensures that Bitcoin cannot be duplicated and supply increased past that 21 million number. Also, similar to the way bars of gold make it into circulation by being physically mined out of the earth, Bitcoins enter into circulation through a process called “digital mining” which requires a lot of effort as well. The difference is that instead of physical labor, digital mining uses energy derived from a multitude of computers spread all over the globe.

A quick recap of what mining is:

The Bitcoin blockchain was programmed to operate on a ten-minute interval, ie, every ten minutes a new block gets mined by one of the many miners on the Bitcoin network. A miner takes all the transactions that occurred over the last ten minutes, packs it into a block, packages it up and adds that block to the chain. A miner’s incentive to put all that money and energy into this intensely competitive work is to earn a block-reward on the completion of a block. Back in 2009 when Bitcoin was launched, the incentive was much higher than what it is today as Satoshi Nakamoto realized that for Bitcoin to succeed as a secure form of payment the network needed to grow rapidly. An accelerated growth would prevent attack vectors such as double spending and a high frequency of attacks on the network. The more the miners, the higher the hash rates and computational power available to make the network more secure.

Back to Bitcoin halving:

The block-reward at the initial stages was the highest at 50 Bitcoins per block, and the level of complicity to discovering a new block was very low. The high volume of Bitcoins pumped into circulation early on served to draw in the miners to secure the network and launch it. The difficulty level of mining is significantly higher now, and the Bitcoin reward is much less. This controls the supply of Bitcoin so that it does not land up in the same pitfalls as regular fiat currency that are susceptible to inflation. The Bitcoin software has a Bitcoin “halving” mechanism that cuts the block reward in half every 2,10,000 blocks which are completed every four years. Since its inception in 2009, Bitcoin has gone through three halvings, the fourth one is due to occur somewhere around May 2020, which will bring the block reward down to 6.25 Bitcoins.

Predictions for Bitcoin in 2020:

Halving has an impact on the value of Bitcoin as it is observed to kick Bitcoin into its next bull cycle. If we think of it from a purely supply and demand perspective, as the supply of Bitcoin is thinning out, the number of wallets on the Bitcoin network is growing. Bitcoin is widely traded in cryptocurrency exchanges all over the world such as Binance, Coinbase, and PayBito among a multitude of others. Mathematically, this is sure to lead to a hike in the value of Bitcoin in the future. Here are Bitcoin price predictions for 2020 from two prominent names in the cryptocurrency space:

Osato Avan-Nomayo

Osato Avan-Nomayo is an analyst from Bitcoinist and his prediction derives from the fact that the Bitcoin mining reward will drop from 12.5 BTC to 6.25 BTC in 2020.

In 2012, the Bitcoin mining reward went from 50 BTC to 25 BTC and then 25 BTC to 12.5 BTC in 2016. The historical price chart of Bitcoin shows that Bitcoin experienced remarkable heights shortly after the occurrence of these two events.

For instance, the year following the first mining reward reduction, the value of BTC rose to an unprecedented $1,000. Its value increased to a record high of $19,500 in the year following the second mining reward reduction, BTC reached record highs of $19,500. The analysis by Bitcoinist predicts that the value of Bitcoin will reach an all-time high of $20,000 in 2020.

Fran Strajnar

The CEO of the cryptocurrency research organization Brave New Coin, Fran Strajnar predicts that the price will touch a whopping $200,000 by 2020. Strajnar cites the inversely proportional relationship between the supply and demand for Bitcoin to support his forecast — the adoption rates are increasing, more and more people are using the network, downloading apps, and creating wallets while the inflow of Bitcoin into circulation is dwindling. Bitcoin’s price will therefore obviously increase.

Another factor that propels the increase in the value of the cryptocurrency is its real-world usage as seen in Japan, where there are over 200,000 stores that accept Bitcoin payments. Although going by previously established patterns the price of Bitcoin can be expected to surge in 2020, it is best to do one’s own research before making investments.
['Maria Garcia']
['Bitcoin', 'Blockchain Technology', 'Bitcoin Halving', 'Cryptocurrency', 'Bitcoin Price']