The following halving Bitcoin will occur around may 2020. Based on history, this event is accompanied by a significant increase in prices, but there is no guarantee that the model will continue.
The algorithmic inflation has always been part of the idea behind Bitcoin Protocol. It was created to ensure that Bitcoin remains valuable. The reduction of the remuneration for the block, and the maximum sentence of 21 million BTC, give bitcoin anti-inflationary property, which is contrary to the tendency of Central banks to print money at will.
Currently in circulation is about 17.5 million bitcoins, and were to produce at least 3.5 million(17.5 million, every fifth of a bitcoin is lost forever). When the following happens having, it will give bitcoin inflation rate of about 1.8% per year, compared with the current 3.8 percent. This will be the first time in history, when BTC will fall below the average historical growth in the supply of gold by 2-3%.
What happens to the price?
In 2012 and 2016, industry experts have observed a significant rise in prices, about a year before the event. This prompted to think that the same can be expected in may 2020, and some speculators have started to buy now.
However, the numbers are not entirely clear. After falling in 2012, it took two years, and in 2016 — one year: it is unlikely that it was an immediate reaction to a deflationary event. In other words, this can be easily explained by the strategy “buy on rumor, sell on the news”, which was implemented some speculators.
Whether may 2020 others?
There are many reasons to expect that in may 2020 things will be different. First, everyone knows what to expect, as they have already seen such events. The news about the reduction in the rewards may already be reflected in the price.
Currently, bitcoin miners receive 12.5 for each unit produced. After halving, the reward will fall to 6.25 BTC per block, miners need higher prices to compensate for the loss of income.
But if the expected growth reduction awards, has already taken place (the speculators who raise the price in hopes of growth bulls), we can see the collapse of mining. If you reduce income by half, many of the miners can turn their losing the device.
I expect Bitcoin will go up, due to the increase in the deficit. Having can double the Bitcoin price per night.
It is worth noting that many of the miners, just merge your bitcoin in Fiat, and this means that offer bitcoin are not so poorly, as expected by the algorithm suggestions. This fact negatively affects the price, as we have, yet strong-making that would satisfy the proposal. Even with reduced supply, prices are unlikely to achieve a satisfactory equilibrium without consumer demand.
Disabling mining would be so catastrophic as unlikely. Whatever happens, it is interesting to observe what will happen after halving.
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