The Bicoin halving

News from the past week

Greetings fellow crypto enthusiasts!

Another awesome week for crypto, with never a dull moment, as usual. 

BTC is hovering around $70,000.

Ethereum at around $3 500.

Solana is sitting at $183.

The long awaited sentencing of Sam Bankman-fried. He finally received a sentence of 25 years in prison and a fine of $11 billion.

As the owner of the exchange FTX, Sam decided he would take all his users funds, which came to a total of around $8 billion. Unfortunately for him, he was accounted for 7 different charges of fraud. 

Crazy stories like this are what cause many to fear crypto and the risks involved. However, just as there are many fraudsters and scammers, there are also many great and giving people in the space. Essentially, if Sam had done nothing, the exchange would still be running today without a problem, showcasing how greed is often the killer of any inves tor. 

As the saying goes “Bulls (optimistic traders who believe prices will increase)  make money. Bears (pessimistic traders who believe prices will decrease) make money. Pigs get slaughtered”. 

Anyway, back to the awesome topic of the week: 

Bitcoin Halving ! 

So many questions arise, what is halving, why should I care and what does it mean for Bitcoin?

Well, lets begin:

In order to understand how the halving will have an affect on BTC, one must first understand the mining process.

Mining is the process by which networks of specialized computers generate and release new Bitcoins and verify new transactions. This is true for Bitcoin as well as many other cryptocurrencies that exist.

To begin mining, one must purchase the computer (called a node or miner , connect it to the internet, place their wallet address and begin verifying transactions. This can be costly depending on where you are located and the prices for electricity. However, there are many new currencies that provide different incentives for miners . Bitcoin pays it’s miners in transaction fees for verifying the transactions and this helps secure the network 

Bitcoin was designed with a very similar model to gold, with mining and scarcity There will only ever be 21 million Bitcoin, and the miners are essentially “digging up” new bitcoins and allowing them to be bought, sold and traded. 

This is where the halving comes in. As we discussed last week, the blockchain is comprised of many blocks ,with each block containing the transaction information. (It takes around 10 minutes for the computers to solve each block and add it to the blockchain.) The incentive offered for solving a block is rewarded in Bitcoin. The halving means that the mining incentive halves. The first ever halving occurred in November 2012 when the reward for solving a block went from 50 BTC to 25 !

This reward is halved every 210 000 blocks, roughly every four years, thereby increasing the scarcity by lowering the incentive for miners to keep mining 

We are currently about to hit the fifth halving.

The halving rewards went as follows : 

It is said the last bitcoin will be mined in 2140 so we still have time ;) 

The chart below shows how BTC’s price has reacted to the halving in the past:

As you can see, the halving is generally accompanied by an increase of price and purchasing volume, as many are eager to reap the post halving rewards.

Remember, markets are unpredictable, and sometimes the large investors (whales) might decide to “dump” or sell all their bitcoin when it reaches a high value. Due to the high volume of their trade, this can cause the price to drop, hence, we recommend having patience when choosing to invest in Bitcoin or any other crypto asset. If you are a short term investor then make sure to have a goal and taking price. Many people follow the rule of 80/20 where they take 20% of the profits and leave the remaining in to accumulate. Others do the other way, where they take 80% and leave 20%.

At the end of the day, it's all up to how you choose to invest, and your chosen level of risk. The price fluctuates constantly, and cryptos are considered a risky investment. Think twice before selling your house ;) 

Well, that sums up a brief history of the halving and we hope that cleared up some questions regarding this topic.

As always, we are here to help. If you have any questions please feel free to reach out to us at any time !