The Bitcoin Halving is almost upon us, and with it comes much to look forward to and be concerned about.Worry not, however, because Coincheck will guide you through this “change”, and you will see that as Bitcoin matures, our understanding and passion for this great technology matures with it!
What is the Halving:
In order to control Inflation problem common to all government issued cryptocurrencies, Satoshi Nakamoto designed an Inflamation control system known as the Halving. Bitcoin’s supply is not limitless, it will cap at 20999999.97690000 bitcoins. This will happen around 125 years from now. In the mean time Bitcoin’s Block Reward is set to halve every 52500 Blocks (roughly every 4 years). This means that every year the production rate per hash is cut in half.
Blocks & Block Rewards: Bitcoin is created through mining. Everytime a miner or a group of miners solves a Block they are rewarded with 12.50 BTC. The process of solving blocks allows the correct infomartion regarding the transactions, happening at that time, to be registered in the Blockchain. This process ensures Bitcoin’s production as well as it’s maintenance, while rewarding it’s workers/miners.
Blockchain: The Blockchain is the public ledger that keeps record of every transaction that has ever happened in the Bitcoin network. It’s comprised of solved blocks that every single miner agreed had the correct information. This ensures the same amount of Bitcoin can’t be used twice in a fake transaction.
Hash: Hash is the measure unit in which miners solve blocks. A miner that has 10 h/s (hash per second) will receieve ten times as many BTC as a miner who as 1h/s. like bytes, Hash can be measured in Kapa (KH), Mega (MH), Tera (TH) or Penta (PH).
So, imagine that half the Gold mines in the world shut down tomorrow. What do you think will happen to the price of the Gold? It must certainly rise. This must also the case with bitcoin, right? In fact many people are willing to bet the price will raise after the halving. The biggest difference between this two scenarios is that everyone knows that the Bitcoin halving is coming, and no one is expecting half the Gold mines in the world to shut down.
This has made Bitcoin’s value rise tremendously in the past weeks, even if the halving hasn’t happened yet. The fact that people know Bitcoin’s production will halve makes people want to buy BTC to benefit from this information as their holdings grow in value. The rise of the demand on the market causes Bitcoin’s price to rise.
So, what will happen after the halving? It’s hard to say, and there is much to consider.
Bitmain has lauched their S9 Antminer, that has a 14TH/s hashrate, that allows miners to continue to mine profitable even if the price stays the same (with the current difficulty) and future Block reward, but will this be enough to ensure the stability of the Bitcoin Network?
Bitcoin needs miners in order to process transactions and some worry that, If the price does not rise enough to reward miners that do not upgrade their hardware, many miners may turn off their equipment. This will cause the network to get slower and would most likely have an impact on the price, as the service quality of Bitcoin is reduced, causing an “domino” effect that could end Bitcoin. Solutions for this problem (such as the Lighting Network) have been presented, however, and many believe that Bitcoin may reach unseen values, during the 2016 Halving and hold them after the halving, ensuring the stability of the Bitcoin Network.