The Bitcoin halving of 2020 is the event we've all been waiting for. However, as the global economy is entering its worst recession in decades, it may take some time until the price of Bitcoin goes up to its highest.
What is a bitcoin halving?
A bitcoin halving occurs every four years and every 210,000 blocks. It is when the BTC base reward per block is halvened(the transaction fees don't get halved, more on that later). When bitcoin was created on 3 January 2009, the initial block reward was 50BTC. In 2012, the first bitcoin halving occured. The price jumped from a few dollars to $700. The second halving in 2016 saw the price rise to an astonishing $20000 after little more than a year. This year's halving will also bring price gains. Just not immediately.
Why does the price of bitcoin go up after a halving?
The price of bitcoin is connected to the supply-demand principle. The supply of bitcoin is cut in half while the demand likely remains the same or increases. This creates price spikes.
How will miners be incentivized to mine if the block reward gets too low?
Transaction fees are an incentive for miners if block rewards get too low. Miners will likely raise the average transaction fee so that their mining still turns a profit. Transaction fees will make up 100% of block rewards by 2140, when the last satoshis of bitcoin will be mined.
What will happen with the current coronavirus pandemic?
Bitcoin's price will take a while to increase. This is because demand will drop for a few months as millions struggle to feed themselves and their family. After this pandemic is controlled, the price will go up, but it will likely take years for bitcoin to reach its peak.
Should I buy Bitcoin now?
Of course! Now is the best time to buy bitcoin, as prices will almost certainly rise, therefore making it harder to buy the same amount of bitcoin. Some notable people, such as the Winklevoss twins and Satoshi Nakamoto, the creator of Bitcoin, believed in the value of bitcoin and stored hundreds of thousands or even millions of bitcoins. Now they are billionaires. Bitcoin might decrease in value in the short term, but since Bitcoin is a deflationary currency(the supply is capped) it is inevitable that the gains will exceed the losses.
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