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In 2024, Bitcoin will have its fifth halving, triggering the reward to go from 6.25 BTC to 3.125 BTC. This change will massively impact miners, whose resources must double to continue their operations and have a similar income as before the halving.

What is Bitcoin Halving?

A Bitcoin halving event occurs approximately every four years, reducing the reward for mining by half. This process slows the creation of new coins, limiting the available supply. The most recent halving took place on April 19, 2024, resulting in a block reward of 3.125 BTC. Halvings are crucial to Bitcoin’s economic model, as they control inflation and reinforce the cryptocurrency’s scarcity. Historically, these events have often preceded periods of increased market interest and price appreciation for Bitcoin.

However, investors and traders should take advantage of the Bitcoin halving, mainly after it’s settled. Experts forecast that the Bitcoin price will go up by at least 50% in the first month after the event, with potential surges in the upcoming three months, after which the price will stabilize.

Bitcoin halving is an essential update for the cryptocurrency as it lowers supply, which is already limited by the 21 million cap, according to Binance. It adds more value to the asset as it enhances demand. But Bitcoin is not the only cryptocurrency with halvings, so let’s find what are the other three digital assets that follow a similar operation.

Crytos That Halve

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Litecoin, A Famous Bitcoin Alternative

Litecoin was created after Bitcoin with the intent to mitigate centralization risk. Still, it has eventually shifted to a peer-to-peer payment system and a coin that can be mined. Litecoin shares a few similar aspects with Bitcoin, but it’s usually seen as its alternative due to lower transaction fees.

Litecoin can be mined similarly to Bitcoin by using ASIC miners. Although its total supply is 84 million coins, there are less than ten million Litecoins left to mine. When it comes to halving, Litecoin had only three, the latest being in 2023, lowering the reward from 12.5 to 6.25.

The hashing algorithm of Litecoin is Scrypt, and it works with regular CPUs for mining, so we can say it’s less energy-intensive compared to Bitcoin. However, its memory requirements made the first Litecoin ASICs to withstand the increasing mining capacity.

Nervos Network, A Layer 1 Blockchain Solution

As most Proof-of-Work ecosystems require halving, this blockchain solution, too, works in the same manner. The Nervos Network was created to help developers build secure and decentralized ecosystems in a flexible and interoperable environment.

The Layer 1 solution is packed with a Layer 2 network called “Godwoken” that requires block halving, which is similar to Bitcoin’s. Every four years, rewards of the CKB native token are reduced by half for all 33.6 billion tokens to be mined.

The first halving occurred in 2023 as the blockchain solution is relatively new, while the latest one is expected to happen around 2059 when the reward reaches 1.046875 CKB. The halving system is based on a unique epoch concept of time addressing the time for a set of blocks to be mined.

Dash, An Open-Source Asset

Dash was developed as a fork of Litecoin, in the same manner that Litecoin was created as one of Bitcoin’s forks. It has been used mainly as a solution for scaling, speed and better transaction costs. The average block mining time is 2.5 minutes, much faster than Bitcoin’s, which is still ten minutes.

This makes Dash a better alternative to Bitcoin due to faster and more affordable transactions. When it comes to halving, Dash developed a unique 7.14% reduction after 210,240 blocks were mined for a smooth emission rate, which has proved to be more successful than Bitcoins.

Dash halving was created to control the emission rate so the coin has more value, which is tied to supply and demand, but also for enhanced price predictability. Hence, miners will be able to prepare beforehand. Regardless, Dash has a special halving technique, even more than Litecoin or the Nervos network.

Is Halving Beneficial?

In most cryptocurrencies, halving is one of the most advantageous events occurring on the market because it brings several changes that improve price appreciation. However, miners don’t have it easy because the rewards keep decreasing while the mining difficulty increases considerably.

However, without the halving event, the value of these cryptocurrencies leveraging the PoW system would not be that high. Although the prices will continue surging, the inflation rate will go up, so Bitcoin won’t be deflationary anymore, so there won’t really be any difference between it and fiat money.

The halving event was planned for the long term for the cryptocurrency to withstand the market, but those calculations were only approximate rates on how Bitcoin would evolve from now on. That’s why there might be differences in how Bitcoin halving actually happens.

Halvings Might Also Pose Some Risks

While regular halving events are supposed to counteract inflation and improve a coin’s value, the truth is they might have some disadvantages. First, volatility tends to increase during these events, meaning that market dynamics change and investors must hold on tight to their assets or diversify their portfolios.

On the other hand, numerous miners might shut down their operations right after the halving due to low profitability, leading to a reduced hash rate. This happening might trigger centralization risks since the mining power can be concentrated in larger pools, which is the opposite of decentralization.

Finally, halvings have the potential to pose security uncertainty over the market because the significant hash rate exposes the network to attacks, while miners who couldn’t make it have to sustain their operations.

However, halvings are pivotal for Bitcoin to continue functioning correctly. While Bitcoin has many other issues in regard to sustainability and volatility, they might not be solved without halving, which is why maintaining the network as it is is essential. Hence, halvings must continue until the last Bitcoin is mined to keep it valuable and in demand.

Wrapping Up / Closing Thoughts

Bitcoin halving is one of the most critical crypto events because the cryptocurrency usually triggers various changes in the market since it’s the first one to have been developed. Bitcoin has increased in value considerably and is leading the market, so when price swings happen, it’s most likely that all the other coins will follow the same path.

However, other cryptocurrencies operate their own halvings, such as Litecoin, the Nervos Network, and Dash. In most cases, halvings are similar, but Dash goes by a unique system based on the number of coins mined at some point.

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