Bitcoin is like digital gold, no, better than Gold, because there will only ever be 21 million bitcoins. You can dig for more gold to add to the supply, but can't mine more than what would ever exit in the world of Bitcoin.
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Right now, we’ve got about 19 million out there. More bitcoins are created and added to the supply through mining every ten minutes. Halving is when this process of creating new bitcoins becomes reduced by half. So fewer amounts of new bitcoins will be produced.
Now why should this matter? All right then, just think of a scenario where you have limited amount of cookies and each day you give out half as many as you did on the previous day. With time those cookies become extremely valuable because they are in rare supply and higher demand. It’s kind of what happens with Bitcoin during halving.
So if the demand for bitcoin stays same or increases but at the same time there are less new bitcoins in circulation, usually its price goes up. That’s like having a rare Pokémon card; everyone wants it but few exist in reality.
But there could also be the other instance where if demand for it goes down, after halving, the price will not necessary go up.
Did you get that?
If supply reduces and demand also reduces
But with the way things are going in the crypto world with demand on the rise due to institutions driving the market up with "whale ish" purchase, I doubt the later will happen.
Not everyone agrees with this assertion. Some people claim that the market doesn't anticipate any extra inflation and there are other factors to be considered. Their standpoint is that the price does not need to rise just because 21 million bitcoins will ever exist.
One thing remains indisputable; governments love making money out of thin air. Rather than stating “oh sorry can’t pay back,” they can print more money which can lead to inflation, in layman’s terms- your money loses its value over time.
Thus some individuals especially myself perceive Bitcoin as a protection against this kind of inflation. Bitcoin has no central authority who determines how much should be made. It is like a hoard of money locked away in secret place where nobody can touch it.
Now let me shift gears for a moment and talk about another thing: crypto payments.
You know, using Bitcoin or other cryptocurrencies to buy stuff? Presently, stablecoins are enjoying quite some prominence. These digital dollars are basically backed by real cash usually held by banks.
Stablecoins are awesome, because they are stable. In contrast to Bitcoins which can go up and down in value, stablecoins remain fairly steady. This makes them much simpler to use for daily transactions.
But here’s the thing; as far as it is about transferring value across the globe, Bitcoin is still the king.
I am super excited about a project called Strike; they are trying to make it easier for people in places like Africa and Latin America to use Bitcoin for everyday transactions. These are areas where stablecoins might be more favored due to their stability but where bitcoin’s technology could do something substantial.
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Here is a big question on my mind for you to Ponder:
What happens when bitcoins run out?
I mean when the 21 million supply is exhausted. This means miners will not get rewarded for validating transactions.
Have you thought about that?
how will the network continue running?
Well my thought is, miners who validate Bitcoin transactions and secure the network get rewarded with fees. These fees ensure that the systems are safe and running optimally. Not only that, but the Bitcoin protocol adjusts dynamically to make sure there are always enough miners.
Indeed, there might be stumbling blocks ahead; however, at present, it is rising faster than ever. As long as individuals continue to find value in it as either an inflation hedge or a way of moving money around the globe, I believe Bitcoin has a bright future.
So there you have it, my thoughts on Bitcoin halving. It’s a ride that I am excited for. We can’t tell what lies ahead but one thing is clear: Bitcoin will not disappear anytime soon.
Until next time, keep being inquisitive and look into tomorrow!
Best,
