Many people have been quick to dismiss Bitcoin's prospects recently, especially since the world's leading cryptocurrency is drawing ever-closer to the oft-dreaded "halvening." Despite all the doom and gloom predictions surrounding Bitcoin and other cryptocurrencies, however, there are plenty of reasons to believe that the halvening is a perfectly normal part of the crypto-market instead of being something worthy of our fear.
As a matter of fact, Bitcoin could even explode in price once the halvening happens. Here's a brief explanation of the forthcoming halvening, and what it means for Bitcoin's future valuation prospects.
The halvening is growing closer
The halvening may sound like a terrifying event out of a sci-fi movie, but in reality, it's much less sinister and much more essential to the ongoing maintenance of the Bitcoin network. Around May 27, 2020, the coin reward for Bitcoin mining will be drastically changed - indeed, it will be halved entirely. Whereas people today can be rewarded with 12.5 Bitcoins in exchange for mining new Bitcoin blocks, which maintains the overall network and adds new tokens to the market, miners will only receive 6.25 Bitcoins after the dreaded halvening occurs. Since Bitcoin's creation in 2009, we've already undergone two halvenings, and this latest one will be no different.
Every halvening is a momentous occasion largely because nobody is certain how the market is going to react. Some insist that a halvening means Bitcoin's price is going to plummet, arguing that miners now have little to no incentive to keep expanding the network. In reality, however, Bitcoin's price has benefited from previous halvenings; after the first halvening in 2012, for instance, the world's leading cryptocurrency shot up to a then all-time-high of $1,000. There are thus clear reasons to believe that a halvening doesn't necessarily spell out doom for Bitcoin in the near-future.
With mainstream actors increasingly finding themselves interested in Bitcoin, and large financial institutions beginning to mull the creation of their own cryptocurrencies, there are few reasons to be pessimistic about Bitcoin even in light of the forthcoming halvening. Bitcoin halvenings usually occur every four years, or after 210,000 blocks have been mined, so the halvening could take place just around the time that cryptocurrencies become mainstays of the modern economy.
Bitcoin will continue to be secure
Another reason that Bitcoin could see its price flourish after the halvening is that the cryptocurrency will continue to be secure, an alluring option in a day-and-age defined by data breaches and hacking efforts. Ethereum Classic recently suffered from a 51% attack, for instance, something unlikely to happen to Bitcoin thanks to the token's impressive hash rate. Given that Bitcoin will likely remain the most secure cryptocurrency on the market for the foreseeable future, it's fair to say that investors will be attracted to it even after the halvening occurs.
Mainstream media coverage of the halvening is sure to bring in newcomers to the cryptocurrency marketplace, too. When major outlets in the world of tech report on Bitcoin halvenings, they traditionally generate an immense amount of attention for cryptocurrencies amongst mainstream audiences who are unfamiliar with the technology. Any attention for Bitcoin is good attention, as the fledgling digital currency needs all the support it can get as it attempts to supplant traditional cash.
Furthermore, the halvening is an important part of mitigating inflation within the Bitcoin community.
If too many cryptocurrency coins are released too quickly, the overall value of the Bitcoin market becomes murky, with investors everywhere uncertain if they're about to endure another sudden plunge. Bitcoin's upper limit is 21 million, meaning once the network hits that limit, no more coins can be released. Until that number is hit, constant halvening will be necessary to ensure rapid inflation doesn't destroy the cryptocurrency in the marketplace.
Listen to the experts
By far the biggest reason I'm convinced that Bitcoin could explode in price once the halvening happens is that experts believe halvenings are necessary parts of the system. Satoshi Nakamoto explained his inflationary logic in an email, for instance, wherein Bitcoin's mysterious creator makes it quite clear that inflation is a serious threat to cryptocurrencies that needs to be mitigated. Halvening encourages sustainable growth, and overall is quite a positive thing for Bitcoin's long-term health.
Don't buy into the panic or believe the insinuations that Bitcoin is on the brink of failure. People have been counting the world's leading cryptocurrency out since day one, and the forthcoming panic over the approaching halvening is no different. Regardless of the fear and uncertainty surrounding a halvening, it's a necessary part of making Bitcoin a healthy token that has long-term viability in a marketplace that distrust it. Nobody knows what Bitcoin's valuation will be like after the halvening, but I see plenty of reasons to be optimistic about the token as it wisely moves to clamp down on inflation.
