The Next Bitcoin Halving is Coming: What Does This Mean for You?
Tags: Cryptocurrency, Blockchain, Halving, Btc, Bitcoin

Roughly 7 months from now on May 20th, 2020, something will happen that could change the crypto landscape forever. It’s happened twice before and ended up making some people very, VERY rich- in bitcoin at least. We’re talking about the next bitcoin “halving”(aka “The Halvening”). In this article we’re going to offer a brief overview of what a halving is, why it is so significant for the price of bitcoin, and what we can expect when it happens next year.

How the BTC Halving Works

This will be old news for many of you but for those who are new to crypto, we need to cover this very quickly. Bitcoin (BTC) isn’t just different from fiat currencies like the US dollar because it isn’t physical money. It operates in a fundamentally different way.

Fiat currencies are printed by central banks at will. This can lead to inflation over time, and if too much money is created too quickly- hyperinflation, as was the case with Zimbabwe or Germany after World War I.

This can never happen with BTC because it isn’t created or issued by a centralized entity. Instead the supply of BTC is limited algorithmically. There will only ever be a maximum of 21 million BTC in existence. The supply is permanently capped by design, which makes a deflationary asset instead of an inflationary one.

BTC transactions are verified by “miners”. Every 10 minutes a “block” of BTC transactions is verified and then added to the bitcoin blockchain. This is complicated mathematical work which today in 2019 requires expensive hardware with significant computing power. This equipment also uses a lot of power, which makes mining a very expensive activity. So…why would anyone do it?

Well, because the algorithm pays them to. Every 10 minutes when those new bitcoins are generated, they are awarded to miners, otherwise known as the “block reward”.

When BTC first launched a decade ago, the block reward was 50 BTC. This meant that every 10 minutes, somebody in the world was receiving 50 BTC. Back in 2009, BTC was worth fractions of a penny and you could quite profitably mine it using an old laptop. Those were the days…

Here’s where the “halving” comes in: every 210,000 blocks, the reward for mining BTC is cut in half. So it went from 50 BTC to 25, and later to 12.5 BTC where it is today. Because bitcoin network runs on a stable, predictable algorithm, we can accurately predict that the reward will again be cut in half on May 20, 2020 to 6.25 BTC.

How Halvings Affected BTC Price in the Past

So far, there have been two halvings in the history of bitcoin, and in both cases, long term growth in the price of BTC followed, peaking around 12–18 months later.

The first halving happened in November of 2012. At the time, BTC was only worth about $11 USD. But in 2013 the price of BTC began to skyrocket, reaching a new all time high of over $1,100. That’s a 9,900% increase!

The price soon crashed down to the $220 to $240 range, where it would remain for a while. But even with the crash, you’d be looking at growth of 1,900–2081% range from the pre-halving price.

The 2nd BTC halving occurred in July of 2016. BTC rose to the $580-$700 range for a few months and slowly increased toward the end of the year. And of course, we all know what happened in 2017…It was the largest crypto bull run in history, with a new all time high for BTC of roughly $20,000 USD in December of that year- a staggering 8,991% increase from a prev-halving price of $220 in 17 months.

In both cases there was massive growth about 12–18 months after the halving, followed by a correction down to a price that was much lower than the new all time high, but still MUCH higher than before.

These changes were permanent. So far, BTC has never crashed back to pre-halving price.

How Will the 2020 Bitcoin Halving Affect the Price of BTC?

So does this mean the pattern will hold, history will repeat itself, and BTC will grow another 9–10,000%? Does this mean that 1 BTC would be around $800,000 in the fall of 2021?

Not so fast…we’re not in the business of making predictions here. There’s already enough “gurus” and “experts” out there doing that.

With each halving, there have been unique variables that must be taken into account. With the first one, it was the first time this had ever happened, nobody really had any idea what to expect. By the time of the 2nd halving, Ethereum had been born, which in turn led to the ICO boom- something that wasn’t happening in 2012/2013.

The biggest change since the last halving is all the interest in crypto from institutional investors. If they start taking big positions in BTC and other cryptos, it could affect the price of BTC in ways we’ve never seen before.

Bottom line? It’s too early to say for sure, but there is a historical precedent for halvings correlating with significant BTC price changes. No matter what happens, the halving will be THE most important story for bitcoin- and the crypto space as a whole- in 2020.

In the meantime, swapping BTC and other cryptocurrencies has never been simpler. Visit our website today to started with Faast in seconds.

***

Did you find this article helpful? Then be sure to click the subscribe button above to be the first to know about new posts here on the blog!

Follow Faast on Twitter

Faast on Facebook

Faast Subreddit