The Halving or as some like to call it the Halvening is upon us. There is less than a week left to go until Bitcoin’s 3rd ever halving event.
This event is known by many, in part because of its fundamentals, but primarily because of the incredible price appreciation seen in the 18-24 months following the previous two events.
So in brief, what is the Halving?
Satoshi Nakamoto, the anonymous creator of Bitcoin is quoted to have purposely built greed into the Bitcoin system. Meaning, he believed, the basis of supply and demand, coupled with scarcity and speculative bubbles would drive adoption of the asset hopefully into main use. Again, Satoshi is claimed to have said that Bitcoin would be worthless or mainstream ten years after its creation. This greed and demand, feed off a central principle of Bitcoin’s nature: scarcity. The entire supply of the world’s Bitcoin will and can only ever be 21 million Bitcoin. The coins are brought into existence via a mining protocol built upon a proof of work blockchain invented by Satoshi. The block subsidy, is the focal point of these halvings. In its early days, each block mined would yield a block reward, the transaction fees for maintaining the network and validating transactions, in addition to the block subsidy, a rich 50 Bitcoin plus transaction fees. In 2012 following the first Halving, the subsidy as the name suggests halved, to be 25. In 2016, the network halved again dropping the subsidy to 12.5 Bitcoin. As supposed by the numbers above, the halving follows a pseudo-asymptotic trajectory, and thus this halving will result in a 6.25 Bitcoin subsidy.
It is projected that the final Bitcoin will be mined in over a hundred years, roughly 2140 C.E. Some have expressed concern, that the miners and their nodes, which are vital to the survival and maintenance of the network will become disinterested or become unprofitable once the final Bitcoin has been mined. As such, the transaction volume and price should scale in accordance with price appreciation and miner profitability to keep them engaged.
Since the inception of Bitcoin, both mining hardware and price appreciation have kept the mining community or the power produced by them, “hash rate” on an upwards trajectory, calming many of those fears. Finally, looking into the Halving, the price action over the last few weeks has been remarkably stable, trading sideways around $9,000. For reference, the price at the time of the last Halving in 2016 was $615, so needless to say this is an anticipated event for HODLnauts and spectators alike.