 | Satoshi Nakamoto introduced halving events to keep the #Bitcoin inflation rate in check. Reducing the mining rewards reduces the incentive to mine for more, increasing #BTC scarcity and raising the stock-to-flow ratio. When the Bitcoin network went live in 2009, the mining reward, or Bitcoin mining subsidy, stood at 50 BTC per block. Bitcoin’s pseudonymous creator, Satoshi Nakamoto, hard-baked the miner rewards reduction protocol into the Bitcoin code as part of its monetary policy. The Bitcoin halving event of 2024 is significant, as it will have an impact on the rate at which new BTC is introduced into the market. The event will result in a decrease in rewards from 6.25 to 3.125 BTC, potentially prompting miners to enhance their efficiency. Bitcoin’s halving timetable in 2024 is also crucial after the 2022 crypto winter and the 2023 economic downturn. By slowing BTC creation, it restricts Bitcoin supply over time. Gold-like scarcity applies here. As such, Bitcoin’s deflationary feature may attract investors who are trying to retain their capital in a world where inflation devalues traditional currencies. Historical figures from past halvings offers valuable insights, as they’ve all followed a similar pattern; amassing phase, bull run phase and bear run phase. This is mainly due to the decrease in mining rewards and inflation caused by the reduced introduction of new #BTC. Bitcoin halving has its pros and cons. Halvings affect the issuance rate of new BTC, creating scarcity, which could drive BTC price appreciation. This comes at the cost of short-term Bitcoin price volatility, which is driven by the uncertainty created by the halving. On the other hand, the Bitcoin halving reduces profitability, meaning miners will earn half of what they were making to confirm new blocks while spending the same amount on computing and energy costs. The halving might also negatively impact Bitcoin network security, as fewer miners will be incentivized to continue mining due to reduced profitability. That could theoretically expose the network to a 51% attack, as mining power would consolidate among fewer participants. [link] [comments] |
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