Over and done with, the Bitcoin halving event still gives continuous copy, fodder for those who still want to reflect on what could have been. The number of bitcoins (BTC) entering circulation every 10 minutes (known as block rewards) has dropped by half, to 6.25 from 12.5. It’s a milestone that’s exciting because it happens every four years and has happened twice before.
The bitcoin halving mechanism was actually integrated into the protocol by Satoshi Nakamoto to create a supply squeeze. Each halving sharply reduces Bitcoin’s inflation rate, with the May 11 halving expected to drop the inflation rate to about 1.8% – not far from gold’s 1.45% inflation rate.
Law of demand and supply scenario anticipated
Michael Dubrovsky, co-founder of mining R&D nonprofit PoWx explains:
The theory is that there will be less bitcoin available to buy if miners have less to sell,”
Some are already thinking of the potential increase in Bitcoin price in this scenario of more demand and less supply. But the periodic decline in Bitcoin’s minting rate could have a deeper significance than any near-term price movements for the functioning of the currency.
A more pressing concern would be that block reward is an important component of Bitcoin, one that ensures the security of this leaderless system. Some miners might have to put their mining apparatus to rest when the profit is not that attractive.
As the rewards dwindle to zero in the decades ahead, it could potentially destabilize the economic incentives underlying bitcoin’s security.
Google trends hours before the Bitcoin halving
Bitcoin topics search is at the highest ever hours toward the halving, with the searches 500% times more than the 2016 searches. The total Bitcoin halving searches back in 2016 put into the record an index rating of 18 (from Google analytics) compared to 100 recorded last week.
The Europeans are the most interested in the soon happening halving (keeping out the low volume nations) as seven of the top ten that have most searches come from Europe. The most surprising country in the list is Nigeria which is the top economy in Africa.
Observers noted that the Bitcoin halving event did not materialize into a raging bull run. Furthermore, the current remark by Tudor Jones has not done much to make a reset of the $10,000 level. Looking at the current backslide to $8,100 causing a shake to $275million plus in the XBT long contract, traders fear has risen even though recovery of over $9,000, a rise in the economy is yet to be confirmed.