Bitcoin Halving explained

This week the long awaited Bitcoin Halving will take place. Investors hope for price explosions in the crypto currency. Is this hope justified? And what is the halving actually about? will explain

Bitcoin is by far the world's leading cryptocurrency. Unlike centralized cyber-currency projects such as Facebook's Libra, Bitcoin is not linked to any so-called fiat currency suc

h as the dollar. In addition, Bitcoin is organized decentrally. This means that no single instance and no single server has control over the currency. Rather, Bitcoin is based on a decentralized network in which all data and transactions are stored in encrypted form - not just on one server, but on thousands simultaneously. This makes the system practically forgery-proof. This system - simplified - is called Blockchain. How is a Bitcoin created? A Bitcoin is created through so-called mining. This involves the so-called mining of Bitcoin. But while printing presses or minting presses are used to produce Fiat hard currency such as the USD, something else is needed to "mint" Bitcoin: computing power. And a lot of it. The miner, of course, does not mine Bitcoin in the literal sense. Rather, with its computing power it contributes to the expansion of the Bitcoin infrastructure - namely by using its computing power to create ne

w so-called blocks within the block grove. This requires expensive high-performance computers that work exclusively for this one purpose. The problem: Such computing power causes extremely high costs, since it consumes enormous amounts of energy and must be continuously cooled due to the heat generated. So that there is still an incentive to create these new blocks, the miner is compensated for his efforts - with Bitcoin. But how much Bitcoin does the Miner receive as a reward? More on that in a moment. What exactly happens during halving? Who exactly is behind the deve

lopment of Bitcoin is still not known today. The only thing that is certain is that the tinkerer has acquired the pseudonym Satoshi Nakamoto. Right at the beginning of 2009, this person specified that the maximum number of available Bitcoin should be just under 21,000,000. This upper limit should lead to a long-term increase in the value of Bitcoin. However, there is a second important factor that influences the value of Bitcoin: the reward of the miners is reduced at regular intervals. At the very beginning of Bitcoin, Miners received 50 Bitcoin per block created. In November 2012 the first so-called halving took place. This means that the miners' reward was halved and fell from 50 to 25 Bitcoin per block. After the reward was halved again in July 2016 in the second halving to 12.5 Bitcoin, the third halving is due this week. Starting on Tuesday, miners will only be compensated with 6.25 Bitcoin per block.

How many Bitcoins have already been mined? As of now, 18,368,600 Bitcoin have been produced. This is about 88 percent of the maximum. But it will be a while before the last 12 percent are mined. The last Bitcoin is scheduled to be taken out of the virtual coin press in May 2140. This can be predicted so accurately because a new block can only be produced about every 10 minutes, for which Bitcoin is paid out as a reward. Will the halving lead to the hoped-for price explosion of Bitcoin? No one can predict how Bitcoin will react in the coming weeks and months to the halving that will take place this week. What can be said for sure The last two halvings in 2012 and 2016 did indeed lead to rising prices - but only with some delay.

Towards the past halvings there was more or less a sideways movement. But a few months after the halving, a kind of Bitcoin rally started in both 2012 and 2016. At the second halving in 2016, this rally culminated in the historic Bitcoin hype of 2017/2018, when the price shot up to almost 20,000 dollars - an all-time high to this day. This time the Bitcoin reacts differently than in 2012 and 2016, at least in the run-up to the rally. The price has been rising continuously for two months. Especially the last few weeks can be described as a Bitcoin rally. Investors are apparently aware of the rising prices at the last Halvings and are buying in expectation of a longer lasting Bitcoin rally. How will the Bitcoin price develop over the long term?

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