You’re probably scrolling through the news and seeing a lot of stories about Bitcoin. This is not news about Bitcoin price hitting an all-time high (ATH) or not. Instead, it’s about a strange term called Bitcoin Halving.
What makes it more interesting is that enthusiasts across Nigeria are planning local celebrations related to this so-called Halving.
So what is this Bitcoin Halving about and why is there a lot of chatter around it? This Monierate article explains in full detail.
What is Bitcoin Halving?
Bitcoin Halving otherwise known as “The Halvening” is an event when the reward for mining bitcoin transactions is cut in half. This event is a recurring event which occurs approximately every four years and signals the halving of Bitcoin mining rewards.
You see, bitcoin miners are entitled to rewards for their activity on the blockchain. But the amount of rewards received will reduce by half every time a halving occurs.
The catch here is that Bitcoin halving is not based on a four-year countdown. Instead, the event is activated when a specific blockchain condition is met.
Bitcoin mining activities result in the creation of new blocks. These blocks are added to the blockchain and they are constantly being counted. Now, the point is that halving is triggered when 210,000 new blocks are created on the Bitcoin blockchain.
This is the one single condition that must be met before a halving can occur.
Date for the Upcoming Bitcoin Halving
Want to join millions of Bitcoin enthusiasts in the countdown to the Bitcoin halving? You’re welcome to do so.
The halving is forecasted to take place on April 20 this year. You can have a look at it here.
Some sources speculate that it could happen a few days earlier or later (remember it’s a matter of how many new blocks are on a blockchain). They give a timeframe of between 19th April to 21st April. These estimates - put together - suggest that the halving will occur anytime within a three-day period.
Whether it happens on the 19th or 21st, we’ll be here to watch and celebrate another amazing moment in Bitcoin history.
Bitcoin Halving History
It is popular knowledge that Bitcoin was launched in January 2009. But many people don’t know about Bitcoin’s halving history.
Previous halving dates were:
- Nov. 28, 2012, to 25 bitcoins
- July 9, 2016, to 12.5 bitcoins
- May 11, 2020, to 6.25 bitcoins
2012 Halving
The first Bitcoin halving occurred in 2012. This was precisely four years after the launch of the first-ever cryptocurrency in January 2009. Before the halving, Bitcoin miners earned a huge reward of 50 BTC for their engagement. This was slashed in two, leaving 25 BTC rewards.
2016 Halving
After 2012, the next halving happened in 2016. Mining rewards at the time fell from 25 BTC to 12.5 BTC.
2020 Halving
The last Bitcoin Halving took place on 11th May 2020. As expected, mining rewards were slashed in half. Bitcoin miners before that time received 12.5 BTC for every new block added to the system. However, after the halving, mining rewards went down to 6.25 BTC.
2024 Halving
What we’re going to witness in a few days is the fourth Bitcoin Halving in history. Once executed on the blockchain, all mining rewards will shrink from 6.25 BTC to 3.125 BTC.
The Impact of Bitcoin Halving
Many people want to know what Bitcoin halving is all about. For others, the more important question is about the impact of this event. We’ve put out clear answers about Bitcoin in the preceding section. Now, we’ll talk about its impact.
Judging from history, the impact of the Bitcoin Halving events occurs on two fronts.
First, pre-halving periods drive attention and even sometimes, adoption. Secondly, post-halving seems to inspire a spike in the asset’s price.
We talk more about these pre and post-halving impacts below:
Pre-Halving Impact
The activities of enthusiasts celebrating every Bitcoin Halving draw lots of attention. Investors, crypto traders, digital platforms such as wallets and exchanges, and other players contribute to spreading the news.
More and more people - through this medium - get to know about Bitcoin and cryptocurrencies in general.
In some cases, people use the opportunity to learn about blockchain and dispersed topics like Central Bank Digital Currencies (CBDCs). This could significantly drive interest, adoption and increased use of digital assets.
Post-Halving Impact
Once the halving is over, it is typical to find that Bitcoin price spikes over the next few months.
An excerpt from Chainalysis expounds on this.
It says, “After the 2020 halving, bitcoin’s price moved upwards from around $8,000 in May 2020 to a new all-time high of over $69,000 in April 2021. These trends suggest that historically, the price of Bitcoin increases within a year after halving, but is then followed by a price adjustment period.”
This matches observations from past halving. Precisely, Bitcoin price rose about 90x after the 2012 iteration. A lower increase of about 30x was noticed after the 2016 iteration and a much lower increase of 3x after the last halving in 2020.
What This Might Mean for Investors
The long-coming history of Bitcoin price surging after every halving cannot be overlooked. Not if you’re a smart investor.
But, for this year’s halving, the stakes might even be higher. The reason is the combination of Bitcoin ETFs and the halving effect.
Every halving makes less and less Bitcoin available in circulation. This creates what is known as the “Halving Effect”, making Bitcoin more rare and valuable.
The introduction of Bitcoin ETFs is also as significant as the halving itself. Just a few months ago, in January, the Securities Exchange Commission (SEC) agreed to enable Bitcoin spot trading. This brought a whole new swing to an already spectacular digital asset.
Experts, therefore, suggest that having a Bitcoin halving (and its explosive price aftermath) now when investors have access to Bitcoin spot trading will be simply impeccable.
Conclusion
Nigeria, like many other countries, is poised to mark the forthcoming Bitcoin halving. Different cities and institutions are unravelling plans for a celebration on the dee day.
Bitcoin-only firms such as DigiOats, iPayBTC and others are already organising events to celebrate this monumental day for Bitcoin. This is truly exciting and shows remarkable local attention to the digital asset.