Few events in the crypto space stir as much anticipation and speculation as the Bitcoin halving. A fundamental aspect of Bitcoin's protocol, the halving event occurs approximately every four years, with profound implications for the cryptocurrency's supply dynamics, market sentiment, and economic landscape.
Bitcoin's halving events are rooted in the cryptocurrency's genesis, serving as a cornerstone of its deflationary monetary policy. Since its inception in 2009, Bitcoin's creator, Satoshi Nakamoto, designed the protocol to gradually reduce the rate of new coin issuance over time. This scarcity-driven model ensures that the total supply of Bitcoin is capped at 21 million coins, creating a digital equivalent of gold with inherent scarcity and value preservation properties.
In the cacophony of price speculation and market rumors, it’s easy to overlook the one thing that everyone eventually falls back to the numbers. In this, we talk about all the numbers surrounding the halving and how they could affect you.
Bitcoin Halving Numbers
Total supply of Bitcoin
With a limited supply of 21 million coins, Bitcoin's scarcity is designed to mimic the properties of precious metals such as gold. This scarcity is achieved through a process called mining, where complex mathematical algorithms are solved to validate and secure transactions on the network. As more coins are mined, the difficulty increases, ensuring that new Bitcoins are created at a decreasing rate over time.
Block Reward Reduction
The entire idea behind the halving is that the block reward for miners is cut in half. Back when it all started, the initial block reward was 50 BTC, which was reduced to 25 BTC after the first halving in 2012, then to 12.5 BTC after the second halving in 2016, and then to 6.25 BTC after the third halving in 2020. The fourth halving is estimated to occur around April 2024, where block rewards will reduce from 3.125 BTC.
Historical Price Performance
Historical data suggests that Bitcoin's price tends to experience significant volatility around halving events. For example, following the first halving in 2012, Bitcoin's price surged from around $12 to over $1000 within a year. Similarly, after the second halving in 2016, Bitcoin's price increased from around $600 to nearly $20,000 in late 2017, though it remains to be seen where it will go after the upcoming halving.
Halving Frequency
Bitcoin halving events occur approximately every four years or after every 210,000 blocks mined. This means that the supply of new Bitcoins entering circulation decreases over time, leading to a reduction in the inflation rate of the cryptocurrency. The upcoming halving is slated for block 840,000 — you can track the progress here.
Hash Rate Adjustments
Bitcoin's hash rate, which represents the total computational power of the network, often experiences fluctuations around halving events. Miners may adjust their mining activities in response to changes in block rewards, leading to temporary increases or decreases in hash rate following halving events.
Impact on the Market, Network and Users
Bitcoin Halving Hype
Halving events often coincide with shifts in market sentiment, with increased media attention and investor speculation leading up to and following each halving. With this also comes speculation and misconceptions about what the halving entails.
Network Activity
Bitcoin's halving events also impact network activity metrics such as transaction volume, block size, and mempool congestion. Changes in block rewards and miner incentives may influence transaction fees, confirmation times, and overall network congestion.
HODL-ing Behavior
Bitcoin hodlers, or long-term holders of the cryptocurrency, often view halving events as bullish catalysts for price appreciation. Many hodlers accumulate Bitcoin leading up to halving events, anticipating a supply-driven increase in demand and scarcity-driven rise in price..
How to trade the bitcoin halving on Coinhako?
Step 1: Create an Account
Visit the Coinhako page and click on the “Sign up” button to begin the account creation process.
You will be prompted for general information like country, email and password and referral code (optional). Once done, click on “Sign up” and you’re one step closing to buying Bitcoin on Singapore’s leading crypto exchange.
Step 2: Complete the Know-Your-Customer (KYC) procedure
Because security is a priority at Coinhako, we require more information from our users before they can start trading. Singaporeans can opt to use their SingPass for KYC, to complete the Know-Your-Customer (KYC) procedure, while global users will need to upload verification documents.
Step 3: Choose your payment method
There are multiple ways to for payment on Coinhako: use bank transfer and PayNow to deposit funds, or pay directly using credit/debit cards. No matter which option you choose, most them are instant, so you can buy Bitcoin as soon as possible.
Step 4: Buy Bitcoin on Coinhako
On our website, go to the “Market” page page. To buy Bitcoin, click on “Trade” button, after which you can enter the amount. You will then have to verify that everything is correct before you can buy.
Risk Warning on Digital Payment Token Services
Hako Technology Pte Ltd ("Coinhako") is licensed to provide digital payment token services under the Payment Services Act 2019 (No. 2 of 2019).
The Monetary Authority of Singapore ("MAS") requires us to provide this risk warning to you as a customer of a digital payment token ("DPT") service provider.
Before you pay your DPT service provider any money or DPT, you should be aware of the following.
- Your DPT service provider is licensed by MAS to provide DPT services. Please note that this does not mean you will be able to recover all the money or DPTs you paid to your DPT service provider if your DPT service provider’s business fails.
- You should not transact in the DPT if you are not familiar with this DPT. This includes how the DPT is created, and how the DPT you intend to transact is transferred or held by your DPT service provider.
- You should be aware that the value of DPTs may fluctuate greatly. You should buy DPTs only if you are prepared to accept the risk of losing all of the money you put into such tokens.
- You should be aware that your DPT service provider, as part of its licence to provide DPT services, may offer services related to DPTs which are promoted as having a stable value, commonly known as “stablecoin”.
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