Did someone say Bitcoin halving? People are going to be?rich!

On a beautiful Sunday afternoon, on the rooftop of a 50-storey building overlooking central park, Two guys meet.?

Do you know what Bitcoin halving is?

Hmm, not sure.

What do you mean by “not sure”?

I know that Bitcoin is this digital currency everyone is talking about, and I know that the word “halving” typically means “reduction by half”. So I guess “Bitcoin halving” has something to do with Bitcoin being reduced by half? Am I close??

Not bad! Indeed it means that Bitcoin is being reduced by half, not to holders though but to the miners that work towards keeping the Bitcoin network afloat.

Wow, slow down, this last bit of phrase got really technical.?

Nahh, don’t worry, it’s easy to understand. For the Bitcoin network to be up and running, it needs something we call miners to allocate computational power. Back in the early days, miners used to be individuals with nothing more than a laptop, but now, because of the exponential increase in Bitcoin transactions, miners evolved into entrepreneurs building facilities with thousands and thousands of GPUs linked together. The typical work of a miner is to let its hardware run 24/7 to validate and store third-party transactions into a digital ledger available to the public. This action alone is what’s keeping the Bitcoin network operational.?

Okayyy, I think I get it… You also said that a miner’s bitcoins are reduced by half due to this concept of bitcoin halving, how is that so??

It’s not their owned Bitcoin that is reduced by half, but the rewarded Bitcoins they get for their job of keeping the network up and running. Think of it as an employer paying his employee his monthly salary. In our case, the employer is the Bitcoin network, the employee is the miner and the salary is given every 10 minutes instead of monthly.

Why would the bitcoin network reduce the miner’s remuneration by half?

Ahaaa, thank you for that question! Please pay attention to what I am going to say because that’s when things become interesting. Contrary to fiat currencies such as the DOL, the EUR, or the YEN, there will never be more than 21 million Bitcoins in the market. The way those 21 million Bitcoins are launched into the market is — you guessed it right — in the form of rewards to the miners. Similar to the timeline of the FIFA world cup, every 4 years a halving happens. At this time, the rewards in Bitcoins miners get, are divided by half!?

Let me ask you a question to make sure you’re still following:?

If the very first Bitcoins were rewarded on the 3rd of January 2009, when would be the next halving? and what would happen?

Easyy, you just told me that the halving happens every 4 years… So the next time miners would see their remuneration cut by half is in 2013. By the way, how much did they use to earn initially?

Yeah well, it’s 4 years plus or minus a few months. The first halving happened on November 28th, 2012, and to answer your second question, this is when miners saw their reward of 50 bitcoins get to 25. By then, 10.5 million bitcoins were in circulation in the market. After November 28th, 2 more halvings happened; one in 2016 ( July 9th) and the last one on the 11th of May 2020. The rate at which Bitcoins were released in the market basically went from 50 bitcoins to 25 to 12.5 to 6.25, and if you continue the math, the next halving will happen in 2024 with miners being rewarded 3.125 Bitcoins.

Interesting. So the way Bitcoins are added to the market is via rewards given to miners every 10 min for their job of keeping the network operational. No more than 21 million Bitcoins will ever be in circulation in the market and there's some sort of halving that happens every 4 years. One begs the question though… Why does a Bitcoin halving even exist? For what reason are newly generated bitcoin reduced by half every 4 years? Why not make available the 21 million Bitcoin from the get-go??

Look at you! You’re getting good at this! Back when Bitcoin was in the building phase, the creator or creators embedded in the economic model a decaying mechanism forcing the emission of new Bitcoins in the market to be less arbitrary and more tamper-proof. The reason is simple and ingenious at the same time: to control monetary inflation.?

Imagine if central banks under the excuse of monetary policies, could print money as much as they wanted whenever they wanted! Ohh wait?…

Lastly, and like you said earlier, Bitcoin is finite. There will be no more than 21 million Bitcoins in circulation ever. Of course, you don't need to own exactly 1 bitcoin to be able to transact with others, you can use decimals of a Bitcoin similar to the concept of cents to the 1 dollar bill.?

Thank you man, I get it now, It definitely makes more sense. Anyway, it was nice meeting you, I’ll go refill my drink.?

Wait, wait… don’t you want to get rich?

Huh?

Before you go refill your drink just give me a few more minutes to tell you the best part about Bitcoin halving. I’m in a flow right now and I don't want you to leave before listening to this last piece of information. Trust me, your bank account will thank me tenfold.?

???

There’s an event that has been occurring repeatedly and without fail since the creation of Bitcoin. This event made people upgrade from a Kia to a Lamborghini, from a 1 bedroom apartment to a penthouse, and from a negative bank account to millions. This information is public to the proactive and secret to the reactive. Here we go…

The very first Bitcoin halving happened on the 28th of November 2012 as we previously mentioned. At the time, 1 Bitcoin was worth 12.35$, fast forward one year, and 1 Bitcoin would trade at 1012.98$. That’s a jump of 8,104%, or if you prefer a x81.?

Yeah, but this doesn't mean anything. I agree that the return rate is insane but it was clearly due to hype. No one could have predicted it, it just happened.

I would have agreed with you back then, but not now. Let me finish…?

The second Bitcoin halving happened on July 9th, 2016. On this day you could acquire Bitcoin at the price of 650.96$. 1 year later you would get a 287% return and if you add 5 months, you would find the price of Bitcoin touching 19,497.40$… a 2,895% increase.?

And finally, the 3rd and last halving occurred on the 11th of May 2020. On this day, the price of Bitcoin was at 8,601.80$. 1 year later you could spot Bitcoin at 63,503.46$, which translates into a nice 638% jump.

Hmm interesting, I see we have a pattern here

We do indeed! Will we have the same scenario happening with the next Bitcoin halving? “Probably” is a better-suited word than “surely” for the sole reason that nothing is assured in life.?

A pattern is a pattern until it's not?anymore

Nevertheless, history tends to repeat itself so I’ll let you imagine the kind of valuable information that is.?

You’re telling me that if I buy and stack up Bitcoins from now until 2024 I have big chances of multiplying my money exponentially 1 year after?

Look, I’m not giving you financial advice here because 1, I don't want to bear the responsibility for any of your investment decisions, and 2, I am just stating facts and observations. Now if you ask if I will invest myself? hell yeah! I will personally diversify my investments by putting my money in many of the different and interesting cryptocurrencies out there.?

Why not stick to putting your money in Bitcoin alone? especially after the numbers you have shown me?

Look, the gains Bitcoin had over the 3 halvings that happened were amazing but it reached a point where it shifted from a highly volatile digital asset to a pseudo-store of value. What I mean by that is that the multiplier you used to have in the past is greatly reduced. I suspect the price of Bitcoin reaching close to 100,000$ a year after the next bitcoin halving. This would reflect into a x4 if Bitcoin stagnates around 20,000$ in 2024.

I will therefore invest in cryptocurrencies that still have the potential to touch — at the bare minimum — a x10.

Ok, how would you spot them?

Bitcoin is the father of all cryptocurrencies, so once it goes up, everything goes up. All you have to do is invest in any of the top 100 cryptocurrencies out there which have a relatively low price point and a good trading volume — Mana and Sand are good examples of tokens that will see a x10 at the very least —. This remains a superficial approach and more research is needed but it’s a good starting point nevertheless.?

One thing though… As a golden rule in Crypto investments, never ever invest money you are not ready to lose completely overnight, and when I say “completely” I mean 100% of?it.?

Damn, you got me all excited about crypto investing, I’ll look more into it for sure. I feel like we’ll meet again later in time and I will thank you greatly.?

Haha, I appreciate it but you know, at the end of the day, time is the teacher in possession of all of humanity’s answers. Only time can validate my analysis and subsequently make us rich?… or not!?

True, true, can I go have my drink now?

Go for it.