Crypto Unlocked: In the bleak midwinter - Page 10

Chapter 1 : Market outlook

Bitcoin halving poses bold vision for 2024

Every four years the issuance of bitcoins is cut in half
Chart 2 : Bitcoin halvings : Higher s
Author : Tom Rodgers
Digital assets are in the middle of a deep bear market , as of Q3 , and bitcoin ’ s value has fallen precipitously from its November 2021 all-time high .
The blockchain and digital asset world at this time is focused squarely on the Ethereum merge . But this long-overdue software upgrade for the world ’ s secondlargest digital asset could be quickly overshadowed by another event coming down the pike : the next bitcoin halving , in April 2024 . Once every four years , the issuance of new bitcoins onto the market is cut in half . It has been this way since the cryptocurrency was introduced to the public in 2008 , and it will continue until the hard cap of 21 million total bitcoins has been reached , by around 2140 .
Why are there bitcoin halvings ?
There is certainly much to admire about bitcoin ’ s hardcoded deflationary structure .
Over 91 % of bitcoin ’ s total supply has already been issued into the market . It is estimated that by 2030 , 98 % of bitcoin ’ s maximum
Chart 1 : Bitcoin halving cycle
Source : News . Bitcoin . com supply will have been created .
Halvings are a core element of bitcoin ’ s software protocol , and the process of slicing block rewards in half – thereby gradually reducing the issuance of new BTC onto the market – is a genius way of controlling inflation programmatically .
This simple element of bitcoin ’ s monetary structure belies its elegance . And it acts as a key narrative counterpoint to the rampant inflation working its way through every major economy today .
Today , bitcoin ’ s inflation rate stands at 1.78 %. After the next halving , in April 2024 , this inflation rate will fall to 1.1 %. This everincreasing scarcity has to date coincided with large upswings in the value of the number one digital asset .
The history of bitcoin halvings
Every time that miners successfully process 210,000 blocks , there is a bitcoin halving . This occurs approximately once every four years .
We say ‘ approximately ’, because blockchains tend to work to their own internal timetable . Events are scheduled not according to dates in the traditional calendar , but instead by block height .
In blockchains , block height is simply the number of blocks that have been successfully added to the chain , and can be used to reference a point in time within a blockchain ’ s history .
Bitcoin was publicly released in January 2009 . At that point in time ,
Chart 3 : The bitcoin halving sche
the incentive handed to miners for supporting the blockchain and verifying the status of the online ledger was 50 BTC .
The first bitcoin halving took place when 210,000 blocks had been successfully mined , on 28 November 2012 . The first halving cut bitcoin ’ s block reward from 50 to 25 BTC per block .
In the four years that followed , the price of each unit of the now scarcer bitcoin supply climbed 10,400 %, from $ 4 to $ 420 .
Another 210,000 blocks later , on 9 July 2016 , the second bitcoin halving took place . Block rewards were cut in half from 25 BTC to 12.5 BTC . Between 2016 and 2020 , one BTC jumped in value by 1,590 %, from $ 420 to $ 7,100 .
It could be argued that bitcoin ’ s predictable supply model makes it a more rational investment than