Bitcoin halvings are becoming more symbolic than earth-shattering
Every four years, the U.S. has a presidential election, but in that same time frame another event captivates the world of cryptocurrency, bitcoin’s halving.
The halving event is when the reward for mining Bitcoin Core (BTC) transactions is “halved.” This event cuts in half bitcoin's inflation rate, that is to say, it cuts in half the rate at which new bitcoins enter circulation (from 12.5 BTC every 10 minutes down to 6.25 BTC).
Imagine taking a quarter and cutting it in half, and then later cutting both halves in half. The more that happens, the smaller the value of each individual piece. However, for inflation’s sake, this is better than just minting more quarters, which would devalue each whole quarter.
It's always a fun day to celebrate considering this is another step in bitcoin’s development and decreasing supply, though with the probabilistic nature of blocks being added to the chain it can be hard to plan a party. Blocks are added to the blockchain every 10 minutes on average. But any given block can take a few seconds or a few hours, and the halving occurs after a certain number of blocks have been added.
It’s an event that will also soon be completely symbolic, though no less culturally important. This will be the third halving, with each halving making a subtler economic impact than the last.
Future halving events in turn won’t have such a roller-coaster effect on the stock market. Headlines will focus on the stock price of bitcoin in the coming days, and the halving event may provide a nice boost in the short term.
But if we’re thinking big picture, bitcoin will always have a volatile future. Only when society as a whole fully accepts bitcoin as currency will we see some semblance of stability.
Since bitcoin has now split into several different blockchains, the halving happened earlier for some of them, such as the Bitcoin Cash (BCH) blockchain in March.
Still, it’s an event to break out the champagne for. After all, it was only a decade ago that bitcoins could be bought for less than a dollar each and everyone thought it was going away.