Why is Bitcoin halved? What coins can Bitcoin buy when it is halved next time?
The halving of bitcoin reduces the number of new bitcoins created in each block, thus reducing the total number of new bitcoins available and increasing the purchase cost. According to the general principles of economics, lower supply and unchanged demand will lead to higher prices. Because it limits the supply of new Bitcoin while maintaining stable demand, halving will generally lead to some large increases in Bitcoin. The next bitcoin halving date is expected to appear in 840,000 blocks in 2024. Although it may be more difficult for miners to obtain bitcoin after halving, it will also increase the value of BTC. So why did Bitcoin halve? What coins can I buy when I halve Bitcoin next time? Next, let's have a look.
Why is Bitcoin halved?
The bitcoin mining algorithm is programmed to find new blocks every ten minutes. As a large number of miners add networks and increase a large number of hashing rates, the time required to find blocks will be reduced. In order to repair the 10 minute target, the mining difficulty is reset every two weeks. With the rapid growth of Bitcoin network in the past decade, the average time of locating blocks has been kept below 10 minutes (about 9.5 minutes).
The supply of Bitcoin is limited to 21 million enterprises. Once the total reaches 21 million, the formation of new BTC will be terminated. The halving of bitcoin ensures that the number of bitcoins that can be mined in each block will decrease over time, making BTC more scarce and valuable.
Logically speaking, after each halving, the motivation to extract Bitcoin will also be reduced. On the other hand, the halving of bitcoin is related to the sharp increase of BTC price, which gives miners the incentive to dig a lot of bitcoin, even if their expenses have already halved.
As prices rise, Bitcoin miners are encouraged to continue mining. On the other hand, if the price of digital currency does not rise and the reward of the block decreases, the miners may lose the power to bring more bitcoins. This is because mining Bitcoin is a time-consuming and expensive operation that requires a lot of computer power and electricity.
What coins can Bitcoin buy when it is halved next time?
1. Ethereum ETH
Ethereum does not have such hard supply restrictions as Bitcoin, but after the implementation of the hard bifurcation in Constantinople on February 28, the block reward was reduced from three ETHs to two. Theoretically, this has led to a 33% reduction in the annual new supply of Ethereum, and the annual new supply of Ethereum is about 4.5%.
2. Raytheon XRP
In order to become the "more conservative quantity standard" of XRP, Ripple Labs significantly reduced the sales of tokens in the third quarter of this year, and this downward trend will continue or even increase. According to Ripple Lab, its XRP sales in the third quarter of this year were about 66.24 million dollars, down nearly 70% from 2515.1 million dollars in the second quarter.
3. Bitcoin cash BCH
According to Gen Coingecko, it will take about 153 days for Bitcoin cash (BCH) to halve. The halving process of BCH follows the halving process of Bitcoin. The reward for each block is halved from 12.5 BCH to 6.25
However, Bitcoin cash lacks a historical record to show that its price will be significantly affected by halving. However, from the perspective of structure, the doubling of the inventory flow ratio of BCH will at least bring supply pressure to the cash price of Bitcoin.
4. Monroe XMR
The inflation rate of Monroe Coin has declined faster than that of Bitcoin. The overall block reward of XMR fell below the Bitcoin reward for the first time this year, but in August, the daily supply growth was less than the Bitcoin standard (First class position note: on November 6 this year, Monroe halved for the third time, and the block reward decreased to 2.199023256 XMRs).
Dash's "inflation" regulation frequency is higher. The block rewards of Bitcoin are reduced by half every four years, but the amount of bitcoin dropped by 7.14% every 383 days (a little more than a year). The reduction frequency of DASH overall block reward is higher but more alleviated, so that the reduction of supply is more subtle and more lasting.
Because of the uncertainty of the large total supply, the mining of DASH will last for 192 years, until it takes one year to excavate a single Dash. By 2209, only 14 more DASHs can be excavated, while the last DASH must be excavated for 231 years.
Litecoin saw the feature of "buying rumors and selling news" in 2019, and the price increased from $20 at the beginning of the year to $140 in August. However, we did not see the rebound after the halving, and the rising price activities that caused this kind of rise can be explained by the rising mentality of Bitcoin again.
Speaking of this, I believe you have a certain understanding of why Bitcoin halving occurs and what coins can be bought in the next halving. In general, halving Bitcoin imposes synthetic price inflation on the digital currency network and halves the speed at which new Bitcoin is released into circulation. The reward system is expected to last until 2140, when Bitcoin will reach the recommended limit of 21 million. After that, the miners can get the reward for the cost of settling the transaction. However, Xiao Bian also reminds investors that although investing in digital currency is a very popular project, investment is accompanied by certain risks. You must have a comprehensive understanding before entering the site and not blindly follow the trend.