Historic Halving: Why are we still so unsure about Bitcoin? And where do we go from here?
Categories: GeneralPublished On: June 16th, 20204.5 min read
On Monday the 12th May around 7:20pm GMT, we witnessed a major historic event which I’m sure most of us are aware of by now. Every 210,000 blocks of data that are verified or ‘mined’ the reward is ‘halved’, recently reduced to 6.25 from 12.5 BTC. This reward is given to those who contribute processing power to the network, and also who solve the extremely complex problems first. Not every miner is eligible for the reward which puts large ‘mining farms’ across the globe competing against each other. Mining has become a legitimate business model since before the rapid rise in price we saw several years ago. This, the 3rd halving is particularly important because we move from double digit rewards to single, a milestone and proof that we are still in the very early stages of this technology.
The reason the reward is halved is to reduce inflation and slowly release supply into the market, the availability of Bitcoins from the issuer decreases. So comparing this to the system we see today, where in the event of an economic crisis we simply print more money, the availability of fiat currency actually increases thereby decreasing its value. This is where the speculation of the future BTC price comes into play. Being a deflationary asset with a limited supply of only 21,000,000 BTC and an estimated 20% of that is either lost or unrecoverable, many believers feel that Bitcoin will rise in value the same way gold does in the market, supply and demand. However the demand is only felt by those who see the potential of the technology, since the mysterious author ‘Satoshi’ published Bitcoin as an open source project, we must assume that they expected the community to build on, improve, and use the technology as our needs evolved. Is Bitcoin really a safe haven or even proven its store of value purpose? Whilst many companies have emulated the idea of ‘ blockchain networks (Bitcoin maximalists refuse to acknowledge the potential one world currency as such) the concept is no longer unique, with Ethereum becoming the most popular network of enterprise for several reasons which we won’t discuss here. The only thing that determines the value of Bitcoin is the market demand which is at best highly speculative, in full disclosure my personal belief is that the industry is almost too big to fail with many a reputation and livelihood riding on the global adoption of Bitcoin. One amusing fact that occurred during the 3rd halving is the message embedded into the penultimate block. It contained the headline to an article regarding the Federal Reserve printing $2.3 trillion dollars in response to the CoVid-19 pandemic. Paying homage to Satoshi Nakamoto’s first block that contained a headline referring to the 2008 financial crisis.
Let’s imagine Bitcoin never gains traction and no one admits it’s value, even then the core technology still remains solid. A digital ledger that verifies transactions through a network is still needed in the 22nd Century. Society created banks through a need of transferring value between locations, and with that were limitations of the technology at the times. Moving vast amounts of wealth such as gold, was a dangerous and expensive process, a problem that still exists 700 years after pirates.
Enter blockchain, the ability to verify an exchange of information with high security and tamper proof transactions. Now we don’t need an Armada filled with gold sailing across the ocean armed with soldiers. With the click of a button we can send funds of any size in minutes and keep the record for eternity. Although using a popular cryptocurrency like Bitcoin is unstable at times, more so than gold. Those minutes during a transaction are not so bad as months at sea, but the world is growing smaller and technologically advances every day. We have a global economy instead of domestic, macro vs micro markets and yet we still haven’t figured out how to move wealth in an efficient way. When using the traditional financial system a transfer takes days with heavy regulation, inspection, verification and finally transfer. With blockchain technology we compile inspection and verification into one, with regulation forming the initial step that governs the whole process, reducing the transfer time to minutes.
That’s how companies like Stably are changing the world and dragging finance into the modern era, we believe that a stablecoin-as-a-service model is an essential tool that many businesses fail to recognize. We can either be a part of innovation or watch from the sidelines, either way blockchain is taking over, and it’s still in the black and white era of development. Stably have produced a suite of tools that allow us to internally replicate non-essential and non-security technologies, allowing us to deploy projects much faster than the competition. Creating a unique method of issuing smart contracts, as well as following global regulation to future-proof any project under our umbrella. Our team spends hundreds of hours per client to ensure each smart contract is fully compliant, even providing audits publicly to establish transparency. The Bitcoin halving of 2020 is most certainly historic and has proven the demand for blockchain technology. Where will you be for 4th halving, watching from the sidelines or powered by Stably?
Stably is a venture-backed FinTech from Seattle, Washington. We provide regulatory-compliant stablecoin and onramp infrastructure for emerging blockchains, Web3 applications, and financial institutions, enabling their users in 170+ countries/regions to easily buy, sell, or swap digital assets at competitive rates across multiple blockchain networks with stablecoins and fiat payments. Our mission is to power the next billion Web3 users with a superior fiat & stablecoin onramp.
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Digital assets involve significant risks, including (but not limited to) market volatility, cybercrime, regulatory changes, and technological challenges. Past performance is not indicative of future results. Digital assets are not insured by any government agency and holding digital assets could result in loss of value, including principal. Stablecoins (e.g., USDS) and bridged assets (e.g., BTCS) involve additional risks, such as technical challenges, security vulnerabilities, reliance on third-party custodians, and dislocation of market prices relative to the underlying collaterals. Please conduct your own thorough research and understand potential risks before purchasing/holding digital assets. Nothing herein shall be considered legal or financial advice. For more information about the risks and considerations when using our services, please visit: stably.io/terms-of-service.