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Bitcoin’s fourth halving, a highly anticipated event occurring every four years in the cryptocurrency realm, has finally occurred.
This event, reducing the Bitcoin block reward from 6.25 BTC to 3.125 BTC, marks a crucial moment in the industry. As a result, the daily issuance of Bitcoin has been slashed in half, now standing at around 450 Bitcoin compared to the previous approximately 900. This reduction will continue until around 2140, when the final BTC is mined.
Why Does Bitcoin Halving Matter?
The fourth halving, affecting Bitcoin at block height 840,000, holds significance due to its impact on BTC’s volatility, which tends to intensify after each such event. This is primarily because the available supply diminishes, subsequently driving up the value of yet-to-be-mined Bitcoin, making it more appealing to investors.
This heightened interest is evident from the substantial volume of BTC moving into accumulation addresses leading up to the event. In the days ahead of the halving, Bitcoin demonstrated massive volatility with price briefly dropping below $60,000 to soaring to $65,000 – all in a week’s time. At the time of writing, the world’s largest cryptocurrency is trading around the latter.
Typically, the halving slows the rate of supply expansion, although at the expense of Bitcoin miners, who face a 50% reduction in block rewards. This adjustment may prompt a temporary decline in the Bitcoin network’s hash rate, as miners with older and less energy-efficient hardware may find their operations no longer profitable and opt to shut down.
Currently, the network hash rate is hovering above 630 Ehash/s, down by 13.3% from the recently established peak of 727 Ehash/s in March, according to data from BitIinfoCharts. Bitcoin’s mining difficulty also sits at an all-time high of 86.39 trillion following last week’s adjustment, thereby making it increasingly challenging to mine blocks.
Satoshi’s Last Words
With the halving done, Satoshi Nakamoto’s last words before exiting social media channels reverberate through the community. Nakamoto, the mysterious creator of Bitcoin, implemented the halving feature as a safeguard against the perpetual erosion of value in fiat currencies. His vision was rooted in addressing the fundamental flaw of trust inherent in fiat currencies.
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”
Bitcoin has come a long since Satoshi Nakamoto’s last words. The industry, as a whole, has witnessed significant advancements marked by major upgrades and breakthroughs.
The introduction of spot and future ETFs, on the other hand, has provided investors with access to Bitcoin, amplifying its appeal and acceptance within traditional financial circles. These developments essentially highlight Bitcoin’s evolution from a novel concept to a globally recognized asset class that is now reshaping the future of finance.
This article first appeared at CryptoPotato
