[ad_1]
By BR correspondent 
15h ago
DURBAN: Bitcoin’s next halving will take place in the early hours of Tuesday, May 12, 2020 and there is enormous international interest in what the halving will mean given that two previous halves lead to dramatic increases. Of the prices.
Marcus Swanepoel, CEO of Luno, said: “Bitcoin will return to its all-time highs in the next 12 to 18 months. I think we are currently at the beginning of a long upward trend, one that, considering the broader economic environment, will experience a higher volatility, especially in the coming weeks. However, with the halving just around the corner, and with a little patience, we will see that same strong increase common with the halving before, even if it will take a little more time than usual to get there. ”
In a recent survey of Luno users, the majority of users (75 percent) expect the bitcoin price to be “higher” or “much higher” by the end of 2020. Less than 5 percent of users of Luno said they plan to sell their bitcoins in the next six months, with more than 90 percent hoping to buy more, increase trade, or keep their cryptocurrencies for the same period of time.
Marius Reitz, GM for Africa in Luno, unpacks the main areas of interest on halving:
How will the price be affected?
Since there have only been two previous halves, this means that there are only two data points, which is not significant enough to devise a trend. When the first halving took place in 2012, there were only 43,000 wallets (accounts). In the second half in 2016, there were around seven million and today there are more than 48 million wallets, but this is still a relatively small number.
In theory, if supply decelerates and demand remains constant, prices will rise. In the past, halving has been correlated with an increase in price. The first halving took place on November 28, 2012, when a BTC was worth around $ 11. Over the course of just one year after the event, the price of Bitcoin increased to $ 1,100. The second half took place in July 2016. Bitcoin maintained a price of around $ 600– $ 700 before flying to $ 20,000.
Bitcoin price bearish arguments
Miners can sell their Bitcoin to pay for new equipment, though miners have known about the impending halving well in advance, so it’s likely already priced. Another argument is that consumers are not planning to buy Bitcoin in the financial toll of Covid-19 and some cryptocurrency holders may liquidate their holdings to cover the actual costs they face due to jobs or other financial losses.
Bitcoin price bullish arguments
If you reduce the supply of anything by 50 percent, demand generally increases, and therefore prices rise. Many have increased their holdings in anticipation of a bullfight. Countries with unstable currencies like South Africa have seen Bitcoin as a safe haven and a good store of value, and with governments printing money around the world, inflation is likely to be higher than in the past. The Covid-19 situation may reduce the purchasing power of the fiat currency, leading more people to consider Bitcoin.
What effect will halving have?
What we know for sure is that only 900 Bitcoin will be produced per day (currently 1800) and it will be more difficult for miners to produce Bitcoin. The inflation rate falls to 1.73 percent, which is substantially lower than Bitcoin’s current inflation rate of 3.93%. For the first time, Bitcoin’s annual inflation rate will be less than that of gold. Global inflation is about 3.56 percent according to statista.com and is expected to rise. The fact that Bitcoin inflation will be below all this and can have a significant impact.
The mining hash rate (network processing power) is currently at its highest point and is expected to decrease.
Covid-19 and a changed financial landscape
Covid-19 has probably permanently changed the financial landscape. While there were panic sales in the stock markets in March, it is now clear that the world economy will be hit hard. Interest rates have generally fallen and countries around the world face news as the UK announced yesterday, its GDP is expected to contract to a dramatic 14 percent a year.
Bitcoin enthusiasts point out that there is a certainty of Bitcoin supply that cannot be affected by any government or person. At times like this, people tend to turn to safe havens like gold, and the price of gold has risen. Anyone with a smartphone and an Internet connection can buy Bitcoin, gold is more difficult to access. There is also an attraction to an alternative financial system.
What is a halving?
Bitcoin’s halving is a planned reduction in the rewards miners receive. The halves occur once every four years or so and this will be the third since Bitcoin launched in 2009.
A reduction in half is a 50 percent reduction in the value of rewards for Bitcoin miners. Bitcoin is generated by miners. They have computers that perform complex calculations that validate transactions on a public digital ledger, called a blockchain. Miners compete with each other to earn newly issued tokens known as a block reward.
Why do Bitcoin halves occur?
It is integrated into the Bitcoin protocol and is fundamental to the principles of Bitcoin. There is a finite number of Bitcoin that will ever be in circulation (21 million) and there is no way to produce more. As such, halves are a unique protocol that controls supply.
Government-issued money (fiat money) can be created by simply printing more notes, which means it loses value in inflation if it is printed too much.
Will halving affect Bitcoin’s processing speed and transaction fees?
The protocol design means that it is unlikely to change. Transaction fees currently do not represent a large percentage of the miners’ income, whose main objective is to achieve the block reward. That is why it is a race to see who decodes the block first. The miners joined forces and formed large mining groups, increasing the chances of obtaining a block that is then shared equally, along with transaction fees.
Does Bitcoin have any advantage over gold?
Gold is established, regulated and attracts institutional buyers. While there is some volatility, it is much more stable than Bitcoin, which is still classified as an experiment and extremely volatile. Gold has the advantage of the first engine over Bitcoin by a significant margin.
Bitcoin has an advantage in terms of ease of use and accessibility. Another key issue is Bitcoin’s certainty advantage. Although gold is deflationary, we don’t know what that finite amount is and how much is left.
ONLINE BUSINESS REPORT
[ad_2]
