In July this year, the blockchain will be halved. This means that the reward for bitcoin mining will go from 25 to 12,5 bitcoin every 10 minutes. What impact will this have on Bitcoin pricing? Will the decrease in reward still be profitable the miners? Will supply meet demand? Many questions…
Bitcoin has a finite supply and will not exceed 21 000 000, this makes Bitcoin deflationary and very attractive to the investor. We also know that generally more demand increases the price however, looking back in history at the last halving, just 4 years ago, there was no real impact on the price which was $13.40 at the time (12 November 2012). Might be a different story in July as the price is hovering around $450 as well as interest and adoption of Bitcoin is steadily rising.
A Price spike could also cause congestion and delays on the blockchain which will result in delay in transaction time and confirmation. This scenario could cause miners to stop mining due to lack of profitability, the Hash rate (mining power) will drop and the difficultly level of the hashing work that has to be done will increase. It takes 2016 blocks before the system readjusts to the lower hash rate however, none of this would happen if the block size cap was increased. Bitcoin Classic have been trying to get this change from 1 megabyte to 2 megabytes agreed for a few months already.
Bitcoin and the Blockchain technology is a democracy and stakeholders need to vote and agree the way forward. Read more about the Block size discussion – more people are for this change than against https://en.bitcoin.it/wiki/Block_size_limit_controversy
On the price prediction, Bitcoin security expert Andreas Antonopoulos says “I can’t predict price. No one can. Anyone who does, even for minutes, is lying. The reward halving will change the inflation rate in Bitcoin. How that affects the overall economy depends on the conditions of all the other parameters in the economy: price, adoption, transaction volume, hashrate, difficulty, investments, other currencies, world market conditions, etc.”
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Click here to watch the Bitcoin Block Halving countdown! http://www.bitcoinblockhalf.com/
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