The digital currency bitcoin is now experiencing its second halving event which happens once in every four years. This event is a rule that is hard coded into the rulebook of the digital currency which demands for the rewards earned by miners to be cut in half. These miners are the ones responsible in making the network safe and secure from hackers with the use of their computing capacity. For every 210,000 blocks containing transactions that are processed, the halving takes place.
According to the CEO of the bitcoin company backed by Andreessen Horowitz, Balaji Srinivasa, halving is considered is just like New Year’s Eve for the financial experts fond of predicting the future.
The halving event has already been proven to be a significant part of the mining process and will continue to be in the future. The users of the bitcoin that invest the computing power of their computers as well as electricity in running these computers nonstop are the ones that are given the incentive. The market is already predicting what the halving effect will be but for many of the users they are more concerned with their operation as the current reward of 25 bitcoins will be cut into 12.5 as the halving takes place. The potential profit they could earn is now less than before and it is evident that after the halving not all miners might be able to survive. A bitcoin mining startup based in Sweden, KnCMiner, has already filed for bankruptcy two months ago.
As the halving takes place, the value of the bitcoin has decreased by 5 per cent. Based on a report by CoinDesk, the bitcoin price of $660 has become $627 instead. A few hours later, the price of the digital currency has recovered a bit and moved up to $640 which makes the drop to 4 per cent only. Since the market is still adjusting from the effect of the halving volatility is expected. At the early months of 2016, the price of bitcoin has already increased by 50 per cent and is expect to rise further due to the reduction of the supply. Those getting started with bitcoins just now might be up for a challenge since the competition is quite steep at the moment.