During recent months, unusual volatility has been observed in the price of bitcoin (BTC) that went from a value of US$73,000marking a new historical record last month, and then plummeting and rising again, resulting in a price that at this time fluctuates between US$67,000 and the US$68,000.
This is generally very common before a ‘halving’, which is, basically, the halving of the reward that miners receive for mining and validating transactions that occur on the blockchain every four years (four years)as cited by the ‘Ámbito Financiero’ portal.
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Andrés Gómez, country manager of CryptoMKT in Colombiaexplain what “Bitcoin is based on a decentralized computer network, or distributed public ledger, that records the details of each transaction related to this cryptocurrency in discrete blocks of information connected in a chain. New blocks are added to this chain in a process called ‘mining’ which involves solving complex mathematical problems and rewarding new BTC to miners who perform the process computationally and energy-intensively.“.
Bitcoin Bloomberg
And he adds: “The reward of these minted digital assets each time a new block is added to the network decreases over time, an intentional feature designed to limit their supply by slowing the rate of production, halving each time 210,000 blocks are added to the network. network”.
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It should be remembered that three other halvings have already occurred: in 2012, 2016 and 2020, iteratively decreasing the reward for mining a block of 50 bitcoins to 25, 12.5 and 6.25. For this year, then, the reduction was to 3,125 BTC.
However, the ‘halving’ represents, according to experts, a possibility of boosting the purchase of this cryptocurrency in the future.
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Bitcoin iStock
“First, a number of factors must be taken into account, such as the increase in the price of Bitcoin could increase confidence and general interest in the market for these assets as a whole, leading to an increase in their demand. Second, investors can choose to diversify their portfolio and look for investment opportunities in other digital currencies instead of limiting themselves to just BTC. And third, if other cryptocurrencies have unique features or technologies that make them attractive to people, an increase in attention to this market in general can lead to greater investment and appreciation in these currencies.“says Gómez.
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The maximum amount of bitcoins that can ever exist is 21 million units. This currency limit is one of the fundamental principles of the cryptocurrency project. Satoshi Nakamoto, the architect who created BTCconceived it, along with the halving, as a mechanism to stop the inflation that usually occurs in traditional currencies.
He explains that if there is a reduction every four years, as is being done, it would lead to the mining of this asset continuing until around the year 2140.
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