Halvings And Block Reward Reductions: How Much Do You Know?

Huobi Global
Apr 30, 2020 · 7 min read

2020 is called the “first year of output reduction”, besides BTC’s
third reduction in output in May this year, multiple fork coins and altcoins such as BCH, BSV, ETC, DASH, ZEC will also usher in a reduction in output this year.

In the blockchain system, to maintain the operation and stability of the network, it is necessary to continuously produce digital assets or charge service fees to encourage miners who maintain the network. At first, to attract more miners to participate, more digital assets are usually produced, but if the output speed is too fast, the value of assets will decline. To maintain the stability of the value of assets and the stability of the entire blockchain network, blockchain systems usually set a reduction in output in the consensus algorithm.

After the first two BTC reduction in output, there had been bull markets. Therefore, currency holders have great expectations for this year’s reduction with so many digital assets reduction in output.

Now, Six major cryptocurrency reductions are listed below for you to take a look at and learn about each one.

BTC: The first two halvings brought a considerable rise, and the coming third halving is coming but there is no way to 100% predict what may happen to the price.

BTC

The first halving of BTC occurred in November 2012. One year later, the highest historical price on the BTC station was $ 1,175, with the highest increase reaching 9260%. The second halving of BTC occurred in July 2016. On December 16, 2017, BTC hit a record high of 19,891 US dollars, with a maximum increase of 2976% and lasting 525 days.

Judging from the two historical halvings, after halving, BTC did not quickly rise sharply. During this period, it experienced a long period of ups and downs.

In May of this year, Bitcoin will usher in a third halving. Due to the expected event, Huobi is hosting a halving countdown, where you can predict and win your share of $160,000!

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Now let’s talk about the rest of the halving cryptocurrencies:

BCH

In August 2017, BCH officially hard forked from the BTC network and became an independent blockchain network. BCH reached a historical high point at a varied price.

In April this year, BCH ushered in the first halving. BCH reached a high of $495 on February 15 with a cumulative increase of 155%, but it continued to decline in the following month, with a cumulative decrease of 71%.

👉Buy BCH

BSV

The Bitcoin SV was created at the request of and sponsored by Antiguan-based CoinGeek Mining, with development work initiated by nChain. The project is intended to provide a clear BCH implementation choice for miners and allow businesses to build applications and websites on it reliably.

There have been two big rises in BSV this year, the first happened on the independent market on January 10, BSV achieved 280% rises in 4 days, comparing the beginning of this year,it achieved 320% rises. but during the March plunge,It fell by almost 75%.

👉Buy BSV

ETC

In June 2016, the star project DAO successfully completed the crowdfunding on Ethereum, and the Ethereum market value raised at that time reached US $ 150 million. After that, DAO’s smart contract was attacked, and the hacker successfully transferred a large amount of ETH.

In order to respond to this attack and recover the losses, Ethereum’s founder originally wanted to solve it by means of a soft fork, but unexpectedly failed in the end and could only perform a hard fork. Since then there has been Ethereum’s fork coin ETC, which represents a different consensus of the community.

ETC still uses Ethereum’s original POW mining method. In March of this year, ETC had a 20% reduction in output and therefore the price did rise substantially.

👉Buy ETC

DASH

DASH was founded in 2014. It first originated from a fork of Litecoin, and then adopted Bitcoin as the blueprint. Compared with Bitcoin, DASH is mainly characterized by speed and anonymity.

Dash uses anonymous technology to make transactions hard to trace. Any network user can enter the data block chain to view the transaction. For those who do not want to expose transaction records and financial privacy, this is undoubtedly a flaw. Dash obfuscates transactions through an original decentralized webserver “master node” to achieve anonymity.

The total issuing amount of DASH is 18.9 million, which has already reduced in output by 7% every year. DASH just completed its reduction in output last week.

👉Buy DASH

ZEC

ZEC is a coin formed based on Bitcoin version 0.11.2 code modification.ZEC retains the original model of Bitcoin. In ZEC’s wallet, there are two types of transparent funds and private funds. Transparent funds are similar to Bitcoin. And it’s transactions are publicly available. while transactions of private funds are anonymous and cannot be traced, so ZEC also belongs to an anonymous coin.

ZEC is the first blockchain system to use a zero-knowledge proof algorithm. Through zero-knowledge proof, ZEC can provide completely anonymous payment transactions, meanwhile ensuring that the public network is still used to maintain the entire network.

ZEC is expected to be halved in October this year, after which the ZEC consensus incentives will become 3.125. Recently, affected by halving, ZEC has increased by 154%.

Compared with other bitcoin-based coins that have been halved, ZEC’s reduction is in the second half of the year. Will this make it out of a different market?

Since POW can reduce output, can POS reduce it also?
Through the above analysis, we can find that these coins that will be halved or reduced in output use the POW type consensus algorithm. Is there any reduction in the output of coins that use the POS type consensus algorithm?

Let’s take EOS as an example. Every year, EOS’s inflation accounts for 5% of the total. 20% of this 5% will be used as incentives for supernodes and standby nodes. The remaining 80% will be used for certain purposes. In 2019, the EOS community voted to destroy more than 30 million EOS.

From the current consensus algorithm of EOS, there is no reduction in EOS output, and there is no upper limit. Is it true that all POS-type coins have unlimited inflation and have not reduced in output?

👉Buy ZEC

Let’s look at another public chain NULS consensus incentive model. In July 2019, the NULS community through a community vote and passed a proposal with a maximum cap of 210 million.

After the proposal was approved, NULS upgraded the Protocol to adjust the NULS consensus incentive calculation method. After July 12, 2020, the total amount of monthly consensus incentives on the NULS main-net will decrease by 0.4% month by month compared to before the agreement upgrade.

In other words, the total amount of consensus incentives before the upgrade is equal. We consider it to be 100%. After that, the total amount of monthly consensus incentives will decrease month by month and become the original 99.60%, 99.20%, and 98.80%.

👉Buy NULS on Huobi

According to the developer of the proposal, Berzerk, in the early stage of the blockchain network, in order to attract more supporters and reduce the risk of early participants, there must be a higher consensus incentive in the early stage, but as the project developed, the risk Will decrease.

However, if the total amount and speed of consensus incentives are not be controlled, excessive assets will inevitably flow into the market, which will have a bad impact on the interests of all coins holders in the ecology.

NULS adopted the method of reduction in output monthly, which not only can control the rate of inflation, but also can avoid the sudden halving like Bitcoin, which let miners obtain benefits that are far lower than the costs involved in maintaining the network in the short term.

Conclusion

2020 is called the first year of reduction in output. There are a number of coins such as BTC, BCH, and BSV that will reduce output. Recently, due to the impact of reducing output, the market has an obvious rising.

However, according to the history of Bitcoin’s previous two halvings, there is still a lot of uncertainty in the short term to let the market enter the overall recovery.

What will the market do in terms of output reduction in 2020?

Let us wait and see.

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2. Huobi Global’s announcements and information do not constitute investment advice, and Huobi will not bear responsibility or provide compensation for direct or indirect losses arising from trading decisions whilst relying on this information.

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