Bitcoin Fundamentals: Halving

By Lamium on Altcoin Academy

Published in

The Capital

3 min readJul 31, 2019

Bitcoin halving, expected to occur during May 2020, means that bitcoin networks supply of coins reduces in half. Next May’s halving will not only cut the inflation rate down to 1,8 percent but also significantly escalate global demand for bitcoin.

Bitcoin’s monetary supply is strictly limited, the total number of bitcoins ever created will be 21 million. The reward per block halves approximately every four years. The final bitcoin halving occurs in 2036 and stops in 2140.

Accumulation Before Halving

Bitcoin’s parabolic rise during Q2 this year has been powered by multiple different factors. One of the main factors is investors accumulating before the halving event.

While many believe the rally was inevitable, others believe bitcoin’s rise has been fueled by FOMO (Fear Of Missing Out). In May 2020, the Bitcoin network is expected to halve, which means that the rewards for bitcoin miners will reduce by half. The halving happens at intervals of 210000 new blocks, or roughly once every four years. The last two halving events happened in 2012 and 2016. Prices remained relatively stable, with the exception of a sharp 50 percent price rise a few months before the 2016 event.

Bitcoin’s Inflation Rate

The upcoming halving will also affect bitcoin’s inflation rate. The rate will go down from the current 3,76 percent to just 1,8 percent. And while this information is often overlooked, it represents a major milestone in the global financial system.

Unlike most fiat currencies, whose inflation rates are very fragile and set yearly, bitcoin’s own inflation rate will remain unchanged for the next four years, giving people a sense of stability they couldn’t count on in traditional financial systems.

Yet again bitcoin defends its position as global antifragile “digital gold”. Bitcoin offers non-correlated performance to any other asset classes, while also acting as censorship-resistant currency.