View profile

The Halving of Bitcoin

Revue
 
Check out past issues of the newsletter along with more interesting crypto content as well as short (
 

Satoshi&Co Daily Crypto Newsletter

February 12 · Issue #124 · View online
ZPX | Satoshi&Co Newsletters

Check out past issues of the newsletter along with more interesting crypto content as well as short (but great) conversations with leading crypto industry participants at our newly-launched website www.satoshiand.co

What is Bitcoin Halving?
One of Satoshi Nakamoto’s original motivations with bitcoin was to make it disinflationary. Satoshi wanted to limit the number of bitcoins that would ever come into circulation so that there would be no value erosion through limitless printing. Halving is a design feature in-built within bitcoin to achieve this purpose. There is  50% reduction in block rewards on the bitcoin network after every 210,000 blocks are mined. When bitcoin was born, there was a reward of 50 bitcoins every 10 minutes, which is approximately the time required to mine a block. This number, after two ‘halving events’ as determined by bitcoin code, is now at 12.5 BTC per block, and is expected to go down to 6.25 BTC per block in 2020, barring any abnormal changes in hashrate, due to some sort of massive price movements, for instance.
The maximum number of halvings that will take place is 64, which corresponds to a total of 21 million BTC in circulation.
Why is it important?
Miners are the ones most affected by halving. In an instant, the value of the ‘resource’ that they are ‘mining’ literally halves, and this can often times put many miners out of business. However, there are two other related factors in play. As some of the marginal miners leave the network, the hashrate drops, and profitability increases for those miners that are still standing. If the theoretical demand for bitcoins were to remain constant, a reduction in supply should see a commensurate increase in the price of bitcoin, and hash rate almost immediately bounces back up to pre-halving levels, if past instances were anything to go by. There is often price action around halving events trying to predict BTC prices along these lines. As expected, miners with low/near-zero electricity prices benefit the most during such events.
Satoshi&Co’s take on halving
We are fewer than 2 years away from Bitcoin’s mining reward halving.  At the current rate of block rewards, the daily issuance of BTC is close to 1800 blocks per day and equates of approx. $6million of new wealth generated every day, at current prices. Perhaps that is too much to absorb for the market, especially when the sentiment receded from all-time highs in the past few months. With the daily dollar issuance set to reduce by half if prices remain at this level, will the demand inflow finally outweigh the supply side dollar issuance? If past instances are anything go by, there is generally increased volumes and bullishness around halving, and the next halving event due in 2020 could be a catalyst for BTC to escape the doldrums of the current bear market.
In addition to BTC, LTC (Litecoin) is also expected to have a halving event. LTC is expected to hit this milestone sometime in Q3 2019. LTC prices have been picking up recently, in anticipation of the event. However, BTC price movements will also be driven by other events, such as the lightning network rollout (Square is already adopting this), and the progress with Bitcoin ETF.
Whisper it gently, but here, finally, might be green shoots of spring….
Meanwhile in Crypto Wonderland....
“New Institutional Capital Inflows”
Two US public pension funds that manage close to $6 billion in combination have become anchor investors in a new $40 million venture-capital fund. The Police Officer’s Retirement System and Employees’ Retirement System, both of Virginia’s Fairfax County with a population of about 1.1 million, have become America’s first pension funds to diversify into the crypto blockchain space through a new fund by assets management company Morgan Creek Capital.
“TRON Foundation Partners with ALS Association”
The ALS Association has partnered with the TRON Foundation to launch a blockchain-enabled charity campaign, according to a press release shared with Cointelegraph on Feb. 11. According to the press release, TRON’s (TRX) participation in the campaign will include using blockchain technology to track donation distribution. The ALS Association plans to release data tracked by TRON to the public at the end of the campaign, the press release notes.
“Bakkt Launch Delayed Again”
Jeff Sprecher, the Chief Executive Officer of Intercontinental Exchange [ICE] announced that the firm’s digital asset platform, Bakkt will be expecting a launch later in 2019. ICE is the parent company of the New York Stock Exchange and operates in 23 leading global exchanges. Sprecher clarified that Bakkt is independent of ICE as it has its own team and infrastructure. Bakkt was announced in August 2018 by ICE and was set to launch in early 2019. However, the date was postponed due to ongoing deliberations with the United States Commodity Futures and Trading Commission.
“New Bitcoin ETF Application”
Yet another contender has entered the Bitcoin exchange-traded fund (ETF) fray. The ETF isn’t really a full-Bitcoin fund, as a maximum of 15% of the fund’s assets will be allocated to BTC, through the CBOE and CME futures to be exact, if the product goes live. Reality Shares is planning for the remaining assets to be allocated to sovereign debt instruments denominated in fiat currencies like the British Pound, Japanese Yen, Swiss Francs, along with money market mutual funds.
Crypto Twitter Pick
StopAndDecrypt
One of these is Bitcoin.

Two of these will get 51% attacked.

Can Proof-of-Stake do this? https://t.co/d7fxu0xga9
What We Are Reading / Listening To
Overnight Performance of Top 10 Currencies
You are getting this newsletter because you or someone in your organization signed up for this. You can find more stuff to read at our news and research portal, our crypto index token and our upcoming relayer.
Brought to you by Satoshi&Co
Brought to you by Satoshi&Co
This newsletter does not constitute an offering of securities in any jurisdiction. The contents of this note should not be construed as investment advice or as a recommendation to purchase securities. This note is intended for the consumption of the recipient alone and not for public distribution. Please consult a certified financial advisor or other appropriate practitioner as may be appropriate as per your jurisdiction.
ZPX Copyright © 2019
Did you enjoy this issue?
If you don't want these updates anymore, please unsubscribe here.
If you were forwarded this newsletter and you like it, you can subscribe here.
Powered by Revue
ZPX | 21-01, Clifford Center, Raffles Place, Singapore- 048621