May 17, 2021, | AtoZ Markets – The wonder child of the crypto world seems to be enjoying its (prolonged) moment in the spotlight. It’s safe to say that no day passes when Bitcoin doesn’t make the headlines for one reason or another. However, if we can look back at the last year, there is one key event that created a whole lot of buzz in the crypto world. We’re talking about the 2020 bitcoin halving, of course. Today, we’re having a look at this event and what it means one year after it took place.
What is the Bitcoin Halving?
Let’s started with an essential point; what exactly is the concept of bitcoin halving? In its simplest form, halving can be described as the concept by which miners are rewarded for their services towards the completion of blockchain transactions. There are 21 million bitcoins that can be mined and once these have all been mined, the digital currency’s supply will be exhausted. Whenever 21,000 blocks are mined (roughly every 4 years), the reward given to miners is cut in half. Back in 2009, bitcoin miners were rewarded with 50 bitcoins per block that was mined while after the latest halving miners can aspire to gain 6.25 bitcoin for every block.
Why Is the Halving Important?
What is the relevance of the halving concept? In a nutshell, it can be said that halving is a form of systematic control mechanism or a supply and demand check. While the demand for bitcoins is likely to remain constant (or as we have seen recently increase substantially), the supply of bitcoins becomes more contained. This ensures a healthy balance between the supply and the demand for the digital coin. An abundant supply and large-scale availability could lead to a reduction in price. After all, the value of something that comes too easily is never too large. The halving process is designed to make sure that this doesn’t happen to bitcoin.
What Has Happened to Bitcoin Since Then?
The last bitcoin halving took place on the 11th of May 2020. Since then, bitcoin has been through one milestone after the other.
We can’t ignore the fact that this halving coincided with a world pandemic. While the world’s economies were grappling with contracting economies and uncertainties, bitcoin emerged as a solid investment option that is not susceptible to the fluctuations that afflict fiat currencies and more traditional investment options like stocks. Suffice to say that since the last halving, the price of bitcoin increasing by a staggering 300%. As we write this in May 2021, bitcoin has surpassed a new all-time high a little over a month ago and reached the value of $63,275. We think that this is impressive for a digital asset that was originally viewed as a novelty by the financial world at large.
It’s also safe to say that the underlying notion that has been a common denominator for the last 12 months, is increased acceptance. The leading cryptocurrency has gone from strength to strength, and we’d go as far as to say that it is now a mainstream concept. Bitcoin is increasingly being seen as an important business opportunity that can open new doors and pique the interest of new audiences.
For instance, finance big names like JPMorgan and Morgan Stanley made the news earlier this year when they announced that they are considering the possibility of jumping on the bitcoin bandwagon. This is coupled with the fact that a big player of the calibre of PayPal has revealed plans to embrace crypto in an encompassing manner. This increased acceptance by these global stakeholders has only consolidated further the coin’s position and turned a wunderkind into a mainstay of the financial world.
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