Halving Bitcoin Will Prove Beneficial Or Will Result In Its Total Collapse?

Bitcoin mining

When it comes to money, whether paper or virtual; somebody needs to make a decision as to when and how much money is to be printed before circulating it in the market.

Explaining Bitcoin mining & Fiat currency

To manage inflation in a nation, Central banks are accountable for printing fiat currencies. It forms an integral part of extensive monetary policy of a nation. However, no national government or country borders are involved in case of virtual currencies, hence; other methods are positioned to control the supply of funds.

Information provided by Blockchain, confirms that till April 2016, 15 million plus Bitcoin is in circulation and its inventor has made certain that its circulation is restricted to 21 million.

‘Mining’ is the term coined for the procedure of supplying Bitcoin which entails complex mathematical calculations employing distinctive hardware and software.

Explaining halving and its implications

The creators of Bitcoin mining deliberated it in a way that mining value is halved periodically. It is going to happen on 11 July 2016. This will remarkably drop the incomes of the miners. The complexity of mining will shun out smaller miners and thus, this crypto cash will be left only for big players or massive mining firms.

This drift is well demonstrated by Chinese who dominate more than 50% of Bitcoin mining. Halving of Bitcoin will be interesting. It will either augment its prices or will result in a colossal collapse.

Halving- short and long term view

Halving of Bitcoin has divided the market specialist in two types one who are a game for it and others who feel halving is a nuisance. We asked both of them to reflect on short and long term implications of Bitcoin halving.

Aleksandar Matanovic, the CEO of ECD a Bitcoin trading firm, stated:

“Prices will decline in short term however; will rise in the long term. Many people who are anticipating price hike post halving and want to benefit out of it will tend to acquire it prior to halving, in order to sell it at much better price subsequently, post halving. This will shove the price up before halving”

Aleksandar believes that the present costs are as per Efficient Market Hypothesis and above mentioned phenomenon has already been taken into consideration. Thus, halving of Bitcoin will not result in immediate price rise contrary to the beliefs of the spectators.

He adds:

“From 11 July 2016, 75 new bitcoins will be introduced every hour against the existing 150. If demand keeps intensifying at a rate similar to current trend, the new influx rate won’t be able to keep pace with the demand and it will result in price rise.”

Price Rise with jagged falls

In Coin Telegraph, David Duccini, Strength in Numbers Foundation, reported:

“In case the price doesn’t equate the costs, there could be a steep drop in hashing control.”

Fran Strajnar, the Co-founder of BraveNewCoin.com elaborated on long and short term scrutiny of the halving.

He foresees short term as:

Viewing the current affirmative market situation when halving is near, a stable, price-increase with sharp decline on the way is in store.”

In long term he thinks that most miners will impede liquidating coins till the price touches the point where they can attain maximum margins. He feels that waiting for six or more months will be apt to draw earnings once more at US$ 700- US$ 850 price range.

Strajnar finishes off stating:

This symbolizes a twofold decrease in supply where fewer coins are printed and obviously fewer coins are sold in the market, as the miners are awaiting price rise. Hence, I think the demand & supply will ensure that Bitcoin reaches $800 by Dec 2016.”

Bitcoin Advice

All posts published by the Bitcoin Advice Editorial Team combined. Primary objective is to provide quality content to our readers.

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2 Responses

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