On video: Power plant restarted to mine Bitcoin/Angular
Bitcoin, the leading cryptocurrency in the crypto market, operates according to a predefined set of rules that cannot be changed without a broad consensus that is almost impossible to achieve. One of the significant laws is the "crossing event", and that significant event is fast approaching.
This event, which we will expand on immediately, will take place this month for the fourth time, when each of the three previous times had significant consequences for the value of the currency, and its strong jump after them.
The Halving event is an event that occurs every 4 years/ShutterStock
First of all, you need to know the monetary mechanism of Bitcoin - how does the currency actually work? Bitcoin, which has become the most powerful and extensive blockchain network in the world, is governed by a set of rules defined in its software code. without the ability to change.
One of the most important rules is that Bitcoin is a disinflationary currency, meaning it has a limited supply, which will be fully in circulation around the year 2140. There will never be more than 21,000,000 Bitcoin coins in the world.
Each block in the Bitcoin blockchain chain is mined on average every 10 minutes, and in each of these, there is a reward for the miner who managed to mine the block.
In the first block, the first coins were also created. So, the reward for each block was 50 bitcoins added to the total supply every 10 minutes on average. After the soon-to-be halved event, the renewable coin supply will drop to 3.125 Bitcoins per new block mined.
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The upcoming crossing event will take place this very month - April 2024/ShutterStock
So what is the crossing event anyway?
The Halving event is an event that occurs every 4 years, or every 210,000 blocks, in which the renewable coin supply (the reward that miners receive each block) is cut in half.
So far the renewable coin supply has been cut about 3 times, meaning 3 halves have been made. And the renewed coin supply decreased in rank from 50, to 25 in the first, to 12.5 in the second, and to 6.25 in the third. In the upcoming crossing as mentioned, the renewable coin supply will drop to 3.125 Bitcoin coins for each new block that will be mined.
The blue line shows the amount of coins in circulation. The orange line represents the percentage of renewable supply, the monetary inflation of Bitcoin/PR
Will this affect the price?
So far, the crossing events are known as historical events in terms of the price, adoption and sentiment of Bitcoin, accompanied by the price jump and global media buzz.
In terms of the "mechanics of supply and demand" of Bitcoin, and what we can learn from the behavior of the currency so far, this is also significant. Since and until now, Bitcoin has proven that it has strong and even growing demand, when the supply of coins is cut in half, it is more difficult to create those coins. And as with any basic lesson in economics, low supply and high demand mean higher prices.
The upcoming crossing event will take place this very month - April 2024. The estimated date is April 19 when the countdown clock can be seen here.
Many speculate that the process of the price rise will also occur in the upcoming crossing/ShutterStock
What happened in the previous crossing events?
In the first crossing event that occurred on November 28, 2012, the amount of coins produced in each new block dropped from 50 to 25. In the year after the crossing, the price of Bitcoin jumped from $13 to $266 per coin.
The second crossing event occurred on July 9, 2016. In this event, the amount of coins produced in half was crossed again from 25 to 12.5. And again, a year later, the price of Bitcoin jumped from $600 to $2,000 per coin.
The third and final crossing event took place on May 11, 2020. In this event, the amount of coins in each new block was again crossed from 12.5 to 6.25. The price of Bitcoin soared from $7,200 to $68,000 per coin a year later.
Many speculate that the process of the price rise will occur in a similar way in the upcoming crossing as well, and there are many estimates and models based on the crossing event. But it is important to remember that these are only estimates and they cannot predict the future price with certainty.
In conclusion - an inverted economic model
In contrast to a money supply that expands over the years, prices that increase and purchasing power that erodes, Bitcoin is based on reverse mechanics, the rate of inflation decreases in the quest to reach 0% supply is renewed in the distant future, and purchasing power that grows, rewards patience, and manages to maintain value over time.
There are other currencies and projects that aim to achieve dominance similar to that of Bitcoin, but as of today, these are not initiatives that have succeeded in changing reality and this does not appear to be a threat to the leading currency.
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