Investors can purchase Bitcoin using currencies such as the US dollar, the European Union’s euro, or the Japanese yen, to mention a few, with minimum transaction charges across different wallets. Bitcoin isn’t a business, but if it were, it would be worth more than stock exchange giants. As the supply of unrewarded coins fades, demand increases. The maximum number of Bitcoins that can ever be issued is restricted to 21 million, a limit introduced by Satoshi Nakamoto since the creation of the cryptocurrency because it has to be scarce. One Bitcoin can be divided into eight decimal places, with constituent units referred to as satoshis. Satoshis are becoming more relevant than ever because Bitcoin has increased in value exponentially.
The size of the cryptocurrency market may not be a good enough reason to join the ranks of Bitcoin holders, but it’s worth paying attention and carefully considering your options. With a detailed guide, you can learn how to buy Bitcoin whether you’re at home or on the go. The experts strongly believe Bitcoin will continue to rise during 2024, especially because the next halving event will take place in April. Plan B, one of the most respected analysts in the cryptocurrency space, highlighted that those who trade around Bitcoin halving cycles have a better chance of earning better returns as opposed to those who just buy and hold. The reason for this is that halving could boost Bitcoin prices, but it’s not a guarantee.
The Next Bitcoin Halving Countdown Is Expected to Occur in April
Every four years or so, Bitcoin reduces the compensation that’s given to miners who successfully manage to process a block of transactions, a policy that’s written into the cryptocurrency’s mining algorithm to keep inflation in check by maintaining scarcity. Most likely, the next Bitcoin halving will take place in April 2024, and it could have a significant impact on the cryptocurrency’s price. Even though Bitcoin is digital money, it can’t be created forever. The rate at which new coins are created decreases by half for every 210,000 blocks mined; this system will continue approximately until 2140 when the maximum supply will have been reached.
Bitcoin’s mysterious creator, Satoshi Nakamoto, who authored the original whitepaper, reckoned that rarity and unavailability would create value. The idea of limiting Bitcoin’s supply contests the way fiat currencies work. To be more precise, fiat money has an unlimited supply, which causes it to overinflate and become worthless. Printing money by increasing the supply engenders inflationary pressure as the supply grows faster than the economic output. Devaluation isn’t the same thing as depreciation. Devaluation occurs when the government voluntarily reduces a currency’s value, while depreciation is the result of supply and demand in the foreign exchange market.
Bitcoin is designed to be decentralized and trustless, so it’s not controlled by a single entity or group. Additionally, there must be strict rules regarding the number of tokens created and how they’re released. In April 2024, the number of blocks will hit 740,000, not to mention the reward will decrease to 3.125 Bitcoins; when Bitcoin was first mined in 2009, mining one block to a certain address would secure 50 Bitcoins, and even if miners are still rewarded, it’s barely profitable. Nevertheless, many variables can affect profitability, such as the mining equipment, which can cost thousands of dollars.
A Bitcoin Halving Directly Impacts Supply and Demand Dynamics
If the economic theory holds, Bitcoin prices should increase substantially in reaction to the supply shock, an issue that continues to cause much debate among experts. In the cryptocurrency ecosystem, it’s not uncommon to witness certain tokens experiencing important price increases, which tend to occur in coins that have a low supply. The scarcity factor creates a perception of exclusivity, therefore leading to increased demand and a consecutive rise in value. Simply put, the cryptocurrency becomes more attractive to investors and traders. Attention must be paid to the fact that the effect isn’t immediate, meaning there might be a delay.
Bitcoin prices can be highly volatile up and after the halving event, but, as a rule, Bitcoin’s value sees a slight increase a couple of months after. According to Plan B, being in the cryptocurrency market during this time allows you to make a substantial amount of money with ease, meaning the Bitcoin halving is a strategic window for investors and traders to capitalize on significant returns from the cryptocurrency. Needless to say, you must be cautious because the reduced mining activity can come at the expense of Bitcoin’s price, so it might not fulfill its potential as a store of value.
Bitcoin Can Serve as An Effective Hedging Instrument Against Uncertainty
Concerns about global economic and financial fragmentation have intensified recently due to geopolitical tensions, introducing uncertainty and stability. The strength of the economy before the outbreak of the conflict can influence the market’s reaction. Bitcoin has demonstrated its resilience and outperformed traditional assets during epochs of discord because cryptocurrency market sentiment is influenced by various other factors. To be more precise, it holds its purchasing power over time, meaning that Bitcoin either remains stable or its value increases. Bitcoin has outperformed traditional safe havens like gold and bonds, so if you’re worried about escalating tensions, retain confidence in its long-term potential.
There are no guarantees whatsoever when it comes to investing, particularly with cryptocurrency, but people are growing more confident in Bitcoin, and a decline in volatility would cause them to be less fearful of losing money. You don’t need much to invest in Bitcoin, just personal identification documents, bank account information, and a good internet connection. Figure out where you want to make a purchase (e.g., a cryptocurrency exchange), get a digital wallet, connect your wallet to a bank account, and, finally, yet importantly, place your order. As mentioned earlier, you can buy fractions of a Bitcoin, so it doesn’t take thousands of dollars to invest.
The next Bitcoin halving, which is due in 2024, is the fourth of its kind, and the number of tokens that enter circulation, i.e., block rewards, will be reduced by half. More halvings will follow until miners’ rewards reach zero.
Featured image provided by EivindPedersen; Pixabay; Thanks!