Bitcoin Halving: Knowing Is ‘Halve’ the Battle

The much-anticipated Bitcoin Halving is fast approaching on May 11. We at Gemini could not be more excited to witness another great milestone in Bitcoin’s lifecycle.

The halving is a reaffirmation of one of Bitcoin’s fundamental truths and greatest value propositions: Bitcoin is predictable, reliable, and trustworthy.

But first, a quick refresher. Bitcoin transactions are validated, aggregated into blocks, and added to the Bitcoin blockchain by miners through proof-of-work, a process that requires specialized equipment and a lot of power to run it. In exchange for their time, effort, and costs, miners who are successful in adding a block to the bitcoin blockchain are rewarded with freshly minted bitcoin. The Bitcoin protocol, written so that no more than 21 million bitcoin could ever be created, determines how many new bitcoins miners receive per block. Every 210,000 blocks, which occurs roughly every four years, the protocol is designed to automatically “half” the block reward. On May 11, the block reward will reduce from 12.5 to 6.25 BTC.

The price of one bitcoin was about $12 at the first halving in 2012, when the block reward decreased from 50 to 25 BTC. At the second halving in 2016, when the reward went from 25 to 12.5 BTC, bitcoin was priced at about $650 and since then it has risen ever higher — it’s currently trading at more than $8,000 today.

But, the short- and medium-term effects of the next halving on the price of bitcoin are widely debated. Some traders expect the price to skyrocket as supply decreases and demand surges. Others expect a price drop as some miners exit the market. Many believe that the very nature of the halving, its predictability, is well known, understood, and already priced-in to bitcoin’s current and future market value.

One issue that is not in question, however, is that Bitcoin’s monetary policy stands in stark contrast, yet again, to traditional monetary policy. Recently, governments across the world have been injecting trillions of dollars into the global economy. While this kind of stimulus can be necessary or helpful, especially in times like these, inflationary forces can potentially reduce the future value of fiat currencies. Bitcoin’s supply remains steady, determined by an unchanging mathematical formula.

In 2009 Bitcoin’s invention and implementation opened our eyes to the thrilling idea that blockchain and cryptocurrency can shift the balance of power from governments and corporations to you, the individual. Over the past 11 years countless new tokens have come to market, addressing issues ranging from privacy on the internet to broadening access to financial products to the decentralization of content storage and delivery.

Our passion for crypto remains undiminished as we explore these ideas and are inspired by their possibility. But, throughout it all, our attention has never shifted away from Bitcoin, the original cryptocurrency. The halving is a great reminder that Bitcoin is functioning as it was intended – predictable, reliable, and still going strong.

Onward and Upward,

Eric Winer, VP of Engineering

Learn more about bitcoin and the halving on our bitcoin price page.