Not by Bitcoin Alone: Cryptocurrency Halvings in 2020
One thing that all of the competing cryptocurrencies have in common is the technological aspect. Besides a few projects that developed their own unique form of performing transactions, all projects use blockchain technology. The chain of blocks grows every single day with new transactions and data stored within the blockchain. People who validate the data and transactions are rewarded for providing computing power, energy, and time in order for the blockchain to remain decentralized and secure. This reward is in the form of a specific currency. Every couple of hundred thousand blocks, the reward for miners will be cut in half as there’s a limit to the number of coins ever to be made. This is called crypto halving. By now, most of us know that the Bitcoin halving is just around the corner, causing many people to speculate on the movement of the BTC price. But similar to Bitcoin there are dozens of other blockchains that will have their halvings happen soon. This could lead to a movement in price, thus a good moment for traders to utilize. We’ll provide you with a list of the most prominent altcoins that will have a halving happen in the upcoming year.
Bitcoin SV Halving and Bitcoin Cash Halving
On April 10 both of the Bitcoin hard forks, that came alive in 2018, had their respective halvings. These two coins have been in a constant battle ever since the argument between Craig Wright and Roger Ver. Bitcoin Cash was around for a while longer created by these two gentlemen, but the moment they couldn’t agree on the future developments of their joint project, they decided to go separate routes. The projects both saw their block rewards cut in half. Now, what first was one of the most lucrative blockchains to mine, suddenly became a lot less popular. Both Bitcoin SV and Bitcoin Cash saw their block reward reduce from 12.5 to 6.25. But, together with the reduction of the block reward, the hashrate suddenly plunged as well. After BSV halving, the hashrate is at 0.98 EH/s, which shows a 50% decline since the moment of the event. This counts the same for BCH halving, as most miners are now suddenly moving their operations to the original Bitcoin blockchain. In terms of price movement, the Bitcoin SV price spiked with 11% to then dive into red numbers by more than 15%. Whether the case will be different for the Bitcoin halving, only time will tell.
Bitcoin Gold Halving
The halving for another Bitcoin fork is set to happen around April 18. Following the same pattern as the original Bitcoin protocol, BTG halving will cut the rewards to 6.25 from 12.5 BTG per block. With 18 million BTG already created, the other remaining 3 million will now take much longer to create. Inflation reduces from 3.6% a year to 1.8% a year. Usually, with less inflation, the price should go up. We’ve seen it happen previously with the original Bitcoin, where the price went up in anticipation of the halving, but lately the Bitcoin Gold price has been at a steady level. The BTG coin is now trading at roughly $10, starting in February that price was still $15. Whatever happens after the Bitcoin Gold halving, we’ll have to find out.
One of the oldest and most established projects here besides Bitcoin is Litecoin. Every 840,000 blocks, roughly every four years, there is a reduction in block rewards for the miners of the coin. It used to be 25 LTC per block but it got reduced to 12.5 LTC on August 5, 2019, with the second LTC halving ever recorded. After the halving, the trust and foundation of the Litecoin project were stronger than expected. The founder of Litecoin, Charlie Lee shared: “Seems like miners have not shut off their hashrate at all. Instead, we are mining at a rate of a block every 1.4 minutes on average, which is much faster than the expected 2.5 minutes.” In terms of price, the LTC price surged just over 10% prior to the halving. Afterwards, the price came back to the pre-halving price. Thus, in terms of price nothing major happened.
Ethereum Classic Halving
Ethereum Classic is one of the projects that displayed the harms of a reward reduction. With the hashrate reducing because of miners dropping out, the costs of performing a 51% attack suddenly went down. It has not been the first time a 51% attack happened for Ethereum Classic, so let’s keep our fingers crossed it will not happen again after the next ETC halving.
What can we learn from halvings?
No matter what the project is, a reduction in mining rewards can spark a chain of events. To name a few:
- Reduction in hashrate
- Reduction in inflation
- Increase in risk of a 51% attack
- Less security on the network
- Slower transaction speed as blocks take longer to confirm
The increase or decrease in price totally differs per project. For the original Bitcoin, a halving has shown an increase in price every single time, but for other projects that’s not so certain. When you decide to trade relying on the crypto halving, make sure you keep an eye on the other metrics than just simple price movement.