Bitcoin Halving and the Significance for BTC Scarcity

Yesterday marked the fourth-ever Bitcoin halving at the 840,000th block. The halving is a significant event for Bitcoin as it impacts the supply of the cryptocurrency and creates scarcity. During this halving, the block issuance rewards were reduced from 6.25 BTC to 3.125 BTC per mined block, effectively cutting Bitcoin’s issuance rate in half. This reduction in supply is crucial in establishing Bitcoin’s scarcity and increasing its market value.

Karim Chaib, the CEO of crypto platform Dopamine App, emphasized the importance of scarcity in determining an asset’s value. He explained that by gradually reducing the rate at which Bitcoin supply increases, the halving events highlight the cryptocurrency’s scarcity. The halving is a built-in feature in Bitcoin’s code, occurring every 210,000 blocks or roughly every four years. The first halving took place in 2012, reducing the issuance rate from 50 BTC to 25 BTC per block. Subsequent halvings occurred in 2016 and 2020, further decreasing the rate to the current 3.125 BTC.

This programmed scarcity sets Bitcoin apart from traditional assets like gold. Unlike gold, which can become less scarce as new extraction methods are developed, Bitcoin has a capped supply of 21 million coins. This feature makes Bitcoin fundamentally inflation-proof, according to Chaib.

Many believe that Bitcoin has the potential to replace gold as the primary store of wealth due to its economic design and halving mechanism. Jonas Simanavicius, co-founder and CTO at Syntropy, stated that gold has been the go-to store of value for centuries because its supply is difficult to increase and it is globally recognized. Bitcoin’s predictable and slow-growing supply, combined with its technological advantages, make it a reliable alternative.

In terms of performance, Bitcoin has outperformed gold in recent years. Over the past year, Bitcoin’s price has risen by 122%, while gold has only increased by 19%. Similarly, in 2024, Bitcoin is up 51% year-to-date, while gold has seen a 15% increase, according to TradingView.

Historically, precious metals and real estate have been considered the best store of value assets. With the digital age seeking more liquid and easily transferable assets, Bitcoin is well-positioned to benefit. Simanavicius explained that Bitcoin not only offers security but also provides immediate transactability, decentralized control, and ease of carry, which outweigh the benefits of other asset classes.

The fourth Bitcoin halving further solidifies the cryptocurrency’s scarcity and its potential to become a reliable alternative to traditional store of value assets like gold. With its predictable supply and technological advantages, Bitcoin has the potential to thrive in the digital age where liquidity and ease of movement are highly valued.

Hanan Escamilla

Hanan Escamilla

12 thoughts on “Bitcoin Halving and the Significance for BTC Scarcity

  1. The fourth Bitcoin halving has further solidified its scarcity. Prepare for exciting times ahead! 🚀🎉

  2. The ease of transactability and decentralized control make Bitcoin an attractive asset in today’s digital world.

  3. The gradual reduction in Bitcoin’s supply rate during halving events is truly remarkable. It sets it apart from other assets.

  4. Bitcoin’s price performance compared to gold is astounding. It’s definitely becoming the preferred store of value.

  5. Bitcoin’s outperformance of gold shows its strength as a store of value. It’s definitely a force to be reckoned with. 📈💪

  6. The fourth Bitcoin halving is a defining moment for this cryptocurrency. It’s solidifying its place in the financial world.

  7. Bitcoin’s outperformance of gold in recent years speaks volumes. It’s becoming the go-to store of value for many investors.

  8. It’s incredible to see Bitcoin’s performance compared to gold. Bitcoin is definitely gaining momentum as a store of value.

  9. Yet another attempt to make Bitcoin seem more valuable than it actually is. Sorry, but I’m not buying into this halving hype.

  10. I find it fascinating how Bitcoin’s halving creates scarcity and increases its market value. It’s a unique feature that sets it apart.

  11. I invested in Bitcoin a while back and it’s been nothing but disappointment. Now they’re halving the rewards? What a joke!

  12. The digital age is definitely driving the demand for more liquid and easily transferable assets. Bitcoin fits the bill perfectly. 💻💸

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