Bitcoin's block reward halving means deflation for the cryptocurrency
Source: pixabay
Many have failed to fully grasp the concept of inflation; why money loses its value over time. Try keeping a hundred US dollars in a piggy bank for 50 years, only to realize it could probably buy you a fast food meal in the year 2070. That is the reality of the value of the US currency.
Inflationary currencies give a false sense of financial security. No one questions when they get paid $2000 a month for a job without any pay raise or increment for the next 10 years. However questions will be raised when workers get paid 1 BTC but subsequently less BTC in the next 10 years.
Playing on psychology, many do not realize the losing value fiat currencies hold. Gold investors would have noticed that over the years, Gold's value has increased consistently due to its 'assumed' rarity. Bitcoin's value, is deflationary, and over the years increase in rarity as less and less BTC gets issued over time.
Source: pixabay
The article here on CCN explains clearly how BTC's block rewards will reduce, affecting the price market.
As BTC approaches its 21 million supply, the block reward provided to miners that verify transactions on the network drops to decrease the amount of BTC generated by the network.
Source: CCN
The market could experience bullish movement in the next few months as we get nearer to the halving event. As for reports thinking that Bitcoin would fall to $1000, there is always a possibility. However there seems to be more failed attempts than true 'predictions' of the Bitcoin market price.
It was quite a laugh to read cryptocoinspy's article on the "10 Bitcoin (BTC) Obituaries Over The Years" -- that never occurred.
In the past 10 years, news took sides berating the creation of Bitcoin while others became rather supportive of BTC.
In one of the articles, finance professor, Mark T. Williams, believed that Bitcoin would plummet to $10 by mid-2014:
At the time that he wrote this article, one Bitcoin was worth a whole lot more than that, at around $887. Of course, Bitcoin never even fell below $100 again, much less $10.
Source: cryptocoinspy
Source: pixabay
At the highest point for Bitcoin in Dec 2017, many were excited about Bitcoin. They started to BUY Bitcoin at $20000. That is definitely an investment mistake any rookie would make. While Bitcoin skeptics remained pessimistic when BTC plummeted, savvy investors are buying up Bitcoin. Before the next bull market.
If you have bought Bitcoin at the peak, please HODL. Just my personal advice.
A very good article and some very sound advice. The age-old dictum "Buy low, sell high" implies that HODL is the wisest strategy.
And you example of inflation is wise and very clear. Particularly in these times, when the US$ is being used less and less in international exchange. And as the US is printing gadzillions of dollars every year.
The coming inflation of the US$ and the ongoing deflation of bitcoin bodes very well for anyone who holds even a few bitcoin. It's a no-brainer.
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Cool articles you write, thanks for this teachings! ;-)
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Hi @jenina619, really appreciate your encouragement! Not easy to keep a blog active when there is so much going on in our lives. I will keep writing :)
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Nice article, I think anyone who bought between 3-20k just simply needs to HODL :-)
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Nice article regarding the value over time. I observed a trend in the charts. Let me put this straight. BTC touched its low exactly 15 months before every halvening. And after halvening it has increased tremendously for the next 15 - 18 months. Before 18 months of halvening the hashrate reduced by 25% due to enormous pressure. This time during DEC 2018 it was reduced by 25%. This indicates that we have already reached bottom or about to reach bottom in the next one or two months. This is just my thought. And one more thing Gold hasn't raised in value during last 6 to 7 years. Infact it has decreased in value. Appreciate your response on my thoughts.
Thanks
kranthikiran
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Hi @kcherukuri, thank you for enlightening me on the halving situation trends are never my strongest :D Also Gold prices are quite difficult to grasp even when recession hits, it cannot fully explain its movements.
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Bitcoin is fifteen months away from the next halving (May 2020)... we had a difficulty adjustment of -25% (Nov-Dec 2018). Therefore, it is almost time to start the new uptrend.
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Hi @altumanimo, thank you for bringing up valuable evidence. fingers crossed!
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Pleasure mate! Here's another one - check out @ChartsBTC on Twitter, this is where these charts come from. He's an Excel genius :)
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@altumanimo, wow this is by far the clearest chart I have seen for this notion. Thanks!!
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Hi @tysler
I can't wait for the BULL run, but I think nobody can really predict what the crypto market will do, but most predictions is optimistic for Bitcoin!!
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@rynow, yes I will keep everyone on the Steemit community updated :)
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There's no doubt that we have to learn from all the lessons history provides us with. I remember in 2016, some people were really dejected (including me) that the reward is halving and that we won't be able to mine as much as before. But then 2017 came along and all of us were anything but dejected anymore.
I learned something really important that year, never to give in to personal greed. Thus, this time I am going in as hard as I can, with total confidence in the community.
Thanks for the great post @tysler
Cheers.
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Hi @reverseacid, thank you for your support! I am hoping for Bitcoin and Steem to grow bigger than in 2017. Crypto and blockchain has come a long way over the past decade and when the mainstream eventually picks it up, there will be a crazy bull market.
-tysler
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