Post Bitcoin Halving – A Review after a month!
Just a month back Bitcoin Halving happened on 9th July 2016 at 16:48 GMT. There were all sorts of news, assumptions, apprehensions and predictions ……..
Bitcoin Halving approaching…….!!
Bitcoin Halving will double the Bitcoin Price….!!
Bitcoin Halving will reduce the Hash Rate……!!
Bitcoin Halving will kill the miners as their revenue is halved…..!!
Bitcoin Network will not sustain after halving…..!!
Bitcoin bubble will blast with this halving….!!
Finally its over. The projections and forecasting still stayed hoping things will show up within a month of post Bitcoin Halving. Now its over a month. This was second Bitcoin Halving. Next Bitcoin Halving will be in 2020. Lets take a review of all important aspects relating to Bitcoin Halving and where do we move from here. Bitcoin has been passing through various transition phases. Lets see which phase it has reached now.
Effect of Bitcoin Halving
To summarize the effect of Bitcoin Halving, the price did actually started rising about 45 days before halving, 24th May to be precise when the price started rising from $440 and it went upto $768 on 16th June. Finally it came down and settled around $650. Post Halving, Bitcoin price has been hovering in the range of $625 to $675. Recently after the news of Bitfinex hacking, it came down to $525 and again went upto the range of $575 to $600. Overall we can say that due to this halving, prices have gone up from an average of around $400 to $650 where it got stabilized. This is the compensation to the miners for the 50% reduced reward. Bitcoin price fall from $ 650 to $ 550 recently was attributed to Bitfinex exchange hacking which has nothing to do with Bitcoin Halving.
Any further changes in price whether northward or southward will not be attributed to having.
Hash rate :
While experts believe that the effect of Bitcoin Halving on price was already factored in since Bitcoin Halving was known to everyone and exact reward post halving was also known. However rather than the price, the difficult or the Hash rate was of more important to the Mining community. An analysis of the difficulty level shows below graph :
As can be seen, the difficulty did rose during the halving i.e. from June to July but after halving it almost stayed constant and then reducing to same level as June. Overall the difficulty has remained constant. Nevertheless, I do expect difficulty to come down a bit in near future as at the moment, all miners are engaged in upgrading their infrastructure or the hardware. Post halving, we are making just 1800 bitcoins each day across the world. As such the competition to get a bitcoin has become more since the number of bitcoins to be distributed among miners has halved. This might result in few miners fading away as they will not be able to mint enough bitcoins to cover their expenses or they will have to upgrade their hardware with better efficiency and powerful servers in order to compete for bitcoins in more efficient way. This better hardware is expected to reduce the over all difficulty to mine Bitcoins.
What lies ahead……
So the charisma of Bitcoin Halving is over. What do we expect in near future now. I am still bullish on Bitcoins in terms of its existence, its power of storing value by virtue of its unique properties, its ability to replace fiat currency and be the only global currency. Now let us see the path it is following post halving.
Phases of Bitcoin since its evolution :
- Conceptual Phase
- Promotion and Mining Phase
- Commercialisation Phase
Conceptual Phase :
This was the initial phase when Satoshi Nakamoto introduced the concept in 2009. Till 2010 he himself was discussing and explaining the world, the use of digital currency and the unique properties of Bitcoins. He stopped communicating since April 2011 after which few Bitcoin enthusiast formed a community and promoted this concept. Till 2012 when we had first halving, the concept was well promoted and there was some awareness among crypto currency lovers.
Promotion and Mining Phase :
This was very important phase since 2012 till 2015 when major investments were made to mine bitcoins and the value of bitcoin really touched the roof. It touched its all time high value of over $1000 in 2013 which made everyone got interested into this currency and miners really became serious. They promoted this digital currency and the blockchain technology came into limelight. Large Venture Captical projects came up relating to Bitcoin and Blockchain technology and that’s how it entered its third phase – Commercialisation Phase.
Commercialisation Phase :
On its lifecycle curve, Bitcoin is now in commercialisation phase. In this phase, more than mining bitcoins, transactions of the bitcoins will be important As of today, around 15.8 million bitcoins have already been mined out of total kitty of 21 millions. Transactions of these 15.8 million bitcoins in the market is what is going to giving actual value to Bitcoin. In first and second phase the transactions were mainly for investments. However now awareness of Bitcoins has increased and has reached to almost 180 countries. Now the options of buying merchandise with bitcoins have gone up and this is increasing on daily basis.
Below are the various ways in which Bitcoin is becoming commercialised :
- Growing number of exchanges : Buying and Selling of Bitcoins has become much easier than before with so many exchanges coming up in each country. In some cases, the government of respective country has also given recognition to the exchange. For example, Bitstamp has got recognition to sell Bitcoins all over Europe.
- Growing number of ATMs / Vending machines in various countries : There are about 800 ATMs across the world. A country wise list of number of ATMs can be seen here : https://coinatmradar.com/countries/. As more and more ATMs are opening up, Bitcoin accessibility, its buying / selling becomes more easier for common people. It also enhance their confidence and motivates them to indulge into this new technology.
- POS apps for the merchants to accept bitcoins as mode of payment : Large number of companies are coming up with Point of Sale (POS) apps which accepts bitcoins for the merchandise being traded. The basic idea is to make bitcoin transaction easy for common people. Just like we use credit cards, we need to have facilities through which we are able to use bitcoins to purchase any merchandise. This has been made possible through use of several POS apps such as Coinify, Coinkite, Coinbase, Bitpay, Blockchain Merchant, Revel, BitXATM, Paystand, Coin of sale XBTerminal, Unocoin POS etc.
- Large number of Gift vouchers / coupons in exchange of bitcoins : Most of the stores, specially online stores, have their Gift Vouchers or Gift Cards which they give away for their promotion. These Gift Cards are being sold through various websites such as eGifter.com, giftbitexhchange.com, instagift.com,etc. They sold various kinds of gift cards such as Amazon Gift Card, Ebay gift card, Bed Bath and Beyond gift card etc. These sites accept Bitcoin to sell these gift cards. Once you have purchased these gift cards through bitcoins, then you can buy anything from these stores. Hence this system of gift cards and the acceptance of bitcoins by such sites to sell gift cards have made it very easy to buy anything in the world with bitcoins.
- Apps like APRA to transfer money in local currencies through use of Bitcoin Technology : This is another revolutionary app which enables you to transfer money to any person in the world who also uses APRA app. You send in your local currency and the other person receives in his local currency. The technology uses transfer of currency value through bitcoins. Read more about APRA app here.
- Alternate means of Storing Value in the time of depreciating fiat currency : This is a very important reason for which Bitcoins are currently being used. We have seen financial crisis in various countries such as Greece, Zimbawe etc. Even in some countries like China, local currency has been devalued to a great extent. In such times when value of your local currency is depreciating, it is a wise thing to convert your currency into Bitcoins and store them. As and when needed or when you local currency has become stable, you may reconvert your bitcoins into your local currency. This phenomenon has been seen in US when during recession, people lost faith in banks and started withdrawing money from saving account and stored them as Bitcoins. Likewise recently when Chinese currency got devalued, people converted their money into Bitcoins. Japanese are doing the same. This phenomenon has given a new meaning to Bitcoin as a saviour of your value of money. Bitcoin, by virtue of its properties is expected to gain value as more and more transactions takes place and its generation diminishes over a period of time. Limited supply of bitcoin has made it valuable provided people use it and there are more and more bitcoin transactions.