The halving mechanism is a relatively common operating mechanism of cryptos, not only in Bitcoin, but also in the well-known Ethereum;
The fundamental reason for the existence of this mechanism is that cryptos, such as Bitcoin, are created by "mining equipment" used as a virtual tool to dig into the digital cave of Bitcoin and then obtain Bitcoin. In this process, Bitcoin "miners" obtain a certain amount of Bitcoin as rewards by adding "blocks" as costs, thereby obtaining economic compensation;
However, in the process of Bitcoin production, every 210,000 blocks are mined (approximately every four years), the rewards received by "miners" will be halved. The halving starts from 50BTC, which will be folded in half sequentially;
Therefore, from the point of view of the Bitcoin single market, under the premise that the demand for Bitcoin remains unchanged, the "supply" of Bitcoin on the market will be greatly reduced, and this may result in a new breakthrough in the price of Bitcoin. At that time, other cryptos that use Bitcoin as the benchmark, or whose reserves use Bitcoin as the main weight ratio, will also rise.
The first Bitcoin Halving took place on November 28, 2012. After the first set of 210,000 blocks have been mined, the halving begins. The reward per block has been reduced from 50BTC to 25BTC.
Before the halving, Bitcoin was selling at $12 per Bitcoin, and in less than three months, the price of Bitcoin doubled.
Two months later, it was on the market for more than $225.
The second halving happened when 420,000 blocks were mined. On July 9, 2016, Bitcoin miners were rewarded with 12.5 BTC for each block.
On July 10, 2016, Bitcoin was sold for around $665, and within a year, its price soared to $2973.
The 2020 Bitcoin halving took place on May 11. After the third set of 210,000 blocks has been mined, the miner's reward is halved again to 6.25 BTC per block. Within a year, the selling price of Bitcoin soared to $65,145.
For MEXCers, this is a once-in-four-year investment opportunity. Starting from the fourth halving mechanism, the market supply speed of Bitcoin has further slowed down. Under the condition that the demand for Bitcoin remains unchanged, the supply quantity is reduced, which has a huge impact on the price of Bitcoin, but the change in price will not necessarily result in a quick reaction as the halving begins. According to past data, the price increase brought about by the halving mechanism is long-term and not necessarily unilateral. Therefore, every MEXCer who has the expectation of investing in Bitcoin should be more cautious, or reasonably diversify risks through different investment methods in MEXC, so as to achieve the purpose of accumulating wealth.
For cryptos practitioners who use "mining" as their career, the halving of Bitcoin rewards will be a "mixed joy and sorrow" mechanism. In terms of the amount of "mining", halving means a huge reduction, but from the price curve of Bitcoin, this mechanism seems to indicate great benefits. If the "miners" can hold Bitcoin all the time, the loss of economic value brought about by the reduction in quantity can be fully compensated by the soaring price. This is why the halving mechanism actually has limited negative impact on mining. Many "miners" also have multiple identities. They can be "miners", bitcoin holders, and traders. They can hedge risks and accumulate wealth in various ways.