Bitcoin

Impact

<h2 id="key-points">Key Points</h2>
<ul>
 <li>The fourth Bitcoin halving, a key economic event, occurred at the 840,000th block, effectively halving Bitcoin’s issuance rate.</li>
 <li>Bitcoin’s programmed scarcity differentiates it from traditional assets and makes it a potential alternative to gold.</li>
</ul>
The fourth halving of <a href="https://crypto.ro/en/cryptocurrencies/bitcoin/" rel="noopener noreferrer nofollow">Bitcoin</a> took place recently at block 840,000.
This halving is a significant event in Bitcoin’s economic landscape, as it impacts the supply of Bitcoin and enhances its scarcity.
<h2 id="bitcoin-halving-and-scarcity">Bitcoin Halving and Scarcity</h2>
The recent halving event saw Bitcoin’s block issuance rewards decrease from 6.25 BTC to 3.125 BTC per mined block.
This effectively halved the issuance rate of Bitcoin.
According to Karim Chaib, CEO of Dopamine App, the halving mechanism plays a crucial role in establishing Bitcoin’s scarcity and market value.
He stated that scarcity is a fundamental economic principle that affects an asset’s value.
By programmatically slowing the supply increase of Bitcoin over time, halving events highlight Bitcoin’s scarcity.
Bitcoin’s halving is hard-coded into its code base and occurs approximately every four years or every 210,000 blocks mined.
The first halving happened in 2012, reducing Bitcoin’s issuance rate from 50 BTC to 25 BTC per mined block.
Subsequent halvings in 2016 and 2020 further reduced Bitcoin’s issuance rate to its current 3.125 BTC.
<h2 id="bitcoin-versus-traditional-assets">Bitcoin Versus Traditional Assets</h2>
This programmed scarcity sets Bitcoin apart from traditional store-of-value assets.
Chaib highlighted that, unlike assets like gold, which can become less scarce as new extraction and production methods are developed, Bitcoin has a capped supply of 21 million coins, making it fundamentally inflation-proof.
Jonas Simanavicius, co-founder and CTO at Syntropy, believes that Bitcoin’s economic design and halving mechanism make it a deflationary asset, presenting it as the first credible alternative to gold.
He stated that Bitcoin’s predictably slow-growing supply is a feature that no other asset has matched until now.
Over the past year, Bitcoin’s price has risen 122%, while gold’s price has seen a 19% increase.
So far in 2024, Bitcoin has seen a 51% increase in value, while gold has seen a 15% increase, according to TradingView.
Simanavicius believes that as the digital age demands more liquid assets for faster transactions, Bitcoin will reap the benefits.
He stated that Bitcoin’s extensive computation and decentralization backing power have grown so strong that more people and institutions recognize this security.
This, along with benefits such as immediate transactability, geopolitical decentralization, and ease of carry, outweighs the benefits of other asset classes.

Unraveling the Impact of Bitcoin Halving on BTC Scarcity

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