- Data shows that bitcoin’s fiat value, including the market movement, significantly increased months after the halving occurred.
- But for Ramon Tayag, the bitcoin halving is just a correlation to the market movement, and not a causation.
- While for Atty. Rafael Padilla, while it is expected to decrease the number of bitcoin rewards for the miners, Bitcoin Ordinals can be an opportunity to earn.
For the crypto trading community, Bitcoin Halving is one of the catalysts for a bull market. In fact, data shows that bitcoin’s fiat value significantly increased months after the halving occurred.
In this article, read how bitcoiners Ramon Tayag and Atty. Rafael Padilla discussed the impact of bitcoin halving in this industry. The two #CryptoPH champions discussed it during the 18th edition of BitPinas Webcast, a weekly #CryptoPH show.
What is Bitcoin Halving?
Bitcoin halving is a long-awaited event in crypto that occurs every four years. It is because the reward for mining new blocks on the Bitcoin network is reduced by 50%, which means the supply of new bitcoins is decreased.
“Behind sa transaction fees, mayroon pang block reward or block subsidy. Iyon iyong nire-reward ng network sa mga miner. Kaya siya tinatawag na halving, nahahati yung reward na yun. So kung nag-mine ka nung 2008, 50 bitcoin yung reward ng isang block, then in 2012, nag-halve iyon, tas naging 25, tas noong 2016, naging 12.5, then nung 2020, naging 6.25, something like that,” Tayag explained.
To be clear, the halving is not based on a timeframe, it is based on the number of blocks mined, which happens every 21,000 blocks. Given this number of blocks and the fact that it takes 10 minutes to mine a block, experts have already computed that the event will happen about every four years.
The last halving happened in May 2020, when the block reward dropped to 6.25 bitcoins from 12.5 per block. The next halving is expected to happen in 2024, with the block reward expected to decrease to 3.125 bitcoins per block.
Impact on the Price of BTC
And since others see it as the main catalyst for a bull market, Tayag also shared his thoughts on how the halving event will impact not just the price of bitcoin, but also the market’s movement:
“And the reason why people look forward to the halving and ask about the price is, if you remember the dates: 2012, there was a bull year around 2013; next halving was in 2016, there was a bull run in 2017; there was a halving in 2020, was there a bull run in 2021? Yes. I wouldn’t say it’s a causation, but there is a correlation.”
For the bitcoin OG, while halving is not the only driver to a bull market, there is a relationship within the timeframe. Thus, he will not be surprised if another bull run will be experienced after the expected halving in 2024.
“Ako, I suspect that it’s gonna happen again—and that’s the question, that we won’t really know the true answer to. I suspect there’s just a suspicion na mangyayari iyon for at least a few more times,” Tayag emphasized.
Of course, the OG will not publicize his prediction without giving a justification, so to expand his answer, Tayag stressed:
“It’s probably a combination of all of this. Pero kung bakit it is essentially (sa market movement is because) miners have less to sell. So, as long as iyong demand for it doesn’t drop by half, people buying Bitcoin doesn’t drop by half, then the price is gonna go up. And of course when the price goes up a little, then you have the traders come in, they want to ride the wave and goes all the way, and then na overheat iyong market, and then what happens? Nagka-crash, (nagkakaroon ng) correction.”
Bitcoin Miners and the Ordinals
Lastly, as more predictions guess that the Bitcoin ecosystem will not be sustainable because the final halving is expected to end in 2140, which means the total number of bitcoins in circulation will reach the maximum limit of 21 million, Padilla emphasized that more innovations in the network will open more opportunities than closed.
“Actually hindi naman kailangang umabot ng 2140 eh, kasi maybe 20 years from now, kaunting-kaunti na lang iyong bitcoin rewards, then paano pa mai-incentivize iyong mga miner? So maraming mga ganoong mga hypothetical theoretical questions,” the lawyer expanded.
Padilla also cited a statement from the Bank of International Settlement, which stated that Bitcoin’s economic design is not sustainable because bitcoin mining rewards will be gone soon. This is where the lawyer insisted that Ordinals can be a good thing for miners:
“Pero ang maganda rito sa developments early this year, iyong bitcoin ordinals (at) iyong inscriptions. Although controversial yan sa bitcoin community, pero ang magandang ipinakita ng example na to is, it is sustainable for bitcoin miners to earn from transaction fees as long as there is a demand to be included in the block.”
On January 21, 2023, a software engineer named Casey Rodarmor introduced a protocol that utilizes “inscriptions,” or arbitrary content (such as text or images) to create sequentially numbered satoshis or “sats”, the smallest units in Bitcoin, to generate distinctive digital artifacts that can be held and transferred across the Bitcoin network.
Basically, it allows the Bitcoin version of NFTs , dubbed as “digital artifacts”, on the Bitcoin network. These artifacts are known as Ordinals.
“Kasi napansin natin na tumataas nga iyong network fee sa Bitcoin dahil sa demand for inscription and ordinals, but that at least gives us an early vantage point on how it may look in the future, pag nawala na iyong mining rewards. Pero as long as there is a demand for your transaction to be included in the network, there will be business, and there will be economic incentives for Bitcoin miners,” Padilla concluded.
This article is published on BitPinas: Bitcoin Halving Explained: How It Influences BTC’s Price
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