For crypto enthusiasts, the Bitcoin “halving” is a big deal. There are countdown clocks and endless predictions and analyses, all leading up to a critically pivotal event for Bitcoin. While the “halving” has an ominous tone, it’s actually a rare event in the cryptocurrency world. So, what is the halving? And why is it so important?
The halving cuts production of Bitcoin in half
Part of Bitcoin’s brilliance is the system in which Bitcoins are released into the market. A block is produced approximately every 10 minutes, awarding a specific number of bitcoins. At its origin, one block produced 50 Bitcoins.
This system changes after every 210,000 blocks is released. Approximately, this comes out to every four years. After each set of 210,000 blocks, the number of bitcoins awarded in one block is cut in half—or, the halving.
Halving production slows the rate of inflation
This halving slows the rate of inflation of Bitcoin. And in 2020, Bitcoin’s inflation rate will fall to 1.8%—below that of the U.S. dollar.
The halving event, occurring on a regular, predictable schedule, removes a lot of uncertainty that plagues the traditional market. At the same time, it creates more scarcity over time. As demand continues to increase, supply continues to decrease. While these values will remain constant and predictable, it’s worth noting that the supply of the U.S. dollar has nearly tripled in the last 20 years.
Bitcoin was built by its mysterious creator, Satoshi Nakamoto, in part as a rebuke to the role governments and financial institutions play in controlling the value of their currency. It is believed that Satoshi Nakamoto is a staunch libertarian, and that Bitcoin was perhaps created as a response to the 2008 financial crisis.
In a state-issued currency, supply can vary with the economy. For example, the U.S. Federal Reserve can add or remove dollars from circulation on an as-needed basis to respond to economic indicators. This can cause frequent inflation and deflation of the value of the dollar.
However, Bitcoin not only has this schedule set, but there will only ever be 21 million Bitcoins in existence. Once the last one enters the market, there will be no more. Because there is a limited supply, a Bitcoin is more like a gold bar than a dollar bill.
Gold, for example, has defended itself as an international store of value and medium of exchange for over 6,000 years. However, unlike gold, Bitcoin can be exchanged effortlessly and doesn’t impose much of a physical burden to transport or store.
Anyone can do the math: Slow inflation rate + predictable schedule + limited supply = a winning combination.
The history of Bitcoin’s halvings
Based on the halving schedule set forth at the beginning of Bitcoin, these events have occurred approximately every four years:
- 2009: Blocks 1-210,000 received 50 BTC
- November 8, 2012: Blocks 210,001-420,000 received 25 BTC
- July 9, 2016: Block 420,001-630,000 received 6.25 BTC
- May 12, 2020: Blocks 630,001-740,000 will receive 6.25 BTC
- 2024: Blocks 740,001-950,000 will receive 3.125 BTC
- ~2140: All 21 million bitcoins will enter into the market
Historically, the halving triggers a bull run
Historically, the halving event has triggered a bull run—it reduces supply. And as you can see in the previous halvings, they have each preceded a meteoric rise in price. However, it’s important to note that this increase is merely a correlation, and we are not 100% certain that these increases are a direct result of the halvings.
Additionally, these major increases did not occur overnight. The dramatic price increases occurred over the course of several months following the halving. While this historical data is important as you determine your own investment decisions, keep in mind that each halving event will be different.
Bitcoin continues to grow in popularity, and in the last few years, it has become a household name. As these events gain more widespread media coverage, the perception of Bitcoin’s value and its recognition will continue to change rapidly.
This type of awareness and media coverage alters analysts’ predictions. Because a large spike will be anticipated following a halving, this could lead to major increases in purchases just before the halving occurs—this could spell different results than the previous events have yielded.
The future of halvings
In 2009, Bitcoin essentially existed within the confines of an esoteric community of programmers and innovators. In 2012, Bitcoin started to gather enough users to make transacting a somewhat viable option. In 2016, Bitcoin was still steadily growing, but far from its popularity today.
Today, Bitcoin has already experienced enough bull and bear markets, massive trading spikes, international regulatory attention, and media coverage to make the 2020 halving a major point of focus.
As Bitcoin marches, slow and steady, toward its destination of releasing all 21 million bitcoins into the market around the year 2040, each halving will have significant consequences for the value of Bitcoin. And with each event, we will gain a deeper understanding of the true penetration of Bitcoin as a digital currency and its value in the market.
The post What is the Halvening? (Hint: It’s a BIG deal) appeared first on Bitcoin IRA | Official Bitcoin Retirement Account Investment.
Prepare For Liftoff: Bitcoin Loses Bear Market Trendline Against Altcoins
Aside from a few rare outliers, over the last several years, owning Bitcoin has been the better investment compared to other cryptocurrencies. Altcoins like Ethereum and others have only recently caught up, and BTC dominance has maintained the lion’s share of the crypto market cap.
However, dominance has lost an important trendline dating back four full years to the peak of the last bull market, and it could suggest a major turnaround is about to occur across the crypto market. Could this be the » Read more
” href=”https://www.newsbtc.com/dictionary/altcoin/” data-wpel-link=”internal”>altcoin season crypto investors have been waiting for?
Bitcoin Dominance Loses Crucial » Read more
” href=”https://www.newsbtc.com/dictionary/bear/” data-wpel-link=”internal”>Bear Market Trendline
” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin by comparison as investors searched for the next BTC.
Related Reading | Five Signs That Say Altcoin Season Hasn’t Even Started Yet
Those investors ended up learning the hard way that there is no replacement for Bitcoin. Altcoins plunged by as much as 99% in most instances, while Bitcoin wiped out only 84% of its gains by comparison. Both scenarios are now far in the rear view, and since then Bitcoin has a commanding lead.
BTC dominance has lost an important monthly trendline dating back to the top of the last bull market | CRYPTOCAP-BTC.D on TradingView.com
At the height of that fever, dominance reached as low as 35%, but has since remained around or above 63%. That key level was lost at the same time a pivotal trendline was, and now there could be no over-performance in Bitcoin for the next year or more.
The trendline in question dates back four years to the bull market peak, and has kept dominance supported ever since.
Altcoins Are Ready To Explode If Dominance Dives Further
” href=”https://www.newsbtc.com/dictionary/altcoin/” data-wpel-link=”internal”>altcoin season, which thus far the leading cryptocurrency by market cap has kept locked away for many years now.
A zoomed in view shows how many times BTC dominance tried to reclaim the line | CRYPTOCAP-BTC.D on TradingView.com
Losing the previous long term trendline resulted in some short term consolidation followed by a large move lower. A bearish retest of 70% BTC dominance failed, sending the important crypto market metric falling back lower to the second ascending trendline.
Related Reading | Altcoin Season Is Here: “Buy Crypto” Surpases Bitcoin Searches On Google
With the 63% level now lost also, BTC dominance should gravitate toward the mid-50% range, allowing altcoins to soar compared to Bitcoin for an extended period of time.
Altcoins could also theoretically hold up better in a wider correction, but that scenario is unlikely as the riskier assets typically are more volatile and react more sensitively to greater crypto market selloffs.
Featured image from Deposit Photos, Charts from TradingView.com
John McAfee faces more charges connected to money laundering and wire fraud
According to the United States Department of Justice, Manhattan Federal Court today charged John McAfee and his team’s executive adviser Jimmy Gale Watson Jr for fraud and money laundering conspiracy crimes.
McAfee has been charged with securities fraud, touting, and wire fraud among other offenses stemming from the fraudulent promotion of crypto that federal law recognized as securities.
On 6 October last year, United States watchdog, Securities Exchange Commissions (SEC) charged the founder of the McAfee antivirus software firm for allegedly making over $23 million in the process of shilling seven initial coin offerings. Jimmy Gale Watson Jr. was also charged for violating Securities’ law in real-time on Twitter for shilling the ICOs along with McAfee.
The ICOs reportedly raised $41 million in the process with half of those proceeds pocketed by McAfee.
Manhattan US Attorney Audrey Strauss alleged that the duo exploited social media and “enthusiasm” among investors in the “emerging crypto market” to make millions through “lies and deception.” She further claimed:
…[McAfee and Watson] allegedly used McAfee’s Twitter account to publish messages to hundreds of thousands of his Twitter followers touting various cryptocurrencies through false and misleading statements to conceal their true, self-interested motives.
The investors of these ICOs allegedly concealed the fact that they were compensating McAfee and his team for their promotional tweets through funds raised from public ICO investors.
While McAfee is currently detained in Spain on separate criminal charges filed by the DoJ’s Tax Division. Watson was arrested on 4 March in Texas and will be presented before a federal magistrate judge in the Northern District of Texas, today.
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PAID Network exploiter nets $3 million in infinite mint attack
Paid Network, a DeFi platform aimed at real-world businesses, has been exploited today in an “infinite mint” attack that has sent PAID token prices plunging upwards of 85%.
While the exploit netted nearly $180 million in PAID tokens at the time of the attack — what would have comfortably been the largest exploit of a DeFi protocol — the hacker’s payday will end up being far less. One observer noted that the attacker’s wallet only converted some of their tokens to wrapped ether, leaving the rest in rapidly-devaluing PAID tokens:
Summary of $PAID incident:
Total PAID swapped to WETH: 2079.603371141493
Total PAID left in account: 594,717,455.71
Total amount in attacker account = $27,418,034.33
Stay Safe. pic.twitter.com/Lz93qGKAq0
— vasa (@vasa_develop) March 5, 2021
The attacker’s wallet still has over 57 million PAID tokens worth $37 million.
The exploit is conceptually similar to an attack on insurance protocol Cover that took place in late December last year. In that instance, the team took a “snapshot” of holders prior to the attack and issued a new token, returning the supply of the token to pre-exploit levels.
The team confirmed on Twitter that they are currently planning for a snapshot and restoration:
We are investigating the issue. We pulled liquidity, are creating a new smart contract, & will be restoring everyone’s original balances to before the hack.
Those with staked, Lpool & UniFarm $PAID will have their tokens be sent to them manually.
We will share more updates soon
— PAID NETWORK (@paid_network) March 5, 2021
However, token holders anxious for a resolution may be out of luck. Some in the community are speculating that the attack on PAID wasn’t an exploit at all, but instead a “rugpull” — a colloquial term for an insider designing contracts to specifically make them exploitable and swiping user funds.
Nick Chong of Parafi Capital noted on Twitter that Paid’s deployer contract, an externally controlled account, transferred ownership of the deployer to the attacker shortly before the mint, indicating that a member of the team either rugpulled, or errantly allowed the attack to take place with a security lapse:
Paid Network’s deployer, an EOA, transferred ownership of a contract to the attacker 30 mins before the minthttps://t.co/h14GdV4fCf
— Nick Chong (@n2ckchong) March 5, 2021
Additionally, a DeFi risk analysis account @WARONRUGS warned of exactly this exploit in late January, noting that the contract owner can mint PAID tokens at any time:
❌ Scam Advisory #86- PAID Network $PAID (0x8c8687fC965593DFb2F0b4EAeFD55E9D8df348df)
Reason: The owner can mint tokens and did mint tokens to fresh wallets who never bought the presale. Contract is behind a proxy.
Likeliness of losing all funds: Very High
— #WARONRUGS❌ (@WARONRUGS) January 25, 2021
An on-chain note sent to the attacker has ominously warned that “the LAPD will be in contact with Kyle Chasse very shortly.” Kyle Chasse is the CEO of Paid Network.
Paid Network did not respond to a request for comment by the time of publication.
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