Editor's Note: This article comes fromChain reference (ID: lianneican), Author: Internal Reference Jun, reprinted by Odaily with authorization.
Editor's Note: This article comes from
Chain reference (ID: lianneican)
, Author: Internal Reference Jun, reprinted by Odaily with authorization.
The recent ups and downs in the price of Bitcoin have made people flustered. It is even more confused about the future trend of Bitcoin.
For those who are not familiar with the Bitcoin currency, the economic model of Bitcoin may not have been understood in depth. Bitcoin rewards miners when a Bitcoin block is successfully mined. Every four years or so, the mining rewards for the ASIC computers that secure Bitcoin's transaction ledger are cut in half. This process is hardcoded into Satoshi's Bitcoin protocol to control inflation until 2140, when all Bitcoins will be mined.
Especially the performance of the previous two bitcoins before and after the reward halving deserves our attention. There is an old saying in China, "If you take history as a mirror, you can know the ups and downs." As the date of the third Bitcoin reward halving is approaching, is Bitcoin's current performance really at the end of the road? Before making this judgment, it is advisable to do some in-depth research, so as to better convey the prediction of the future after a major event.
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In 2008, the global financial crisis broke out, and Bitcoin came into being. In response to the opacity and uncontrollability of currency issuance centralization. "Bitcoin founder" Satoshi Nakamoto proposed the idea of Bitcoin based on the blockchain technology model. On January 3, 2009, Satoshi Nakamoto dug up 50 bitcoins in a small server in Helsinki, Finland, and bitcoin has since entered the money market stage.
For a long time after the birth of the first bitcoin, although more and more people participated in "mining", bitcoin did not have any market value. Until May 21, 2010, American programmer Lassler used a Ten thousand bitcoins were exchanged for two pizzas, equivalent to the market price of $30. The "Most Expensive Pizza in History" incident marked the beginning of Bitcoin's market value. Converted to the price of pizza, the initial price of Bitcoin was US$0.003, equivalent to 1.88 cents of RMB.
The door to a new world opened, and after Bitcoin generated value, the enthusiasm for mining continued to rise. In November 2010, the price of a single bitcoin on Mt.Gox, the world's largest bitcoin trading platform at that time, exceeded $0.5, which was about 167 times higher than the initial price.
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Bitcoin halving events in history
Historically, the market trend for Bitcoin has been positive. In fact, on November 28, 2012, also known as "Halving Day 2012," Bitcoin's block reward was halved from 50 bitcoins per day to 25 bitcoins per day, the first time ever Defined as a scarce asset, the result is pushing up the price. As shown below, this process occurs every 210,000 blocks.
Bitcoin vs Block Reward
Bitcoin rewards every 210,000 blocks
Before that, however, Bitcoin experienced two bubbles between 2010 and the end of 2011, followed by a bear market. That's when the flagship cryptocurrency hit an inflection point and began a steady recovery, just a year after its first halving. A few months later, the price of Bitcoin shot up from $10 to $200. At today's prices, that's a drop in the ocean. A period of consolidation followed, which was followed by a new rally to all-time highs, peaking at $1,200 per Bitcoin.
As in previous cycles, Bitcoin's price continued to fall back to the next inflection point, around $120, roughly a year before the next halving on July 9, 2016. As one might imagine, as the price of Bitcoin climbs, the performance of Bitcoin also fluctuates due to its historical performance. This time around, the block reward was cut in half again to 12.5 BTC per day, adding to the scarcity of the process. The ensuing parabolic bull run that saw Bitcoin hit $20,000 in December 2017 was when everyone started paying attention to Bitcoin.
Bitcoin price performance before and after each halving
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Will history repeat itself?
As Bitcoin experiences a wave of uncertainty, it is reasonable to consider whether past behavior will significantly affect future performance.
Fundamentally, Satoshi Nakamoto asked such a question in the white paper itself. To maintain this self-motivating environment, nodes are incentivized to support the network, a process Satoshi Nakamoto compared to gold mining. Satoshi Nakamoto wrote in his Bitcoin white paper:
"The steady addition of a certain amount of new coins is analogous to gold miners expending resources to increase the supply of gold in circulation. In our case, this is consumption of CPU time and electricity."
In a sense, this removes some of the reservations that say miners don’t have enough incentive to keep the ecosystem afloat due to potentially lower profit margins. Considering that Bitcoin’s hash rate during the halving event is either flat, exploding, or increasing quarter-to-quarter, it seems impossible for miners to exit at all.
Instead, the hash rate has only increased in recent months. Based on Bitcoin's entire history and incentives, it's clear that miners will continue to maintain the Bitcoin network.
