Two Reasons The Next Bitcoin Halving is Different

The world’s largest cryptocurrency, Bitcoin, is undergoing its next halving event on April 19th, 2024, exactly 60 days from today. Unlike the previous halving events, this upcoming halving is different due to two primary factors. Here’s everything you need to know:

What is Bitcoin Halving?

Bitcoin uses a consensus algorithm called the proof-of-work (PoW) model. Under this model, Bitcoin miners solve mathematical puzzles to add new blocks to the network and earn some BTCs in each block.

Bitcoin halving is an event that occurs every four years, where the number of BTCs allocated to these miners slashes by half. The mechanism helps to maintain the scarcity of the asset while combating inflation. The halving process occurs after 210,000 blocks have been added to the blockchain.

The first halving, which occurred on November 28th, 2012, saw the mining reward move from 50 BTC per block to 25 BTC. The second halving event occurred on July 9th, 2016, and the mining reward per block dropped to 12.5 BTC. On May 11th, 2020, the third halving occurred, taking the block reward to 6.25 BTC. The fourth halving is two months away. The process will continue until 2140 when BTC reaches its total supply of 21 million coins.

What Makes This Halving Different?

Some key events have occurred within the Bitcoin ecosystem since the last halving. One is the approval of the spot Bitcoin exchange-traded fund (ETF), an investment vehicle that allows traditional financial companies to offer a Bitcoin-backed product to clients. After ten years of delay, the U.S. Securities and Exchange Commission (SEC) endorsed the product, enabling companies to offer the Bitcoin ETF to U.S.-based investors.

Since the regulatory approval took effect on January 10th, it has raked in billions of dollars from investors. For example, investment company BlackRock has accumulated over $6.2 billion worth of BTCs. Eight other companies offering the product have accrued nearly $14 billion worth of BTCs.

The second factor that distinguishes this halving event from past ones is the introduction of decentralized finance (DeFi) and Ordinal inscriptions into the Bitcoin ecosystem. Bitcoin was originally designed to facilitate peer-to-peer electronic money transactions. Over the past year, however, several developers have introduced theories that enable the Bitcoin network to host diverse functionalities.

For example, in January 2023, software engineer Casey Rodarmor rolled out the Ordinal theory. This theory enables the Bitcoin network to facilitate the trading of digital collectibles in the form of inscriptions. Since then, several projects have emerged, developing the idea.

In another instance, a Bitcoin developer introduced the concept of crypto staking and yield farming to the Bitcoin community. The developer brought the idea of BRC-20 tokens to facilitate these functionalities.

These factors have been a major driver in Bitcoin adoption, bringing the asset to more audiences across the globe. 

Halving events are known for taking BTC’s value to new heights. The last halving took BTC to its current all-time high (ATH) of around $68,000. Market experts speculate that the upcoming halving event will take Bitcoin to a new ATH within six months. The forecast comes after the spot Bitcoin ETF products contributed to a significant BTC price increase.

Bitcoin currently trades at $51,900, a 4.7% increase over the past week.