In the past few months, cryptocurrency has been struggling and bleeding value. This resulted in people who had invested in cryptocurrency selling their investments and losing faith in the technology. The sudden loss of Terra Luna was the nail in the coffin that cemented the fate of cryptocurrency in the market. Terra Luna lost 100% of its value in less than a week, and people completely lost their faith. This was a huge blow to the market and cryptocurrency adoption, which had just gained traction. But although all this is happening, Bitcoin has the potential to regain its value in the future.
Bitcoin utilises proof of work as its consensus method. This means that the token remains decentralised and gains value through crypto mining. Although this information is not new, one thing people do not know is Bitcoin Halving. According to Bitcoin, Bitcoin halving is a practice carried out roughly every four years, give or take. Bitcoin halving is carried out after the mining processors have developed 210,000 blocks. This takes about four years to be completed. After the blocks have been developed, the processing speed is cut by half its potential. This means it requires double the effort to process the same amount.
Some of the reasons why this is important include the following:
Unlike other currencies, especially fiat currencies, Bitcoin halving reduces the risk of inflation in the market. Inflation is when more currency is developed to chase after the same amount of goods and services in the market. This is causing most problems since almost half of the money in circulation was printed between 2020 and 2021.
While other currencies increase the amount of currency in the market, Bitcoin reduces the quantity by half. This is one of the reasons why Bitcoin will be a better alternative to fiat currencies. The other reason this information is critical to Bitcoin and cryptocurrency investors is the impact the halving has on the token’s value. The last time Bitcoin halving happened was in 2020. Before the halving occurred, Bitcoin was valued at $8,787. A few weeks after the Bitcoin halving happened, Bitcoin shot up in value to hit $60,000. It got to $68,000 in 2021.
Although people complain that Bitcoin has lost its value, it’s still valued at over $30,000. This is a lot more than its value in 2020. Bitcoin halving plays to the law of equilibrium. When the supply is reduced by half while the demand remains the same or increases, the token price increases, this is why people should not give up faith in Bitcoin. Due to this, the best conclusion is that buy Bitcoin now while its value is low. Holding Bitcoin during the cryptocurrency crisis will not be easy, but it will pay in the long run.