TL;DR: All eyes are on the most successful fork of BTC, Bitcoin Cash (BCH), as a historic first halving of its mining block reward takes place on April 8, 2020. Host Collin Enstad is Master of Ceremonies for a live video stream filled with chat and special guests taking-in the event’s implications, real and theoretical. The stream begins at 10am EST.
Historic First Bitcoin Cash Halving
By now the theory is well-worn, known. Due to the inflation rate being effectively cut in half every four years, less coins in ultimate circulation create a form of digital scarcity. That, in turn, all things being equal, should assist in making the given coin more valuable. Admittedly, there’s much hedging in those sentences, and for good reason. Most analysts simply do not know what will happen in the real world. And since the BCH halving is about a month ahead of BTC, the ecosystem is intensely curious how it works itself out.
Miners in the Bitcoin scheme secure the network. They’re incentivized in that direction by a block reward, at present 12.5 BCH per each block mined. The speculative price drives their enthusiasm, either as individual businesses and hobbyists or pools, relative to other costs, from hardware to maintenance and, of course, electricity. Each so-called Proof of Work (PoW) coin covets more miners, more security, as a sign of network health and robustness.
The bargain is to have more miners in the form of hash rate finding blocks, helping to essentially process transactions, and to keep the overall coin free from a possible 51% attack or what’s known as an overtaking of the network by a bad actor. There’s more involved, but it’s a quite elegant economic, Game Theory system at play.
It is also a system thrown for a loop every four years by a programmed halving of that block reward, which seemingly punishes miners in the immediate term directly (in this case from lowering the reward from 12.5 BCH to 6.25), and potentially scaring them off to other networks or into capitulation altogether if the speculative price isn’t making up the difference. However, the harder money properties of a set inflation schedule, capped at 21 million BCH in total, means each halving reinforces digital scarcity which, as alluded to earlier, adds to the longer-term value of BCH. For the Bitcoin Cash community, coin price is of far less importance than utility, than becoming peer-to-peer electronic cash for the world. This distinguishes the BCH project from most of its rivals, as both theory and real-world adoption mix for an interesting few days.
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DYOR: CoinSpice is your home for just spicy crypto things. We’re not affiliated with any cryptocurrency project or token. Each published piece is intended for information purposes only, not investment advice and not in the hope of impacting speculative markets. There are plenty of trading sites and coin-specific advocacy journals out there, we’re neither. CoinSpice strives for rigorous accuracy in our reporting. Information presented here is contingent usually on a host of factors, and the ecosystem moves fast — prices change, projects change, and at warp speed. Do your own research.
DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH.