On May 21, 2020 there will be the next Bitcoin halving, like every 4 years. World production will fall from 12.5 to 6.75 Bitcoins per block, halving. Fundamental economic laws states that, with the same demand, if supply decreases, price will increase. Theorem that has had the most crystalline empirical confirmation in the last two halving, from Genesis block until today.
The first halving took place on November 28, 2012, when Bitcoin price was at 12 USD. Six months later, in May 2013, the price was ten times higher (130 USD). Soon it would have had an explosion that led to the big bubble of 2013 (surpassing the 1000 USD in November 2013).
The second halving took place on July 7, 2016, when the price was at 650 USD. Six months later, in January 2017, the price had almost doubled (more than 1000 USD) and would soon have had an explosion that led to the big bubble of 2017 (almost 20,000 USD in December).
Nobody knows what the price of Bitcoin will be, but if we want to test a rational forecast, from now till 2020, from certainty, we can only take into account two important points which are:
- Bitcoin technology is improving, enhancing Bitcoin qualitatively;
- The money supply will be halved.
Based on these two fixed points, it is rational to make mention today that the price of Bitcoin will probably rise, it is irrational to say otherwise. This is simply the best conclusion that we can reach with the data and information we have available. Meaning, by 2020, we can expect a new wave of users also attracted by the price hike, as a result of a boom in the use of Bitcoin services and an expansion of transaction volumes. By the end of 2017, the Bitcoin network and ecosystem were not yet ready to handle that huge influx of new entries, the increase in the average cost per transaction in Blockchain was clear:
Improved Bitcoin network services
At that time there was no alternative to Bitcoin: either you paid those commissions or could not do the transactions. But in the next big rise (hopefully...), you have to be prepared. The Bitcoin network and all the services must be ready to accommodate the crowd and incoming services, wallet and exchange must, in advance, prepare a place for newcomers.
At the moment, the network is working very well with improvements in all aspects:
- Major services and exchange makes batch transactions, thus reducing the number of transactions (hence commission cost), even though the amount of payments has increased, it has shown incredible efficiency in the use of resources.
- The SegWit adoption is in constant growth (from 0 to approximately 50% in 1 year), which permits to make use of an additional block space (even if the block size is set at 1 MB) to duplicate the Blockchain capacity.
- The wallets begins to adopt BECH32 addresses (first Electrum and then Bitcoin Core, Coinomi, Samourai,Wasabi and others) that optimizes the space occupied by the transactions.
However, the true focal point is Lightning Network, both for scalability reasons and for more privacy for users. The Electrum wallet will be a fundamental part of this technological renovation, and finally represent the real turning point for Lightning Network. Anyway, we'll see, May 2020 is not that far.
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