Fourth Bitcoin Halving Reinforces Its Scarcity, Paving the Path to Be Gold's Alternative
Summary:
Bitcoin's fourth halving event recently took place, cutting the rewards from block issuance from 6.25 BTC to 3.125 BTC and effectively halving Bitcoin's issuance rate. The event highlights Bitcoin's inherent scarcity and strengthens its market value. The hard-coded scarcity feature differentiates Bitcoin from traditional value storage assets like gold that can lose their scarcity. Bitcoin's predictably slow-growing supply, thanks to its halving process, gets considered as the first reliable alternative to traditional assets, say market experts.
Bitcoin saw its fourth halving event occur just a few hours back at the completion of the 840,000th block. This periodic halving, a prominent feature of Bitcoin’s code, is in essence an economic tool that manipulates Bitcoin's supply, thereby increasing the asset's scarcity. Bitcoin's recent halving knocked down the rewards of block issuance from 6.25 BTC to 3.125 BTC, which essentially cut the rate of Bitcoin issuance into half. According to Karim Chaib, the head of the crypto platform Dopamine app, the halving mechanism reinforces Bitcoin's scarcity and bolsters its market valuation. This process, embedded within Bitcoin's programming, happens after every 210,000 blocks, roughly equating to a four-year period. Starting from the first Bitcoin halving in 2012 that reduced Bitcoin’s issuance rate from 50 BTC to 25 BTC, we have witnessed two more halving procedures in 2016 and 2020, dramatically reducing Bitcoin's issuance rate to a present rate of 3.125 BTC. This property of programmatic scarcity, as per Chaib, is what makes Bitcoin stand out from traditional storage-of-value assets like gold that can lose their scarcity with the invention of new extraction and production methods. Bitcoin, with its 21 million coin cap, is inherently resistant to inflation, claims Chaib. Some market analysts proclaim Bitcoin to be the next gold, attributing these attributes to the periodic hallving and its economic design that would effectively make Bitcoin a deflationary asset. Jonas Simanavicius, co-founder and CTO at Syntropy, calls Bitcoin the first reliable alternative to gold, which was considered the ultimate wealth storage due to the difficulty to increase its supply. He states that Bitcoin beats gold at the game with its predictably slow-growing supply. Bitcoin's price has surged by 122% in the last year in contrast to the 19% rise in gold's price. Bitcoin is reportedly up by over 51% year-to-date (YTD) in 2024, whereas gold has only risen by 15% YTD, according to data from TradingView. Simanavicius believes with time, Bitcoin will pave its way to becoming the preferred asset class for the digital age, where instant transaction, geopolitical decentralization, and ease of mobility are more prioritized than traditional storage-of-value assets such as precious metals and real estate.
Published At
4/20/2024 11:09:12 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.