What is a “Halvening” and why does it boost Bitcoin and Litecoin prices?
The price of Litecoin today stands at 6 times the price it was on December the 10th 2018. No adoption has happened in the last 6 months, no real developments and no interesting news. So what is driving the price up so much? Of course there are rumours Charlie Lee has been buying back all the LTC he sold at the last ATH (All Time High) so that he can repeat the process during the next bull run and sell at the next ATH. But these are just FUD rumours…
The other explanation for the price increase is the upcoming Litecoin halving or “halvening”. But what what is a Halvening and why does it boost Bitcoin and Litecoin prices?
What is a halvening?
According to http://www.thehalvening.com we have the following explanation:
“WHAT IS BITCOIN HALVING?
In the Bitcoin network, user transactions are grouped in blocks and recorded to a digital public ledger called a blockchain. Miners are in charge of this task, and receive a mining reward in the form of bitcoins for each block recorded.
The amount of bitcoins rewarded for each block decreases with time: it is halved every 4 years. This event, the moment when the mining reward is divided by 2, is commonly called “Bitcoin halving”. Other denominations are used: “reward drop”, “reward halving”, or simply “the halving” or “the Halvening” which is a popular meme among bitcoiners.
When Bitcoin was created in 2009, the initial reward was 50 bitcoins. In november 2012, it dropped to 25btc after the first halving. The second halving will take place in July 2016, decreasing the reward to 12.5btc.“
Vitalik Buterin the head of the Ethereum network explained the need for a halving as:
“The main reason why this is done is to keep inflation under control.
One of the major faults of traditional, “fiat”, currencies controlled by central banks is that the banks can print as much of the currency as they want, and if they print too much, the laws of supply and demand ensure that the value of the currency starts dropping quickly.
Bitcoin, on the other hand, is intended to simulate a commodity, like gold. There is only a limited amount of gold in the world, and with every gram of gold that is mined, the gold that still remains becomes harder and harder to extract.
As a result of this limited supply, gold has maintained its value as an international medium of exchange and store of value for over six thousand years, and the hope is that Bitcoin will do the same.”
Touching on Bitcoins halvening in 2020:
It is widely expected that the price of Bitcoin will shoot up the closer we get the the 2020 halvening.
But why would a halvening affect the price of Bitcoin or Litecoin?
The long and short of it is that it shouldn’t have any effect whatsoever. If Litecoin and Bitcoin were a legitimate business model then there is absolutely zero influence a halving of the rewards would have. Plain and simple, this has all been common knowledge since their inception.
If Bitcoin and Litecoin were ponzi schemes and/or pyramid schemes then of course any major “event” such as a halvening can be used to manipulate and control the price whichever way the major controlling parties desired enabling them to cash out massive profits as they dump their stock on the “greater fool”.
That is all. Halvening doesn’t suddenly increase adoption. It doesn’t improve the unusably slow transactions times. It doesn’t suddenly make cryptocurrency mining cheap and eco-friendly. It does NOTHING.
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