Tonight, the production of new bitcoins will be halved, in technical terms we speak of “halving”.
Because of the shortage, investors hope for the starting signal for a new price rally.
Before the event, however, the Bitcoin price came under noticeable pressure.
The cryptocurrency Bitcoin is back in the spotlight. After an incredible price increase to more than $ 20,000 in December 2017 and a deep fall to less than $ 3,300 a year later, Bitcoin investors are now hoping that a shortage in the production of new bitcoins will lead to a new price rally. But first, fans of the cryptocurrency had to cope with another crash at the weekend.
According to the technical protocol, the third so-called halving should be implemented on Monday evening. Satoshi Nakamoto, the mysterious founder of Bitcoin, had determined that the total amount of all Bitcoins would be limited to 21 million pieces. The bitcoins should not be distributed in one fell swoop, but should be made available gradually over the course of several decades. At the halving events, the number of bitcoins that can be calculated by the miners every ten minutes is halved as planned – from the previous 12.5 bitcoins to only 6.25 bitcoins.
“Halving noticeably cuts the supply of new bitcoins,” says economist Philipp Sandner. “It would be as if all the gold mines in the world were producing only half of the gold overnight,” said the professor at the Frankfurt School of Finance & Management.
Bitcoin: amount capped at around 21 million
At the beginning of the year, Bitcoin analyst Timo Emden told NewsABC.net: “If investors were to have a certain amount of panic, the price could receive an additional boost. The amount of bitcoins is capped at around 21 million – the fewer new bitcoins are issued, the ‘more valuable’ the asset could become for investors. ”
In the history of Bitcoin, the remuneration for a calculated block has been halved for the third time. With the first halving in November 2012, the Bitcoin price was in the double-digit dollar range, with the second halving in July 2016 it was already around $ 600. Before the current third halving, the price climbed to more than 10,000 euros last week and then plummeted to less than $ 8,500 at the weekend.
Regardless of how the course evolves, halving the reward for mining new bitcoins has an impact on the scene of “miners” who provide computing power to the network. “The mining volume is decreasing, and mining is no longer as profitable,” says Sandner. Vendors who use old hardware or buy expensive electricity are therefore pushed out of the network because they then become unprofitable. “The more efficient mining farms remain in the network, those that have cheap electricity or use the latest hardware.”
Expert: Bitcoin is “perfect as a crisis currency”
The overall computing power of the Bitcoin network will be reduced. “But there is no danger that the computing power will no longer be sufficient to ensure the security of the network. The entire Bitcoin network is now too large for that, ”emphasizes Sandner.
Despite the price fluctuations, the economist believes that Bitcoin is “perfect as a crisis currency” in the times of the corona pandamia and the associated economic uncertainties. “Bitcoin is architecturally like gold, but digital. Like gold, bitcoin is a scarce commodity. There is no inflation with Bitcoin, ”Sandner argues. Therefore, Bitcoin is theoretically suitable for preserving value.
However, Sandner also admits that Bitcoin is a “very, very small project compared to assets” like gold. That is why the market has relatively low liquidity in relative terms. “This is also a reason for the high volatility.” In theory, Bitcoin is suitable for preserving value in a crisis. “In practice, however, the whole project is still relatively young and the understanding of exactly what Bitcoin is is far from as widespread as it is with gold. Because of the volatility, Bitcoin is more for experienced investors, not for beginners. ”
Bitcoin: warn consumer centers
Consumer advocates in Germany, on the other hand, unanimously warn against investing money in cryptocurrencies that they are a “high-risk speculation object”. “Cryptocurrencies are subject to strong exchange rate fluctuations,” warned the consumer advice center in Hamburg recently. Their value depends solely on demand. “If demand drops, the currency also loses value.” Consumer advocates point out that bitcoins do not generate additional interest. “Another disadvantage: the market for cryptocurrencies is not regulated by a financial regulator. State security systems are missing. “
The proponents of Bitcoin and other cryptocurrencies, however, rely on the study “Imagine 2030” by Deutsche Bank. There, around 80 pages argue why cryptocurrencies like Bitcoin will develop into currencies in the traditional sense, in so-called fiat money. But even this thesis was not contradicted by the highest authority: “Given the price fluctuations, crypto tokens are neither suitable for reliable value storage nor as a computing unit,” said Bundesbank boss Jens Weidmann.