(MENAFN- Daily Forex) Before I delve into bitcoin halving and what it could mean for investors and traders, let's take a brief look at how Bitcoin, a cryptocurrency, works:
Bitcoin is a digital currency which can be used for online transactions. Bitcoin operates independently of a central bank, unlike fiat currencies such as the US dollar, which is backed by the US government. New units of Bitcoin currency are mined (generated) by computers which solve complex mathematical problems. Bitcoin has a finite supply of coins (21 million).
What is Bitcoin Halving?
Bitcoin halving is a technical event, written in Bitcoin code, which occurs every four years. Halving refers to the rewards for Bitcoin miners, who generate Bitcoin, being cut in half. This reduces the incentive for Bitcoin miners, with the result that fewer Bitcoins are produced. With less Bitcoin available on the market over time, Bitcoin's price should move higher. The scarcity should make Bitcoin more valuable and can be thought of as“digital gold”.
Bitcoin, which is trading at around $63,350 at the time of writing, has been showing high volatility this year. Bitcoin soared 66% higher within the first three months of 2024 and hit a record price of $73,750 in March. However, Bitcoin has declined 8.9% so far in April, despite all the excitement leading up to the halving event.
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