Bitcoin Halving: The Gold Market is Borrowed Time
Bitcoin is on track to have a lower annual inflation than the gold standard, which has been the most important store of wealth since the beginning of the digital currency. Bitcoin’s annual supply will drop by half at Bitcoin block height 840,000. This in turn, reduces its inflation rate, which is currently 1.7%, to just 0.85%. The supply of gold, on the other hand, is expected to grow by up to 2% annually, depending upon technological advancements and economic conditions.
Bitcoin has seen three halves to date:
November 28, 2012 Bitcoin’s block subvention decreased from $50 per block to $25 per block.
The 9th of July 2016 is a day to remember. Second Bitcoin halves reduced the block subsidy to 12.5% from 25 BTC.
20 May 2020 After the third Bitcoin half-division, block subsidies were reduced from 12,5 BTC/block to 6,25 BTC/block.
On April 20, 2024 (EDT), the fourth Bitcoin halves is expected. With it, newly issued bitcoin per block would decrease from 6.25 BTC down to 3.125 BTC. This epoch — a period of 210,000 blocks or approximately 4 years – will see Bitcoin’s supply increase by 164,250 BTC (from 19,687,500 to 20,671,875), a mere 328,124 bitcoin from the maximum supply limit of 21 million.
The total is 94% #bitcoin Supply has been released and the half-off is scheduled for 11 days👀
The digital scarcity of the finest kind🚀 pic.twitter.com/fjbLs1tq7r
— Bitcoin Magazine (@BitcoinMagazine) April 8, 2024
The History of Gold
A common benchmark used to demonstrate the storage of value function of gold is the fact that an ounce of it costs the same as a pound of silver. “fine man’s suit” over time. The principle of the “gold-to-decent-suit ratio,” The origins of the toga can be traced to Ancient Rome. A toga of high quality was equivalent to one ounce of pure gold. The price you’d pay in gold for a suit of high quality is close to that of an Ancient Roman toga.
The yellow gold metal has proven to be a reliable investment over time, but it is not without its problems.
For example, the cost of verification – or assaying – gold requires it to either be dissolved in a solution or melted down. For someone looking to use their store of hard-earned money for everyday purchases, this is definitely a problem.
Gold was also difficult to store and transport, which led to its demise. Gold certificates were redeemable in the past for the gold underlying the certificate. However, this commodity was frequently rehypothecated resulting the notorious “Nixon Shock” In 1971, the United States abandoned the gold standard forever.
It is also important to note the inherent risks of securing gold as it can be a liability and a source of risk when used for its intended purpose. Executive Order 6102 Then-President Franklin Delano Roosevelt banned “the hoarding of gold coin”The challenge is to secure precious metals in a way that allows them to be stored privately and securely.
Bitcoin: From Speculation into a Safe Haven?
Bitcoin, initially considered a speculative investment due to the price volatility in its early years, has been increasingly adopted as an asset of value. Today investors are recognizing its value and superior qualities. Bitcoin represents the discovery that digital scarcity is possible, while also offering many uses far beyond precious metals.
As such Bitcoin has become a significant force in the economy in just 15 years – reaching a market cap of $1.4 trillion on March 13, 2024.
Bitcoin’s growth is not solely due to its ability to meet the needs of the a store of value This is a better alternative to gold. It is certainly more promising than gold. “magic internet money” The price of gold continues to increase rapidly $15.9 trillion market capitalization.
Gold’s Financial Qualities: Perfected digitally
Bitcoin’s finite supply is 21,000,000 coins. It can resist the inflationary and market-driven nature of traditional currencies.
Bitcoin has a high level of durability. It is an immutable, data-based form of currency. Its digital ledger system uses proof of work It has both economic and political incentives to resist attempts to change it. This ensures that it will remain a stable store of value for a long time, barring any unforeseeable catastrophic risks. Due to its inherent value, it is important that the currency remains stable over time. informational natureThe ability to safely store Bitcoins despite attempts by adversaries to stop you is a positive attribute.
It is extremely difficult to reverse or alter a confirmed transaction on the Bitcoin Blockchain. The geographical distribution of Bitcoins is the source for this immutability. Bitcoin’s network of nodes This is an important feature for both miners and the public. The integrity of the ledger can be maintained and the transactions are not falsified or altered. In an increasingly digitalized world, trust and security is paramount.
You can also read our conclusion.
Bitcoin’s rise as a monetary good – predictable, free of terminal inflation, and easily transferable – has contributed to it gaining acceptance as a store of value among holders. The upcoming half-off will make Bitcoin’s scarcity surpass that of gold for the very first time. This will serve as a warning to market participants who want to avoid monetary debasement.
Bitcoin’s ability to ensure the integrity of the 21 million cap by virtue of its decentralized design continues to be a driving force for adoption.
Gold has had an excellent run. Bitcoin will shine now that the halves are on the horizon.
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Source: bitcoinmagazine.com