B IT C O IN

HAL
VING
WhatdoesBi
tcoi
nHal
vi
ngmean?
TheBit
coinhalvi
ngtakesplaceevery210,
000blocks
,whichis
appr
oximately4year
s.Thisisapredeter
minedsys
tem,meaningthatit
wasint
egratedint
otheBitcoinpr
otocolbySat
oshiNakamotohimsel
f,t
he
myst
eri
ousc reat
orofBit
coin.

Theev entwill
conti
nuetotakeplac
euntilal
l21mil
lioncoinshavebeengenerat
ed,whi
chist
het ot
alnumberof
Bit
coinsthatcaneverexis
t.Thi
ssyst
em isschedul
edac cordi
ngtobloc
kheight,
nottoapart
icul
ardate.
Whenthe
‘
halvening’happens,i
tcut
sthesupplyofminer’
sblockproducti
onrewardsbyhalf
.

I
ns impleterms,t
hismeanst hatthebit
coi
nrewardminer
srecei
veperbl
ockisc
utby50%. Cur
rentl
ytheBit
coi
n
blockrewardis12.
5bi t
coinsperblock.Whenblock630,
000ishiti
nMay2020,therewardwil
ldropto6.25
bitc
oins(BTC)perblock.That’
sabi gadj
ust
mentinamarketwort
habout$1
20bill
ion,wherebi
tcoi
nsworth
severalbil
l
ionsdol
larsarecreatedeverysi
ngl
ey ear
.

I
fyou’
vebeenfoll
owingthecryptocommunityevenf
orashor
twhi
l
e,youmusthaveheardthephr
ase‘hal
vni
ng’
or‘
Bit
coi
nhalvi
ng’float
ingaround.Especi
al
lyduri
ngthemont
hspr
ecedi
ngt
heev ent
,thesearc
hesfort
heter
m
goupexponent
ial
ly.
Justtak
eal ookatthi
sgraph:

I
nter
estovert
ime

Di
dyouknow?
TheBit
coincommuni t
yisfamousf
ori
nventi
ngit
sownwords
.Themos tpopul
arofthesei
s‘hodl’
,whi
chal
l
egedly
comefrom adrunkenpostonaBit
coi
nforum.‘
Halv
eni
ng’
isanothersuchword,alt
houghit
sorigi
nsaremerki
er.
Somethinkthati
tmighthavebeencr
eatedtoaddmor
egravi
tastothewor d‘
halv
ing’,
butt
hatismere
spec
ulati
on.
But
…whydoesi
toc
cur
?
Bi
tcoi
nwasal waysmeanttobeadeflat
ionaryasset.Li
kegol
dorsil
ver
,
t
hepos t
ulat
eisthat,overt
ime,t
hes
upplyofbi
tcoinswill
dec
reas
eand
t
husbecomes carceroverti
me.

Asbit
coinsbec omes car
cer,
andassumingdemandf orthem i
ncr
easesoverti
me,Bit
coi
ncanbeus edasahedge
agai
nstinflat
ion.Thiscanhappenbecausepric
e,gui
dedbypr iceequil
i
bri
um,isboundt
oincreas
e. Ontheot
her
si
de,fiatcurr
enc i
esthatwemor ef
requentl
yusetoday(suchastheUSdol l
arort
heIndi
anrupee)
,inflat
eover
ti
measi t
smonet arysupplyi
ncr
eases,l
eadingtoadec r
easeinpurchasi
ngpower.

Thi
sisknownasmonet ar
ydebasementbyinflati
on.Fi
atcurr
enci
esarebackedbyagov er
nmentthatiss
uedit
,
whi
chmeanst hatt
hegovernmenthasf
ullcont
roltomeddlewit
hit.
Thiscannothappenwi
thBi
tcoin.
Thecreat
orofBit
coi
n,Satos
hiNakamoto,
elaborat
edveryli
tt
leonwhyhe( orthey)c
hoset
heparti
cularf
ormul
a.

Whathedi
dsayi
s.
..

“ Coi
nshavetogeti
nit
ial
lydi
str
ibut
edsomehow,

”
andaconst
antrat
eseemsli
kethebes
tfor
mula.

I
nmos ts
tate-
iss
uedc urr
enc i
esac entr
albank,
suc
h
astheRBI ortheU.S.FederalReserve,has
i
nstrumentsatit
sdisposalthatenabl
eittoaddor

-------- >
-- removemoneyf r
om cir
culati
on.

$$
I
ftheec onomyi sflounder ing,fori
ns t
anc e,t
heRBI
canincreasec ir
c ul
ationandenc ouragelendi ngby
purchasingsec urit
iesfrom banks .
Al t
ernati
vely, i
fthe
RBIwant storemov emoneyf rom theec onomy ,i
tc an
sel
lsecur i
ti
esfrom i t
sac count.Howev er
,Bit
c oin’
s
------
>
---- ‘
monet arypolicy’ i
swr i
ttenint
ot hec odes hared
acr
os stheent i
renet wor k.Theonlywayt oc hangei t
wouldbeagr eementac rosstheent i
rec ommuni t
yof
Bit
coinus ers
, whichi snear-i
mpos sibletoac hieve.

Manyhav ecomet ointerpr

etitasas i
gnofNakamoto’
s
poli
tic
alidealsandgoal s.I
fmassadoptioni
sfinal
ly
achieved,Bit
c oi
nc anpotenti
all
yreducethepower
government sandbankshav eovermonetarypol
i
cy,
i
ncludingbailoutsofdyinginst
it
uti
ons.

Asment i
onedear l
i
er,
noc entralent
it
yc anc r
eat
e
bit
coinouts
ideofthestr
ictschedule.Thisisal
sooneof
thefeat
uresthathascont
ributedtoBitcoin’
simmense
popular
it
y.

Ri
ghtnow,
appr
oximat
ely
1,
800newBit
coinent
ercir
cul
ati
onev
eryday
.

Fol
l
owingthethir
dhal v
ingeventi
nMay2020,thedai
lyi
ssuanc
eratewil
lf
all
toabout900BTCperday,res
ult
ing
i
nBitc
oin’
sannualratedroppi
ngfr
om 3.
70%to1.
79%.Thi
sisanint
eres
ti
ngdev el
opmentasBi
tcoi
n’
sis
suancewil
l
nowbebelowt heinflati
onrat
eofmostdev
elopedcount
ri
es.

Forcompar
ison,
theinflat
ionratei
ntheUnit
edStatesis1.
9%fort
he1 2mont
hsendi
nginMarch201
9.Thebigges
t
di
fferenc
eher ei
sthatBit
coi
ni sanon-
sov
ereign,
fix edsuppl
yassetwher
eastheUSdol
larhasnos
upplyc
apand
ent
ir
elyr
eli
esontheUSgov er
nment.
Hol
don.Whataboutmi
ner
s?
Miner
swillr
ecei
velessnewbi
tcoi
nsfort
heireffort
swithever
yhal
vi
ng
t
hattakespl
ace,butBTC’
spri
cewil
lhavethelastwor
d.

I
fthepri
ceisl
ow-orsigni
ficantl
ylowert
hant
heproduc
tioncos
tfort
heminers–somemi
ner
smaynotbeabl
e
t
oc ov
erthei
rcos
tsofproduct
ionandwil
lbef
orc
edt os
topthei
rmini
ngoperati
ons
.

Asac onsequenc
eofthis,asminersst
epout, t
heonesthatwil
lst
il
lbeablet
oaffor doperat
ionswil
lhavel
ess
competit
ion,
andhence,fewerexpenses.Theyareal
solikel
ytogetmorerewards.Thi
scouldpotenti
al
lyl
eadtoa
scenari
owherethesi
tuati
onturnsint
os omethi
ngknownasmi ners’war
,wherethemarketcouldbecomemore
centr
ali
zedasonlyl
argermini
ngc ompaniesli
keBit
mainwouldbeabl etost
ayopen.
Looki
ngbac
katpas
thal
vi
ngs
Ther
ehaveonl
ybeent
wobi
tcoi
nhal
vi
ngspr
evi
ous
ly.

1 s
t
2 nd
onetookplac
eonNovember onetookplaceonJul
y9,
28,2012,
atbloc
khei
ght 2016,atbl
ockhei
ght
210,
000 420,000.

4t
honei
sli
kel
ytohappeni
n2024bet
weenMar
chandMayatbl
ockhei
ght840,
000andt
her
ewar
dreduc
e
t
o3.
1
25BTC

Nowwi t
htheabovec ommonbutimport
antquest
ionsandanswers,wehavetr
iedtoexplai
nit
.Butnowasan
I
nvest
or,Tr
aderorasac ommonman, l
etst
ryands eehowwec anrelat
ethehal
vingeventwit
hthepri
ceof
Bi
tcoi
n.Todothi
s,it
’
sbes tt
otak
eal ookathowpas thal
vi
ngshaveaffectedt
hepr i
ceofBit
coi
n.

I
ntheone-
yearperi
odsaft
ert
hetwopr ev
ioushalvi
ngs
, i
nNov ember2012andJ
uly2016,
bit
coi
nros
eby
al
mostei
ght
ytimesandfourt
imesr
es pect
ivel
y.However
,iti
snotclearhowmuchoft
hesepri
cegai
nswas
downtot
hehalvi
ngasopposedtoothereconomicorsocial
fact
ors.

Mostofthepeoplerel
atethehal
vi
ngeventwit
ht hebul
lmarket,andmanyareexpecti
ngani
ncreas
ein
Bi
tcoi
n’spri
ce.Butexper
tsals
obeli
evet
hattherecanbeseveralreas
onsbehindthat
,someoft
hem bei
ng

Areduct
ionofanysiz
ableamounti
nli
qui
dsuppl
ymeanst
hatev
eni
fdemands
tagnat
esandr
emai
nsflat
,
t
hepric
ewoul dinc
rease.

Awarenessandint
eresti
ncr
eas esamongs tthepeopl
eandnewpeopl ewouldtak
einter
esti
nit
.(Googl
e
Tr
endss howsqueri
esonthet erm“bit
coinhalvi
ng”havedoubl
edthi
smonthfrom Decemberl
evelst
othe
hi
ghestsincet
helasts
uchev entin2016.)Theothersi
deofthemarketi
sdemand,whichhasi
ncreased
si
gni
ficantlyov
erti
measr et
ail,vent
ure,andinst
it
uti
onalmoneyhaveall
gott
eninvol
ved.

Oneofthemaj orreasonsisinref
erencetot
hemi ners.Wec ansaythatt
henexthalvi
ngisnotguarant
eed
tocaus
eanot herbullruntoanewal l
-t
imehigh.I
tcouldjus
taseas i
l
ybet hecasethatthenexthal
ving
makesminingunpr ofit
ableforalar
geporti
onofthec urr
entminers,
leadi
ngtoas harpdropinhashrat
e
anddecreaseinpubl i
csenti
mentaboutthes t
abi
li
tyoftheBitcoi
nnetwork.

Hal
vi
ng BTCreward BTCr
eward Pr
icebefor
e1year Pri
ceonhal
ving Pr
iceaf
ter1year
dat
e bef
ore Af
ter Hal
vingday(
PerBTC) day(
PerBTC) Halv
ingday(PerBTC)

28/
11
/2020 50 25 $2.
51 $1
2.50 $1
072.
83

09/
07/
201
6 25 1
2.5 $270 $650 $2540

(
Sour
ce:
htt
ps:
//
99bi
tcoi
ns.
com/
bit
coi
n/hi
st
ori
cal
-pr
ice/
)
Now,l
et’
stakeac
los
erl
ookatpas
thal
vi
ngs
.

201
2Bi
tcoi
nhal
vi
ng
Pri
ortothehalv
ings,t
heBit
coi
nc ommuni
tyhadveryl
it
tl
es enseofhowt heev
entwouldaffec
tthenet
wor
k.The
veryfirs
thalv
ingthatt
ookplac
ein2012provi
dedourfirstunders
tandi
ngofhowmar k
etswouldres
pondt
othe
Bit
coinsuppl
yschedule.
Asitt
urnedout
,thepri
cebegantor i
seshort
lyaft
ert
hehal
vi
ng.

Accordi
ngtohist
ori
cal
data,
afteral
argepumpinJuneof2011
,anupwar dt
rendbegant
oforminNovember2011
,
al
mos toneyearpri
ort
othefirsthal
vi
ng.Thi
s“pr
e-hal
vi
ng”t
rendresul
tedina341.
90%pri
ceincr
easei
nBitc
oin,
whi
c hthent
radedatanaverageof$12.
31perBTCbefor
ethefirsthal
vingi
nNovember2012.

The1 s
t
hal
vi
ngr educedBit
coin’
sdailyi
ssuanceratefr
om 7 ,
200BTCperdayt o3,
600BTCperday .Al
mos t
i
mmedi atel
yBitcoi
nwentont omak ehist
oricgainsasitskyrocketedbyal most8,
000%ov erayear-l
ongperiod,
reachingaround$1 ,
000inlateNov emberof201 3(ex
ac tfiguresdependont heexchangedata)
.Howev er
,soon
aft
erinDec ember201 3,Bit
coinbeganamul ti
-yearbearmar ketast heassetdecl
i
nedov er80%.Thistr
endwas
l
argelyc ontr
ibutedt
obyt heinfamousMt.Goxhac k.Ar eversalofthist
rendonlytookplac
etwoy earsl
aterin
Oc t
oberof201 5.

201
6Bi
tcoi
nhal
vi
ng
Thesecondofficial
halvi
ngtookplac
eonJ uly9th,201
6,ands awthebl
ockrewardfal
lto1
2.5BTCperblock.The
ti
mebetweenthefirstands
ec ondhalv
ingwasnotr eal
lyfouryear
sbutact
uall
y131
6day s
,or3.6years
.Withthi
s,
datas
howsthatanupwardtrendbegantoformi nOctober2015,appr
oxi
matel
y9mont hspri
ortothehal
ving.

The“pr
e-hal
ving”uptr
endresult
edinBi
tcoi
nincr
easi
ng1 12.
0%ov erthe9mont hperi
odandanav eraget r
ading
pri
ceof$650perBTCatt het i
meofthesecondhal
ving.Thi
sev entdroppedBitc
oin’
sdai
lyiss
uanceratefrom
3,600BTCtot hecurr
ent1,
800BTCperday .BTCwast henpus hedint
oabul l
runin2017wheretheas setsawa
2,
800%increaseoverthefoll
owing1
8months.Thepeakfinal l
yhiti
nmi d-Dec
emberof201 7
,withapric
ej ustshy
of$20,
000BTC( exac
tfiguresdependontheexchangedata).
2020Bi
tcoi
nhal
vi
ng
Whatt
oex
pec
t

Somet i
meinMayof2020, thenumberofbi tc
oins
enteri
ngc i
rcul
ati
onev ery10minuteswill
dr opbyhalf
,
to6.25from 12.5.Manyex pert
sbeli
ev ethat,gi
ven
theeconomi cscenar
io, t
hefluctuati
onint hepri
ceof
Bit
coinwillnotbeasdr asti
caspreviousyears.

Whi
leBit
coi
ndi ds
eeanincreas
einpri
cepos
tthe
201
6-hal
vi
ng,buti
twasnotassubst
ant
ial
asthe
i
ncr
easepostthe201
2-hal
vi
ng.

Thi
shappenedbecauseeveryoneinthecommunit
y
washighl
yanti
ci
pati
ngthehalvi
ng,soanyexpec
ted
pri
ceacti
onwasalr
eadyfact
oredin.Thi
siswhyit
won’tbesur
pri
si
ngifBi
tcoi
n’spri
ceacti
onpostt
he
2020halvi
ngeventi
sn’
tthatgreat
.

Bi
tcoi
nnowhasfut
urestr
adi
ng.Manyexc
hangesoffermargi
ntr
ading,
fut
ureopt
ionswhic
hdonotr
equi
re
ac
tualbi
tcoi
nsi
nhandtoengagei
nt r
adi
ngwhichmakest
heactualmi
nedBTClessimport
ant
.

TheamountofminedBi
tcoinvol
umeisl
owercompar
edtothetot
alvol
umetraded.
Nowmi l
l
ionsofbi
tcoi
nsar
e
tr
adeddail
yonvari
ousexchanges,
henc
eift
he bl
ockrewar
dreducesf
rom 1
2.5to6.25i
twouldn’
tmakemuch
differ
enc
eamongs tt
hetr
aders.

Whatwedoknowforcer
tai
nisthati
tistoohar
dt opr
edi
ctthebi
tcoi
npri
cefort
heshor
tter
m.Whatwil
lbethe
pri
ceonhal
vi
ngdayandwhetheritwil
lf
oll
owthehist
ori
cal
patt
ern andi
ncr
easeit
sval
uati
on(
forwhat
ever
reas
on)c
onti
nuest
oremainamatterofspecul
ati
on.
Whatwi
l
lfut
urehal
vi
ngsl
ookl
i
ke?
Asblockrewar
dscont
inuetodi
mini
sheveryfouryears,Bi
tcoi
n’sfix
ed
supplys
houldacc
ruevalueast
hecostofmini
ngincreaseswitheach
halvi
ng.

Thisisal
sol
ikel
yoneofthedri
vingfac
torsbehindBi
tcoin’
sc ycl
es.
ThelastBi
tcoi
nisest
imatedtobemi ned
aroundtheyear21
40whent hebloc
kr ewar
ddr opst
ol essthan1satos
hi.Asf
utur
eblockrewardsc ont
inual
ly
dimini
shandeventual
l
yreachzeroi
n2041 ,f
uturemi
ner swill
havetorelyonot
hersti
mulant
swi t
hinthes ys
tem
toconti
nuetoreapbenefit
s.

WhetherornotBi t
c oinwil
l evenexis
tafterahundr
edy earsisamat terofspeculat
ion,butevenso,thereare
manyt heor
iessurroundingt henewi ncenti
vemechanis
msaf terthelastbl
oc kreward.Oneofthemos tpopul
ar
theor
iesisthat,
ast henetwor kconti
nuest ogr
owandbec omesmor ewidelyaccepted,iti
spossi
blethatby
2140,tr
ansacti
onfeeswi llbeprofitableenoughforminerstoc onti
nuewor ki
ngev enwi t
houtanyblockreward.
Thisi
sex actl
ySatos hiNakamoto’svisi
on:

“ Onceapredet
erminednumberofcoi
nshaveent
eredcir
culati
on,t
hei nc
ent
ivec
an

”
t
ransi
ti
onenti
rel
yt ot
rans
acti
onfeesandbecomplet
elyinfl
ati
onfree.
 2020ZebPay|
www.
zebpay
.com |
hel
p.z
ebpay
.com

Theinformati
onpr ovi
dedinthi
se-bookisasummar
yintendedforinfor
mationalpur
pos esonlyandmustnotbe
tr
eatedaspr of
es si
onaladvi
ce.
ZebPaydoesnotofferanylegal,t
echnical
orfinanc i
aladviceas
apartofthise-book.T
radi
ngincrypt
ocurr
enci
esi
ssubj
ec tt
omar ket,
legalandtechnicalr
isks
.Zebpaydoesnot
guaranteeanyr et
urns.Pl
easeconsul
tyourl
egal
andfinancialadvi
sorsbeforeinves
ti
ngi n
crypt
ocurrenci
es .