Financial encyclopedia

The scarcity of bitcoin has always been the focus of market speculation. Investors believe that as long as there is demand in the market, the price will rise indefinitely.

Bitcoin was halved last month. In the past, every halving was regarded as a catalyst for price increase. In 2012, 2016 and 2020, the highs before and after halving were 93 times, 30 times and 8 times respectively. However, in the past, the price did not rise immediately after halving, and sometimes it even adjusted for a period of time, and the price fluctuated greatly.

What is halving?

Since the advent of Bitcoin in 2009, it has experienced four times of "halving". The so-called "halving" means that miners get "halving" the rewards through mining. Every time the bitcoin blockchain generates 210,000 blocks, the bitcoin block reward will be halved, which happens once every four years. At present, miners get 3.125 bitcoin prizes for every block dug up until the upper limit of 21 million bitcoin blocks is fully exploited, and the process of halving will end, which is expected to appear in 2140.

Sources of scarcity

The supply of bitcoin is limited to 21 million pieces to ensure that its supply is strictly controlled, which is in sharp contrast to the unlimited issuance of legal tender, and the mining reward has been halved, and the number and the end of mining have a certain time.

Bitcoin uses asymmetric encryption, and holders need to use private keys to access their assets. If the private keys are lost, forgotten or the holders die, these bitcoins will never be retrieved, thus further reducing the number of bitcoins in circulation.