Analysis

How Will 2017’s Block Reward Halving Affect Bitcoin Price?

Guest Author | March 13, 2015 | 6:19 pm
Analysis

How Will 2017’s Block Reward Halving Affect Bitcoin Price?

Guest Author | March 13, 2015 | 6:19 pm

In the next couple of years, Bitcoin price is expected to see a drastic variation from the current levels of $290. While the fundamental factors such as the support of national governments may take Bitcoin past $500, an increased number of Bitcoin thefts and scams will undo the good work and may cause irreparable damage to the investors, both potential and existing.

The Bitcoin market also has one major event coming up during the next couple of years; the halving of the block mining reward to 12.5 Bitcoins per block. At present, a successful miner is rewarded with 25 Bitcoins per block. The Bitcoin protocol halves this reward every 210,000 blocks (roughly every four years). The next halving is expected to happen in 2017, or if the computational power exceeds the calculations, the probability of a 2016-halving increases considerably.

It is widely expected that fewer Bitcoins will be mined going forward as network complexity reaches a higher level. Now assuming that the digital payments’ industry expands for the next 2 years at the same rate as it has in the past, the increasing demand for the cryptocurrency amid supply moderation should lead to a spurt in prices. With the price scaling new heights, Bitcoin mining will be revitalized as the value of rewards increases, which will further push up the prices. Having this side, we must also point that extreme volatility and wide vicissitudes will continue to remain in the scene.

Another major consideration is that since only 21 million Bitcoins will ever be mined, and more than 13 million are already in circulation, the sprawling Bitcoin community is left with just a little more than 7 million Bitcoins.

With big and small businesses accepting cryptocurrency payments, and the quantity being constrained, the basic laws of economics are anticipated to play out in the favor of buyers, but not without temporary shocks!

Reference: Bank Of England Report: Innovations in payment technologies and the emergence of digital currencies

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  • cohagen

    How do you possibly get 500+? Put down the glass pipe!

    • LaFlare1017

      That was based on IF bitcoins were to receive government backing, I think it would be a reasonable price for that scenario, but I also don’t think that scenario is very likely

      • cohagen

        Given that government backing of even a single bitcoin is an extreme Marvel Comics What If? concept then well….no it’s not likely at all.

    • erik

      Hit $500 last month, damn you are dumb. People like you will be buying my bitcoins at over $1k next year.

  • Lakawak

    increasing demand? On what planet is the demand increasing?

    As for the rest…you are just spouting random numbers with absolutely no basis.

    • LaFlare1017

      Although the price of bitcoins has gone down of the past year and half, the number of transactions using bitcoins is increasing

      • cohagen

        Moving of bitcoins from wallet to wallet by exchanges too generate fake volume are not real transactions bub.

        • LaFlare1017

          Do you have a link where I could read about that? I hadn’t heard about that

          • cohagen

            That was widely discussed on several btc trading sites mid and late last year also most of the millions of created wallets are also just empty or inactive.

          • LaFlare1017

            Oh I gotcha, well then it makes sense why those charts seem so irregular, I just had’t read about it. While I knew some about BTC, I’m researching it more now because I will be getting paid exclusively with bitcoins soon(not my choice, it’s a long story), and I’m just trying to decide whether to convert them all to cash right away or hold on to some in case of another bubble.

          • cohagen

            Me I would cash out. Totally your choice though.

          • LaFlare1017

            I will probably cash out at least 75% of it and hold on to the rest in case of a spike in the price. Might get really lucky, might not.

          • cohagen

            Better chance of sex aliens from planet sex coming to take you too there home planet.

          • LaFlare1017

            Lol maybe, but a lot of people would have said the same thing when bitcoins were worth nothing.

            There are still reasons people use bitcoins, I know that the overseas company I am working with has good reason to use them. I don’t see BTC going mainstream, but there is always going to be a demand for these types of non-cash transactions. The only question is if this demand can match the output of bitcoins. There are companies that are legal that have a purpose for them, there are investors who buy them based on speculation, there is a massive amount of people using them in black markets, gray areas(for example in states where marijuana is legal but money can’t be kept in banks because of federal laws conflicting with state laws), and tax avoidance purposes. While obviously, the motives for some people using them is questionable, that doesn’t change fact that it still creates a large demand for them or a similar services.

            Even so, you might be correct that the bitcoin price may be currently overestimating this demand. However, anything can happen, because regardless of demand for their use, speculation can drive the price up whether that speculation is entirely based on facts or not.

            Cryptocurrency is here to stay, the question is at what price point.

          • cohagen

            I see bitcoins lingering like Esperanto, a few will use it but the world at large will be wtf are you talking about.

          • Kerouac

            have you nothing better to do than spam btc news sites? If the price goes up, all current investors who saved it earn money. It’s not like fiat currency doesn’t have its own issues, particularly inflation and over-devaluation, etc.

            Furthermore, regulation is not a boon, it’s a destructive measure that causes death of plenty of dreams.

          • cohagen

            World Bitcoin Association Files for Bankruptcy Amid Landlord Legal Fight
            A New York-based bitcoin company affiliated with Bitcoin Center NYC has filed for Chapter 11 bankruptcy protection after months of legal wrangling.

            A non-profit industry advocate founded last year, the World Bitcoin Association (WBA) has been embroiled in a legal dispute with its landlord over site issues at 40 Broad Street, a building that also houses Bitcoin Center NYC.

            The organization claimed between $100,000 and $500,000 in liabilities, and up to $50,000 in assets, according to court documents obtained by CoinDesk. The filing also states that the company expects to have enough funds to pay unsecured creditors, with a creditor meeting scheduled for 17th April.
            This also will drive btc value down.
            cash out 100% Also I’m sure your aware of what happened with the evolution darkmarket admin today stealing million worth of btc and resulting flash crash. Thing is they said a week ago on reddit they would do it week ahead of time and nobody did anything to stop them.

          • LaFlare1017

            Yeah there is definitely a lot of problems. The bankruptcy doesn’t surprise me at all, a lot of of bitcoin companies have gone bankrupt, which correlates with the huge bubble the price saw. I’m not getting paid for a few more weeks(once it starts I will paid every 4 weeks) so I have some time to decide. May cash it all out, or just most of it, depending on the stability. I will definitely cash it all out if it’s on a definite downward trend at the time.

          • cohagen

            Well it broke through 250 down 248 and deeper decline to follow. This kinda thing is to bitcoin what crust is to pizza. So you may wanna look for a mattress to stuff with cash.

          • cohagen

            The collapse of dark market exchange Evolution at the hands of a US$12 million exit scam by its founders is just the latest in a string of losses that have beset the digital currency world. In the same week, Coinapult admitted to have lost US$43,000 from one its hot wallets.

            One estimate now puts the average monthly thefts from Bitcoin at around 18,500 every month since 2011. The prospect of making a jump to wider user adoption looks remote when faced with this scale of regular and seemingly unstoppable losses. Food for thought.

          • cohagen

            Straight from the source.

            /r/Bitcoin user Kinitex has been crunching the numbers on the scale of Bitcoin thefts over the last four years. Tallying over 900,000 BTC being stolen in this period, the inquisitive user works out that an average of over 18,500 BTC being stolen per month since 2011.

            “I added the 19000 Bitstamp hack and 130,000 evolution theft. I’m probably missing a bunch more but I ended up at just over 900,000 BTC stolen or hacked since 2011. That averages out to just over 18,000 BTC per month. That is just absurd to think about…”

          • LaFlare1017

            There are almost 14 million bitcoins in circulation, so you are right, 900,000 is a huge number. Thanks for the information, that is a big concern. I think bitcoins are a great idea but their security problems are a concern.

          • cohagen

            Actually real numbers would be 1.6 million stolen(see fella forgot to include the mt gox heist in his numbers.), 1.2 million of satoshis unaccounted for, 90,000 held by us feds not auctioned yet, 24,00 held by austrailan fed.

          • cohagen

            The anonymous community only have themselves to blame for the negative attention that Bitcoin has attracted, instead of fuelling the ire of the regulators they should have worked to assuage their concerns by focusing not on unrealistic financial freedom but why P2P technology could be a boon for all concerned.
            You only have to listen to Andreas Antonopoulos trivialising anonymity when lecturing the Canadian Senate to realise the arrogance and ignorance that promotes Bitcoin.

          • negahllort

            be wary of anyone that is very ready to ‘volunteer’ information to ‘your benefit’. this cohagen fella’s clear slant against bitcoin is obvious as his personal insults toward any defense for bitcoin fly out at alarming speeds – if you look into his post history.

            not everything is rosy in bitcoinland, but remember objectivity when looking at the information given. in all those counted claims of lost and stolen bitcoin, they have originated in cases when bitcoin holders have voluntarily given complete control of their bitcoin to others – exchanges / seedy black markets / ‘investment’ fund opportunities / etc.

            just be cautious about who youre trusting and critical of the information being fed to you.

            by the way, season 9 of tpb on netflix in a week!! kitties are so nice!

          • A lot’s happened in 10 months, but dude, it’s on it’s way up.

          • Jeremy

            Solid advice cohagen

          • Hold on to as much as you can! It could be more expensive than gold in 2016.

          • cohagen

            The BTCe exchange and several other exchanges have been caught double counting transactions( a coin coming and going during a sale for example, one coin counted twice instantly.) also to inflate volume numbers.

        • Charles Guillory

          even if measured at the exchanges is the wrong number of transactions,I have seen a rise in the number of things that involve the currency and opportunities to use them- which wouldn’t happen if nobody wanted them

          • cohagen

            First btc and crypto are not currency. 2 they are easily manipulated by just a few parties who profit heavily from them in fiat.

    • Increasing demand my man, it’s unstoppable. With the introduction of Circle and Coinbase, more and more users (at least in America) are being able to sign up and buy Bitcoin.

  • Alex Devinichi

    u call that analysis? pfft…. BS

  • JaredJoseph

    The halving is scheduled to occur in July of 2016 at this rate. Please update the title of this article

  • Brony Pony

    I say we’ll see Bitcoin double in price by Cristmas

  • BTC will be at least $550 (MIN) by halving if not on the upper end of $1000.. Fact is, so many people have no clue about Bitcoin ( or Crypto Currency ) in general. Once this hits mainstream then we will watch the price SOAR! ETH, LTC, FCT, SYS, are ALL ON THE UP AND UP!!

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