Bitcoin 

In May will occur another halving of Bitcoin.

Halving is the basis of the economic model of this cryptocurrency because it guarantees the issuance of the coin at a constant and decreasing rate.

This mathematical system allows to control the inflation rate of the currency, unlike legal tender currencies, whose issuance is at the pure discretion of governments and central banks.

In other words, the protocol underlying some cryptocurrencies is designed to prevent their price from falling drastically. Thanks to halving events, the availability of coins is never too high in relation to demand.

Indeed, we must remember that their value is a balance between supply and demand. As in any other market, if supply exceeds demand too much, the price of a product collapses.

What’s halving? 

It is the process of reducing the mining reward. This means that in May 2020, Bitcoin miners will see their Bitcoin compensation owed for their validation work on the Blockchain halved.

When does halving occur?

They are scheduled to occur every 210,000 blocks, so 1 every 4 years or so. Since the maximum bitcoin limit that can ever be created is set at 21 million, it is expected that the last coins will be mined in 2140 as a result of 32 halvings.

Will the price of Bitcoin then rise or fall?

Crypto industry experts believe that halving the miner’s fee from 12.5 to 6.25 will lead to an increase in Bitcoin’s demand (and therefore its value) due to a further limitation of supply. In fact, not only will the difficulty to mine Bitcoin increase, but the costs of this activity will increase proportionally (more powerful and expensive hardware instrumentation, higher power consumption).

The last Bitcoin halving in 2016, after all, caused the incredible peak at $20,000 in 2017.

Most likely, we won’t see such a boom, because in the meantime the market has matured and has caught the interest of big players in traditional finance. However, what has happened in the past leads us to believe that we will see an increase in the value of Bitcoin over the next year.

 

Ethereum

One of the most important changes for the Ethereum Blockchain – code-name of the operation: “Berlin” – which will lead to the launch of Ethereum 2.0 is already underway.

The update involves a radical change in the consensus mechanism, from Proof-of-Work to Proof-of-Stake. But what does it mean? That miners will be replaced by special network validators for checking transactions and creating blocks on the Blockchain.

 

The Impact of Ethereum 2.0

Most other cryptocurrencies, such as Young (YNG), are based on the Ethereum ERC-20 protocol. This means that the same opportunities that will open up for ETH will be reflected on all altcoins built from its protocol.

The Ethereum update will also create new possibilities for dApps (decentralized applications) and Smart Contracts.

Ethereum 2.0 could, therefore, trigger new financial models for loans, staking and new incentives that could lead to the birth of new DeFi (Decentralized Finance) projects and the take-off of existing ones.

 

Sources:

Cfr. D. Laufenberg, L. Li, H. Shahriar e M. Han, Developing a Blockchain-Enabled Collaborative Intrusion Detection System: An Exploratory Study, in Advances in Information and Communication, Proceedings of the 2020 Future of Information and Communication Conference (FICC), a cura di K. Arai, S. Kapoor e R. Bhatia, I, 2020, p. 174; W. Y. M. M. Thin, N. Dong, G. Bai e J. S. Dong, Formal Analysis of a Proof-of-Stake Blockchain, in ICECCS, 2018. Sul diverso concetto di “proof of work” sia consentito rinviare, ex multis, allo studio di C. Catalini, J. Gans, Some Simple Economics of the Blockchain, in NBER working papers, 2019, A-2.