The Bitcoin has been on fire so far this year, rising almost 250% since the beginning of the year. There are multiple reasons behind the rally, but one of them is very important.
It is called the "the halvening ", an event in which rewards are reduced to the so-called Bitcoin miners in half. To understand the meaning, it is important to know how basic-block-key technology works.
Miners with high-power computers are competing to solve complex math problems to validate Bitcoin transactions. Whoever wins this competition gets the reward which is in this case Bitcoin.
Currently, the number of Bitcoin miners rewarded at 12.5. Bonuses are reduced by half every few years to prevent the presence of high supply. By May 2020, as experts say, the bonus for each factor will be reduced in half again, to 6.25 new Bitcoin.
Why does the halvening happen?
This process takes place almost every four years. This is because there is an existing rule in the Bitcoin program, created by Satoshi Nakamoto, the anonymous person or the people who set up the configuration.
Bitcoin is often referred to as "digital gold" due to the dynamics of supply and liquidity. Experts say the value of the encrypted currency is supported by the scarcity of the total number of existing Bitcoins.
The total number of Bitcoin currencies to be released is 21 million. About 80% of this amount has already been extracted.
How will this mechanism affect prices?
Traders see the likelihood of boarding with such an event, as it eventually leads to a lower supply, leading to a higher price of the digital origin coin.
On the other hand, as demand on the bitcoin soars, the price is predicted to rise further.
As we mentioned earlier, there are several other theories about why the price of bitcoin this year has risen, along the way of investors using it as a hedge amid the trade war between the United States and China.
Others have attributed the strong climb in prices to the mounting interest from intuitional investors, most notably the Facebook.
In the meantime, the Bitcoin has risen more than 10 percent to $12,480, extending its advance for an eighth consecutive session, according to its price on BitStamp cryptocurrency exchange.
The Bitcoin hit a top at $12,935 earlier on Tuesday, marking its highest level this year and the highest since January 2018.
Ripple rose more than 1.75 percent at $0.48
dollar and Ethereum that augmented 6.28 percent to $333. Bitcoin Cash surged 4.02
percent to $497.