Bitcoin Halving Is Really Different This Time
In the world of cryptocurrency, it's rare to be able to honestly state, "this time it's different." However, for the Bitcoin halving that is planned for next month, things are truly different this time.
This is the first time that Bitcoin (BTC) has increased in value prior to the planned reduction of block rewards, as highlighted by Bitcoin historian Pete Rizzo.
The three previous halvings (2020, 2016, and 2012) were preceded by notable increases in the values of cryptocurrencies.
We are in unknown ground when it comes to technical analysis, therefore nobody can predict with certainty how the Bitcoin halving will impact the price of the cryptocurrency.
The hypothesis that cryptocurrency is trapped in four-year boom-and-bust market cycles founded in historical events is challenged by the halving of bitcoin, which might accelerate or halt the cryptocurrency's historic climb.
Nonetheless, this fourth Bitcoin halving in the network's history is already unique in several respects.
This is not only the first time that the price of bitcoin has dropped by half ahead of an event, but it's also the first time that transaction fees have contributed significantly to the income of bitcoin miners.
Transaction costs are correlated with network utilisation, and network usage has increased dramatically since the Ordinals protocol was introduced. This protocol enables users to "write" arbitrary data into the chain in order to construct assets that resemble NFTs.
This has no bearing on the price of Bitcoin, but it may have an effect on the quantity and kind of mining equipment that is still in use following the halving. Usually, halving works like wildfire to get rid of outdated ASICs that can no longer make money after the "block subsidy" is cut in half.
People already estimate that this will be the most valuable block mined to date. The halving will occur at a block height of 840,000 (a number of blocks that have been hashed on the blockchain).
This relates to the preceding point: By giving each individual Satoshi, the smallest unit of Bitcoin, a serial number, ordinals function to transform a fungible asset like bitcoin into something with a provenance, an identity, and rarity.
Ordiscan.com's founder, Tristan, estimates that collectors of these "rare sats" may be able to recoup $50 million from the 840,000 block data.
The first satoshi of the block alone may be worth more than $1 million according to the "Rodarmor Rarity" system, which gives value to Bitcoin protocol events like difficulty changes and halvings, he writes in a blog post.
Many companies schedule launches or announcements to coincide with the anniversary since it is a momentous occasion for the community. This year is the same as last, with the exception that Casey Rodarmor's most recent protocol design, known as Runes, is being introduced as a new primitive token for Bitcoin.
To put it briefly, Runes are an alternate method of releasing tokens based on Bitcoin (much as altcoins published on Ethereum ). Given the success of Ordinals, the protocol is receiving a lot of interest, and several projects have already declared their intention to release their Runes coins on the first sat of the halving block.
In addition, Tristan believes that miners will be in fierce rivalry to obtain the halving block by any means necessary because to its potential great value.
According to what he writes, "Block 840,000 is worth at least two orders of magnitude more than any previous block." "This has never happened before, and miners will find it very difficult to abide by the standard procedures when they are holding this enormous prize pool in their hands."
All of this suggests that in a process known as miner extractable value (MEV), miners may attempt to outpace one another in order to obtain the block. Not just Tristan has speculated about a potential "reorganisation" of the business.
Recently, Will Foxley's "Mining Pod" discussed the concept of transaction sniping, with the "rare sat" in issue valued at a more cautious 10 BTC.