Have you been lately asking yourself: should I buy Bitcoin? Is Bitcoin a good investment in 2020? You must have heard a lot about Bitcoin and the profits early investors made. But still, you’re unsure about investing in Bitcoin, aren’t you? If you’re unable to make a decision, you’re not the only one. Since its inception in 2009, Bitcoin has been in the news for good, as well as bad reasons. And due to these mixed views and fluctuating prices, people have always remained doubtful about investing in Bitcoin.
Whether you’ve invested in Bitcoin or not, most probably you will be interested in knowing what future holds for the world’s first cryptocurrency. At present every crypto investor is asking one same question- will Bitcoin skyrocket after the 2020 Halving? Over the years, Bitcoin has seen several highs and lows. Staring from $0.01 to $20,000 per coin, Bitcoin has been through all the ups and downs. Investors are a bit skeptical about the future of this digital coin because its price was on the decline for the second half of 2019. However, experts believe that the Bitcoin price could possibly rise to the $50,000 mark in 2020. Wondering why and how this is possible?
If you remember, Bitcoin saw massive growth after the 2016 halving. After every four years, Bitcoin halving takes place in which the amount of Bitcoin generated by the network, roughly every ten minutes, is cut in half. Since its launch, Bitcoin “Halving” has occurred twice, each time boosting Bitcoins price by at least 10x. Now on May 20th, 2020, Bitcoin will undergo its third halving. This means that 50% less Bitcoins will be generated every 10 minutes. Every time Bitcoin Halving occurs, it affects Bitcoin’s price. So, should you consider buying or mining Bitcoin in 2020? Let’s find out what could be the impact of this year’s halving and why 2020 is a big year for Bitcoin.
Is Bitcoin a Good Investment in 2020?
Bitcoin was launched in 2009 by Satoshi Nakamoto as a seeming response to the 2008 Great Recession. Today, more than 2000 cryptocurrencies exist but Bitcoin still dominates the market. This is because despite having gone through tough times, Bitcoin always bounce back to regain its top position. Many investors are now wondering that how Bitcoin will manage to dominates the crypto sphere when the performance has not been exciting in the recent past. So, let’s take a look at what the future holds for this popular cryptocurrency. But before that first check out what makes Bitcoin a good investment option.
What Makes Bitcoin Valuable?
Bitcoin was developed on a model of deflation. So, unlike fiat currency, Bitcoin has a limited supply which is fixed at 21 million units. This means that no more coins could be produced once this limit is reached. Due to this reason, Bitcoin is not at the risk of inflation. It is not controlled by any central authority which means government or central banks cannot print extra units of currency. The deflationary nature of Bitcoin makes it scarce and gives it more value.
How the Halving Impacts Bitcoin Price?
The Bitcoin network is verified and secured by miners who solve a “block” of transactions. These blocks are added to the Bitcoin blockchain and in return for solving blocks, miners are rewarded with new bitcoins. This “block reward” is fixed and every 10 minutes new bitcoins are produced. At the time of its launch, the first block reward was 50 BTC. However, the network is programmed to undergo halving every 4 years. This halving process will continue until the last bitcoin is mined in 2140. The first halving occurred on November 28th, 2012 and second in July 2016. Now, the next “halving” is set to happen in 2020.
At present, the block reward is 12.5 BTC. The upcoming halving will reduce the block reward to 6.25 BTC every 10 minutes. Now, you may wonder whether this year’s halving could change Bitcoin’s price forever as previous halvings have done.
The block reward halving process positively impacts bitcoin’s price. This can be understood with the example of gold. This metal has a high value due to its scarcity. Likewise, halving makes bitcoin scarce and this reduced supply makes them more valuable. A quick look at previous halving can help you understand how this year’s halving could impact bitcoin.
At the time of the first-ever halving, the price of Bitcoin was about $11. After the first halving, the price of bitcoin reached an astonishing $1,100 in a year. Then the second halving also had a similar effect. After the second halving, bitcoin’s price soared from approx $700 in 2016 to a whopping $20,000 by 2017. By looking at the history of the halving process, investors have high hopes this year. If bitcoin follows its previous trends, it may reach a new all-time high in the coming months.