Hi , morning folks welcome back to our daily wrap in the crypto ecosystem .if you missed the previous post feel free to revisit for a better understanding..... Stay with me till the end
HOW CRYPTOCURRENCY VALUE IS DETERMINED:
The price of cryptocurrencies is governed by the law of demand and supply. This simply means that buyers and sellers of these cryptocurrencies control their value. The price of various cryptocurrencies is highly volatile and so, it is a high-risk investment at least for now. If there are more sellers than buyers, the price drops and vice versa. One spectacular aspect of cryptocurrencies is that various cryptocurrencies have a fixed supply called Maximum Supply. This means that a particular amount of a cryptocurrency will ever exist foreveras a result, many cryptocurrencies are expected to be scarce in the future as many people will acquire and hold them.For example, Bitcoin has a maximum supply of 21,000,000. Unlike fiat currencies, Bitcoin can not be minted at will by a central body because, it is limited algorithmically. There will ever be 21,000,000 Bitcoin in existence.
BITCOIN HALVING:
Every ten minutes, a block of bitcoin transaction is solved by miners and is added to Blockchain network. This is an expensive and hectic task which consumes alot of electricity and requires sophisticated hard wares. People mine because the algorithm rewards miners with new BTC, which are generated and added to the circulating supply every 10 minutes. The distribution of new BTC is known as “block reward”. At the beginning, block reward was 50 BTC which means that every 10 minutes, new block reward is added to the circulating supply. Every four years, halving occurs in the bitcoin network. This means that when halving occurs, the mining difficultyincreasesand the mining reward is reduced by half. The first Bitcoin halving occurred on the 28 thNovember, 2012with block 210000and Bitcoin mining reward was reduced to 25BTC. On the 9thday of July, 2016, the second halving took Bitcoin mining reward to 12.5BTC. the next Bitcoin halving which will take Bitcoin mining reward to 6.25BTC is expected to occur in the month of May, 2020.
