To Halve Or Not To Halve: Block Reward Projections For The Top 5 Cryptocurrencies

Even as cryptocurrencies completely reshape the status quo of the global financial system, there’s still one thing that they haven’t been able to disrupt: The law of supply and demand. The more you have of something, less valuable it becomes. Scarcity tends to make things valuable. Until the innovation of the blockchain, it simply wasn’t possible for digital goods to have a limited supply in any meaningful sense. Knowing this, bitcoin’s early developers created a kind of virtual scarcity, slashing the BTC reward for mining new blocks by half every 210,000 blocks.

By “halving” the future supply of new tokens, bitcoin and other cryptocurrencies have a way to predictably and automatically control inflation, something that economists have struggled with since the invention of money. In this post, we’re taking a look at the impact of “halving” events for the top five cryptocurrencies.

5. Bitcoin Cash – April 8, 2020: After splitting dramatically from the main bitcoin blockchain in mid-2017, BCH has struggled to find a clear niche for itself in the greater cryptocurrency world. There is, however, one situation where BCH may yet have an advantage over its more popular sibling. Due to the nature of BCH mining, its miners are expected to hit the BCH halving more than a month before BTC’s mining reward drops. This could result in a major price boost for BCH, at least in the short term.

4. Litecoin – August 5, 2019: As of this writing, LTC’s halving even is mere weeks away. The price has seen a significant increase over 2019, climbing from around $32 at the start of the year to a high of over $140 in June. That said, Litecoin’s 2015 halving didn’t exactly cause its price to skyrocket. In fact, it actually fell from $4.31 to $2.67 in the month following the decreased block reward. How it will play out this time is anyone’s guess.

3. Ripple – N/A: Even among blockchain technology experts, there’s serious disagreement about whether or not Ripple’s XRP token actually qualifies a “real” cryptocurrency.  XRP is fully controlled by Ripple Labs, meaning it isn’t decentralized in any sense. In fact, XRP tokens can’t even be mined. If you want to hold XRP tokens, you have to buy them. As a result, there is no block reward to be halved. Ripple Labs alone controls the supply.

2. Ethereum – N/A: Unlike bitcoin, ETH doesn’t have a hard-coded block reward system. Instead, Ethereum developers collectively decide what the block reward will be based on a variety of factors. In August of 2018, for instance, Ethereum’s core developers decided to drop the block reward from 3 to 2 ETH in advance of the “Constantinople” software upgrade. If there’s ever a halving event in Ethereum mining system, it will only happen as an ad hoc decision from the developers.

1. Bitcoin – May 19, 2020: In the weeks immediately following bitcoin’s last halving event, things were pretty quiet. The block reward decreased from 25 BTC to 12.5 BTC on July 9, 2016, with the BTC trading at $656. A month later, without the hype surrounding the halving boosting speculator interest, the price actually fell to around $590. Over the next few months, however, BTC slowly and steadily gained momentum. By July 9, 2017, it was trading at $2,570. A year later, BTC was worth $6,760. By July 9, 2019 — just three years after the halving —it was selling for $12,670. While there were many factors playing into that 1831% increase, it’s safe to say that the decreased block reward was definitely among the biggest. There’s no guarantee that the next halving to 6.25 BTC per block will have a similar effect, but most experts believe that BTC’s price will rise over time thanks to increased demand.