Bitcoin Cash is to have its first halvening this Wednesday, around the same time the peak of the Chinese flu should have passed too in London and New York, so making it perhaps a double cause for celebration.
The halvening will happen on or around 4PM London time on Wednesday, known as globally peak time because China has not yet gone to sleep, America has just woken up, while Europe is preparing drinks.
At that point, miners will start receiving 6.25 BCH per block, down from the current 12.5 BCH.
At a technical level there should be no problem, although of course you never know, but at block 630,000, the number on the screen just changes and that’s that.
At an economic level however there’s a huge change because there would be just half the supply.
The effects of that are unlikely to be felt for a few weeks or maybe two-three months, discounting any pricing in attempts which realistically are not fully possible because you don’t have full information on what the price should be as it also depends on demand, not just supply.
All you can say is that if demand remains the same, which could due to cost averaging, then price should rise. If demand falls, then price should fall less than prior to the halvening. If demand rises, then price should rise even more than it would have done before supply was halved.
That supply practically is probably not halved instantly, although technically it is, because miners have savings which they might have to keep using, potentially maintaining the supply pressure at level.
However new income has changed, so those savings should eventually run out or they adjust the supply they bring to market in line with the new income.
By income, we mean in BCH. What they care about is fiat, so they might bring less BCH to the market, but still get the same amount of fiat if price doubles.
If it doesn’t double, then presumably they’ll have to run on savings if they don’t lower their operating costs, and some may well go bankrupt.
Unique Halvening This One
There has never been a halvening quite like BCH at the scale of BCH’s market cap and interest.
That’s because BCH is kind of mined with bitcoin in as far as miners run some simple algo calculating whether mining BTC or BCH would be more profitable, and accordingly attribute their hash.
If BCH’s value against bitcoin doesn’t double, then BTC would be twice as valuable to mine for around 35 days.
BCH’s hash is currently around 2% of BTC’s. Saying it would fall to 1% is perhaps a bit simplistic because you’re taking hash from one – making it more profitable for others – while adding it to another, so making it less profitable.
Meaning there’s maybe a squared effect so it would fall by 50%. Not that it matters, and it doesn’t matter because the current 2% of BTC’s hash is hardly more secure than if it was 1% or even 0.1% because we’re talking a difference between 98% and 99.9%.
Basically no difference as if they wanted to attack they can, but different dynamics would come in play in that case, including a change of Proof of Work (PoW) which arguably should be done anyway, yet BCH is very divided so you can’t get anything done there.
Meaning there shouldn’t be any problem at a technical level in regards to security and the like because technically BCH isn’t secure, but practically it is.
There’s also BSV too and that halves next week, a few days after BCH. Much of the above applies to that too.
The big one of course is the bitcoin halvening next month. That is a first too because its the first halvening since bitcoin went mainstream in USA in 2017.
For bitcoin there are other considerations, including Wall Street which loves to play with it, but some of the above applies too in as fas as they can’t price in what they don’t know in regards to demand and it’s interaction with supply, so the effects should begin to be felt around the end of summer probably and then onwards.