Bitcoin mining is considered as one of the wealthiest industries across the market. But the question that a lot of people have in their mind is that what will happen of block rewards are cut in half? What would be its impact to the security of network and to the miners? It’s a given that Bitcoin mining is a very profitable activity. It has been long proven by hobbyist miners and those who have been doing this activity for a very long time. So when the upcoming halving in May 2020 cut the block reward in half, would that spell the end even for large and medium sized producers?
A lot of bitcoin enthusiasts perceive halving as a bullish idea as it is a catapult for the price of BTC. Hence, this halving will certainly and definitely affect the miners.
But before we proceed to that part, let us first understand what bitcoin halving is. The creator of Bitcoin who is believed to be Satoshi Nakamoto programmed the Bitcoin network that the miners’ block rewards would be halved every four years. The very first block reward started out at 50 BTC which was halved in the year 2020 and halved again in 2016. Therefore, the current block reward for miners is 12.5 BTC. Consequently, in My 2020, the block reward will go down to 6.25 BTC and another half after 4 years. Now, since over the years the block rewards are getting smaller and smaller, experts fear that once it becomes non-valuable already, then miners will no longer continue to do mining as they will no longer receive block rewards. As a result, if the halving will continue, and the value of the block rewards will be lesser and lesser over time, them it will definitely have a lot of negative effect on Bitcoin mining. First, miners who have low mining efficiency will be forced to stop their operations and may have to re-evaluate their business. Second, since giant international firms have cheaper sources of electricity and have more advanced technologies and machines, the digital mining will just become their racetrack. Third, the small operators will also be forced out of the market. This also includes those who are running S9s. So technically and generally speaking. If you will not be able o upgrade your equipment to the 70+ TH/s and your infrastructure to the 2500W miner you might just find yourself out of the market already.
Overall, the Bitcoin halving will certainly have a very huge impact on Bitcoin mining both in the long and short term. It is also expected that we will see the scenario where smaller operators will be driven out of the market while the larger mining farms with advanced technologies and infrastructures will stay in the market. Yes, Bitcoin might have been very profitable in the recent years. But as the industry matures and changes are coming in and out, we may not see this cryptocurrency as enticing as it is due to the Bitcoin revolution family.
If you want to get started investing in platforms such as Bitcoin Circuit, you will need to have an understanding of basic bitcoin terms such as ICO. In this article, we will discuss just that. Without further ado, let’s start:
Basic definition of an ICO
Basically, ICO means Initial Coin Offering. It is a procedure for raising money by making use of cryptocurrencies. It is most widely used in initiatives which have not yet completely created their blockchain program, merchandise, or assistance. The transaction is generally settled with cryptos such as Bitcoin or Ethereum, however, in certain cases, fiat money can also be approved.
Investors take part in Initial Coin Offerings or ICOs with the expectation and anticipation that the organization is going to be prosperous, generating need and evoking the fundamental tokens to raise in price. Quite simply, they aspire to obtain a great return on investment or ROI as early investors of that specific cryptocurrency venture.
After the startup company creators have established their tokens, they have to persuade investors to back up their venture by taking part in their ICO. This can be accomplished with the production of a whitepaper explaining the organization’s objectives and the way in which the newest environment should do the job.
ICOs vs IPOs
ICOs are frequently contrasted to IPOs or Initial Public Offering. Having said that, this comparing is very misleading. IPOs generally affect proven businesses that offer partial control stocks in their corporation in order to raise finances. In comparison, ICOs are mostly employed as a fund-collecting system that enables organizations to get funds with regard to ventures in really early phases, and people who buy their tokens are generally not purchasing virtually any possession within the organization. Usually, ICO tokens are set up within the blockchain of the Ethereum cryptocurrency, pursuing the ERC-20 token standard. As such, ICOs are not similar and should not be compared to IPOs.
Are ICOs Lawful?
The quick response is maybe. Legitimately, ICOs have been around in a very gray spot due to the fact that disputes can be said against them. However, the previous ruling by SEC was able to get rid of several of the gray spot surrounding ICO. In some instances, the token is merely an application token, which means it provides the owner admission to a particular process or system; thus it is not possible for it to be categorized as a monetary protection. In contrast, when the token is labeled as an equity token, which means that it’s main objective is to increase in price, then it will be similar to a security.
Although many people buy tokens to gain access to the main system at some upcoming opportunity, it’s hard to refute the concept that the majority of token acquisitions are for risky investment decision reasons. This is simple to conclude provided the appraisal numbers for a lot of initiatives that have not yet pushed out a commercial item. The decision of the SEC has presented several clearness to the position of utility as opposed to protection tokens. Regardless, there are still many gray areas left in the legality of ICOs. Until additional regulating restrictions are enforced on ICOs, business people will carry on and keep taking advantage of this brand new trend.