Bitcoin Cash is one of the biggest cryptocurrency markets around the globe, with a an estimated market value of $8.7 billion in April 2021. Bitcoin Cash is a fork from the initial Bitcoin blockchain, which was created in August 2017 to overcome the scalability issues of Bitcoin. At every four years Bitcoin Cash undergoes a process known as the halving which means that the rewards paid to miners for confirmation transactions are reduced by half.
By 2024, Bitcoin Cash will experience its third halving and many are contemplating what this might mean for the future of the cryptocurrency. We’ll have a look at the definition of what Bitcoin Cash is, what the halving means as well as the history behind Bitcoin Cash halvings, the advantages that come from Bitcoin Cash halvings, potential problems with the halving and what we can anticipate of the 2024-based halving.
What is Bitcoin Cash?
Bitcoin Cash (BCH) is an unregulated cryptocurrency launched in August 2017, as an alternative from Bitcoin, the first Bitcoin blockchain. It was developed to deal with the issues of scalability in Bitcoin such as slow processing speeds and expensive costs. Bitcoin Cash has a larger block size of 8MB which allows more efficient and lower cost transactions that Bitcoin. Bitcoin Cash is also accepted by a broad range of wallets, exchanges as well as merchant service.
What is the Halving?
The process of halving that happens every four years, during which the mining rewards for validating that transactions are valid on Bitcoin Cash blockchain are cut in half. That means that miners will receive a fraction of the BCH tokens to validate transactions. It also has the result of reducing the amount of brand new BCH tokens being produced, which helps to keep inflation under control.
What is the History of Bitcoin Cash Halving?
First Bitcoin Cash halving took place in April 2020. the second one will take place in April 2024. In the first halving the rewards for miners increased up from 12.5 BCH per block to 6.25 BCH per block. The second halving will lower the reward down to 3.125 BCH per block.
What Are the Benefits of Bitcoin Cash Halving?
The most significant benefit of reduction in the number of BCH tokens is that it helps to control inflation through reducing the amount that new BCH tokens produced. This will help to preserve the value of BCH and will also aid in helping the network be more secure, since the miners are required to do more to earn rewards.
Potential Challenges of Bitcoin Cash Halving
The most significant issue of the reduction in size is that it may result in decreases in mining activity because the rewards diminished. This could lead to an increase in protection of the internet since there are less miners who can verify transactions. In addition, it could cause the increase of transaction costs because miners must be competitive for the smaller rewards.
What can we expect from the 2024 Halving?
It’s difficult to determine what effect the 2024 halving could impact Bitcoin Cash, as it is not yet happening. However, it is probable that the Bitcoin Cash network will become more secure, since the benefits for miners will decrease and they’ll have to be more efficient in order to make the same amount BCH. In addition, transaction costs could rise as miners compete for rewards, however this could compensated by improved security of the network.
Conclusion
The halving of Bitcoin Cash is significant for every cryptocurrency and the 2024 halving for Bitcoin Cash will be no any different. It could result in a greater security for the network as mining rewards decrease and they must do more to get the same amount of BCH. However, it could result in an increase in transaction costs because miners are competing for fewer reward. The only way to know is when the time comes to reveal what extent Bitcoin Cash is affected by the halving as well as what is in the near future for Bitcoin Cash.