Today I want to take a moment to talk to you about what makes the crypto sector tick: technology. What does crypto do? What can you do with it? Technology has the power to determine whether a crypto takes off… or crashes and burns.
Trying to write out horoscopes by drawing lines on a price graph is a great way to miss this point and wind up jumping at shadows.
Instead, I want to talk about the technological changes that have made Bitcoin the leading crypto. The mining rate halvings of Bitcoin, sometimes known as “halvenings,” are a feature, and not a bug, of Bitcoin. With each halvening, it becomes technologically more and more difficult to mine new Bitcoins. It used to be you could do it with a few off-the-shelf chips, but mining nowadays takes specialized, high-tech rigs – extremely expensive processor rigs.
I should know. I used to mine Bitcoin in my own home. Now I’d need an entire second house to fit a mining rig…
Those particular tech requirements help keep Bitcoin scarce, and scarcity is Bitcoin’s whole brand. By cutting the rate at which new Bitcoins are generated, the system keeps that scarcity at the forefront of how Bitcoin works. It makes sure the 21 million BTC cap doesn’t arrive too soon, and that existing coins aren’t excessively diluted by new coins entering the supply too quickly.
The fact that it’s always getting harder and harder to get new Bitcoins creates the exact psychological effect on price that suits the original crypto best. Value is just a function of how hard something is to get versus how badly people want it. If people think that something is precious, it can actually create this effect.
It’s not just theory. This has happened before. The payoff from Bitcoin mining gets cut in half in BTC terms about every four years. This last happened on May 11, 2020; within a year or so, Bitcoin hit a new high of $65,000. That’s more than three times the previous peak back in 2017.
And that peak back in 2017? Guess what: The previous halvening was the year before that, July 10, 2016. It goes back even further. The first halvening was on November 29, 2012. The first time Bitcoin priced above $1,000 was in late 2013.
I mean, it’s actually eerie how regular this is. It happens every four years like clockwork. Now, you can never know for sure, but if I had to pick a date, I’d guess Bitcoin’s next all-time high would occur in late 2025, after its next halvening in 2024.
The original crypto is showing us that a major planned technical change for that crypto can be a big-time price catalyst because, if a crypto is more fit for purpose, it’s easier to use, and more people have a reason to adopt it, and wider adoption almost always means a higher price per coin