BCH halving is coming, are you ready?

First, let’s explain what halving means, which means “the reward for each new block produced is reduced by half.” BCH, like Bitcoin, is obtained through mining operations. Miners will receive a certain amount of rewards for producing blocks, which is also the way each new BCH is born.

The reward of Bitcoin is halved every time the 210,000th block is produced, and the mining difficulty is set at about 10 minutes on average to mine a block. Satoshi Nakamoto wrote this into the code base when he was developing Bitcoin. Based on an average of 10 minutes per block, it will take us 4 years to produce 210,000 blocks, which means that every 4 years, the output will be halved.

BCH has a similar setting to Bitcoin, and the reward will be halved every 210,000th block. Theoretically, the block time of BCH and BTC is about 10 minutes, and the halving time should be the same, but because BCH used the EDA emergency difficulty adjustment algorithm for a period of time in the early days, that is, if the BCH blockchain mines less than 6 blocks within 12 hours, the difficulty will drop by 20%, which makes BCH's early block speed faster than BTC, so BTC's halving time is later than BCH.

According to the BCH code setting, BCH has a cycle of 210,000 blocks, that is, the reward will be reduced by half every 210,000 blocks mined. Therefore, at the beginning, when BCH was 0 ~ 209,999 blocks, the reward for each block mined was 50 BCH; then there was a halving, and the reward for each block mined was 25 BCH from 210,000 to 419,999 blocks; according to convention, the reward for each block mined was 12.5 BCH from 420,000 to 629,999 blocks, and the reward for each block mined was 6.25 BCH from 630,000 to 839,999 blocks...

The first two halvings of BCH followed Bitcoin, which occurred in November 2012 and July 2016 respectively, and this year's third halving is expected to occur around April 8 through calculations.

The block reward halving means that it will take longer for all BCH to enter circulation, but it also means that the output of new BCH from mining will become less and less. And because of its limited supply and increased mining difficulty, its scarcity attribute becomes more and more obvious. Scarcity will directly increase its value. As the saying goes, things are more valuable because they are scarce! For BCH, there is no doubt that this is a very big positive.

Compared to most fiat currencies that lose value over time due to inflation, the halving model is the opposite, it will put upward pressure on prices. After the halving, the BCH annual inflation rate will also be directly adjusted to 1.80%, a significant decrease.

In fact, for BCH halving, the most important thing for BCH supporters is to be mentally prepared. Compared with BCH upgrade, major nodes are upgraded in time before the upgrade, and the main thing about halving is that the block reward is halved. Although we don’t need to do anything in advance, we must have a very clear understanding of this matter.

Especially for miners, with the same computing power, the BCH handling fee has changed from 12.5 BCH to 6.25 BCH. Therefore, some people are worried that BTC has not halved yet, and the halving of BCH will cause miners to avoid the loss caused by the halving of BCH earlier than BTC. When the rise and fall of BTC and BCH are basically the same, about 50% of BCH computing power will be cut to BTC, and the average block time of BCH will be greatly extended. The output of BCH mined with the same computing power is lower than that of BTC, resulting in more computing power being cut away, and more computing power being cut away, resulting in longer block time...

In fact, this worry is unnecessary because the difficulty adjustment algorithm of BCH is different from that of BTC. The mining difficulty adjustment algorithm of BCH is a modified DAA algorithm. In short, it has the following characteristics:

1. Adjust mining difficulty block by block;

2. The mining difficulty of each block is adjusted based on the computing power of the 144 blocks before it;

3. When the computing power changes exponentially, the network will quickly adjust the difficulty to ensure fairness

4. Avoid feedback oscillation caused by the mismatch between current computing power and target difficulty.

The above characteristics of the DAA algorithm ensure that even if the computing power drops by 50% instantly, it will only have a short-term impact on the BCH block speed. The DAA algorithm can quickly adjust the difficulty according to the actual computing power situation, so that the block time returns to normal levels.

Moreover, a large amount of computing power has been withdrawn from BCH. This is a case study: the most typical example is the "computing power war" during the BSV split. BCH computing power has dropped sharply for several consecutive days, with a cumulative decline of more than 50%. The average block time of BCH can still be stabilized at about 10 minutes. Facts have proved that when a large amount of computing power is withdrawn quickly, the DAA algorithm can quickly adjust the difficulty according to the actual computing power, so that the average block time is restored and stabilized at about 10 minutes. It can be seen that even if 50% of the computing power is withdrawn, the impact on the BCH block time is short-lived and slight. In addition, BCH has added reorganization protection, that is, 10 block confirmations, and there is no need to worry about it being attacked by 51%. For BCH, the halving will proceed smoothly.

For BCH developers and ecosystem builders, the BCH halving is just a small episode. There is no need to pay too much attention to it. They just need to quietly wait for the arrival of the halving, continue to develop BCH and build the ecosystem, and use their own strength to contribute to BCH. They can attract more users to use BCH through technical improvements and ecological improvements, making BCH more powerful.

For market investors, the most concerned thing is the price of BCH. After all, this is also the halving market that has been discussed. In this regard, we can refer to Bitcoin. To some extent, Bitcoin has seen different degrees of increase every time it is halved. However, the rise of Bitcoin only appears at least half a year or a year after the halving, and it peaks almost a year later. The previous two peaks were in December 2013 and December 2017. Therefore, for investors, the best choice is to hold for a long time and wait for the peak.