As the halving approaches, how will BCH perform?

Every time a new block is generated, the miner who mined the block will receive a certain amount of Bitcoin as a reward. However, every 210,000 blocks in the Bitcoin network, the system will automatically halve the number of block rewards, hence the name halving. This mechanism was created by Satoshi Nakamoto to set a supply cap to make Bitcoin more scarce, as the total number will never exceed 21 million. Compared to most fiat currencies, which depreciate over time due to inflation, the halving model is the opposite, putting upward pressure on prices.

The first halving occurred in 2012, when the block reward was halved from the original 50 to 25. The second and last halving occurred in 2016, when the block reward dropped from 25 to only 12.5, and has remained so to this day. The upcoming BCH halving is expected to be in April 2020. After this happens, BCH miners will lose half of the current block reward (12.5 BCH), and miners will only receive 6.25 BCH and transaction fees per block. BTC is expected to halve after May 2020.

In fact, BCH performed very well one month before the Chinese New Year, basically leading the whole industry. Before that, the whole industry had actually experienced a two-year bear market, and the two-year reshuffle and dormancy had given the market a new round of upward opportunities.

During the Spring Festival, a serious pneumonia crisis broke out in Wuhan, and martial law was imposed nationwide. Due to the virus, people's lifestyles have changed a lot. Paper money requires actual contact with users, which also brings about a way for the virus to spread. At this time, mobile payments such as Alipay that do not require contact have been sought after by the public. From this perspective, digital currencies such as BCH may also receive more attention.

Halving can cause prices to skyrocket, possibly even several times. Only in this way can miners continue to make profits and continue to invest in computing power. Hyperblock CEO Sean Walsh commented: "If you look at the first 6 months and the last 6 months of the first two halvings, you will see that the price of Bitcoin has risen sharply. As a miner, (halving) means that income will be halved overnight, which is a bit scary, but the increase in price is enough to make up for our losses."

In fact, if we observe the past, each halving has triggered a bull market. In simple terms, "scarcity makes things valuable", and prices soar. Only in this way can we continue to attract computing power and continue to invest in the BCH network. If the growth rate is high enough, the total computing power and miners of the BCH network will not only not decrease, but will also attract more computing power to join the BCH network. And because BCH is halved first, it is the first digital currency to enter the price dividend period, and it may even absorb the computing power of BTC. Profit-seeking miners may switch computing power to the BCH network because it is profitable.

Some people say that the halving market has already started. In fact, BCH has been rising for nearly a month since before the Spring Festival, and has doubled from the low point before the New Year. Investors' enthusiasm is gradually fermenting, and miners are full of confidence. The resulting halving market may become the biggest market turning point since January 2018.

Some people also believe that after the halving, the block reward will become less and less, and eventually BCH will no longer have miners to operate the network. In fact, the block reward is only a benefit for miners in the early stage, and the long-term and rising income of miners is still the source of income from the handling fee. As time goes by, all BCH will be mined, and at that time, each newly produced block will no longer have a block reward. In fact, 20 years after its birth, the block reward has basically been negligible. What about miners? Obviously, miners need enough income to maintain the mining cost. Without the block reward, miners only have one way left. In fact, this is also the original prediction of Satoshi Nakamoto, who predicted that "Bitcoin will die or generate a large number of transactions in 20 years." Only a large enough transaction volume can maintain the mining cost of miners.

From this perspective, all POW currencies, assuming they can produce blocks normally, will face a death crisis after experiencing multiple halvings. The block reward, the biggest source of income, is gone, and their own development is insufficient. They do not attract enough transaction volume, and eventually miners will leave these weak POW currencies.

This is also the fundamental reason why BCH is committed to being the best money in the world. BCH can rely on sufficiently excellent payment attributes and transaction functions to attract users to use it. Judging from the current payment capabilities of BCH, the activity of BCH on the chain has been rising.