The COVID19 pandemic has not only influenced how people across the world travel, work, and shop, but it has also impacted the share markets in the US, India, China, and Europe. Although rare assets are mostly considered safe in all stock exchanges, there has been some trepidation regarding the value of precious metals in the past month.
As of May, the value of Gold in the US market peaked at $1700 and then began to slide off. On the other hand, silver and platinum prices were seeing an increase. According to several share market and investment experts, investors should sell gold and begin investing in silver in the long run.
However, there is much doubt about how long silver can keep up its bullish run with the market prices dropping fast, and the value of INR falling fast against the USD shows that there is little safety in investing one’s hard-earned money in the traditional assets.
What should you know about Bitcoin Halving before investing in the crypto asset?
On the other hand, Bitcoin values have shown considerable stability in the last couple of months. Peaking at $10,367.53 in mid-Feb and dropping to $4,994.70 in mid-March. According to Bitcoin experts like Nate Martin, the sharp rise and fall of the value of Bitcoin have little to do with the pandemic and its effect on the share market.
The seemingly erratic behaviour of the Bitcoin’s value is a result of the phenomenon miners and experts refer to as Halving. Bitcoin Halving occurs every 4 years or every time 210,000 blocks are mined. It occurred in 2012 and showed the same predictable fluctuations in the Bitcoin prices.
Bitcoin Halving is when the miners are rewarded a fixed number of bitcoins (50 BTC) for mining the first 210,000 blocks, but the one who mines the 210,001st block gets half the reward (25BTC) and so on. Since there are only a fixed number of bitcoins (21 million) similar halving events will continue almost every 4 years until 2140.
How is Bitcoin protected against inflation?
Unlike fiat currencies and assets, there are a fixed number of bitcoins to preserve their value. The blockchain system is so designed that there will always be a fixed number of coins to be mined and there is little chance that economic crises, like the one COVID19, is bringing on, will have any impact on the value of this crypto assets.
Halving is necessary to check the number of bitcoins in circulation. According to Bitcoin experts like Tim Peterson, the value of Bitcoin rarely fluctuates immediately before or after a halving event. In fact, in most cases, the value remains entirely predictable despite economic upheavals and fluctuations of fiat currencies by the Metcalf Law.
This law uses the principle that the value of a network depends on the size of a network. Or, the blockchain, at least in case of Bitcoin and other altcoins. Therefore, unlike other assets, Bitcoin is certainly a more predictable and safer investment alternative for anyone interested in exploring investment opportunities during these tumultuous and economically turbulent times.
Why is Bitcoin the asset class of the future?
Currently, several countries within the EU, Japan, China as well as India are seeing a higher number of investors choose crypto assets than before. In the COVID19 impacted financial states, Europe has shown decided interest in stablecoins and altcoins.
A larger number of investors believe that Bitcoin is here to stay. Many veterans have been holding onto Bitcoins for as long as 7 to 8 years. The rise in the value of bitcoin has not yet decelerated. In fact, the value keeps rising as more and more investors harbor the hope that crypto assets like bitcoin have the power to disrupt the current financial state of India and other novel coronavirus ravaged economies.
The use of bitcoin can reduce intermediaries, set up a fundamental platform for payments, acquisitions, and settlements. Its stable and predictable increase in value makes bitcoin the ideal investment opportunity for both beginner and veteran-level market investors across the world.
(The writer is Founder at Bitbuddy, a Bitcoin marketplace startup.)