There are many of you out there who are anxiously awaiting the Bitcoin halving this summer with baited breathe. Many of you are speculators who think it will be the beginning of some sort of short-term economic windfall. Is this whole Bitcoin thing going to go nuclear for all you day traders out there? Let us review the economic facts of the case, sprinkle in some pontification, add a little “bro- science,” run it up the flag pole, and see if it waves.
(Do not take this as financial or investment advice. Do your own due diligence. The views here do not necessarily reflect those of BitConnect.co, and may just be the economic ramblings of a Bitcoin madmen. Viewer discretion is advised.)
Let’s take a walk down Halving History Lane
Just look at the history of Bitcoin halving, which entails all of one halving, after Block 210000 was solved on November 28th, 2012. A Bitcoin way back then was worth only $12.35 USD. In 2012, the halving had no drama at all surrounding it. The day after, there was no great spike in BTC value. Nor was there for the rest of 2012. Values proceeded as if a halving never occurred until 2013 when a new trajectory began to emerge.
Things went crazy in early April 2013, as the banking “bail-in” in Cyprus caused not just a run on the banks, but a run on Bitcoin, driving values up to about $230 USD. This turned out to be a bubble, caused by the banks there, and the arc returned to normal. If you remove that spike/bubble, the price arc flowed quite naturally to a value of $129 USD on May 28th, 2013, exactly six months after the halving, a 944.5% increase versus the USD.
Let’s say prices didn’t change, from today until July 6th, the day the 420000 Block is expected to be solved. That would mean the value of a Bitcoin would have to balloon to $4284.50 USD by January 6th of 2017.
Sweet! Where do I sign up?
Is that going to happen? Not if the Bitcoin community is still stuck in 1 MB newbie mode, it won’t. The developers, miners, coders, and business owners who run Bitcoin are much smarter than I, but I have dealt with more than a few smart people in my day. Smart people love to make difficult things to complete the things they accomplish easily and the simplest of things the hardest things they’ll ever do.
Any current and consistent Bitcoin user, plus Bitcoin elite like Brain Armstrong and Gavin Andresen, know that a block size increase to 2MB in the immediate future is not only recommended but is, at this point, necessary. The blockchain is struggling with the steady influx of new users every day and has shown stress cracks over the last few months. What will happen in June, when a new wave of Johnny-come-lately BTC speculators hit the market to buy in? Translation volume will go through the roof, weeks in advance, and if Bitcoin still sits at the kiddie table, this will get ugly real quick!
This buying frenzy may increase values, but crush the system under the weight of the demand. It does not seem that there is a resolution that includes a 2 MB upgrade in the immediate future by Bitcoin Core. It will be interesting to see how this plays out, as the Core may be pitting themselves against the entire Bitcoin community if things continue down this dangerous path.
Back in 2012, Bitcoin was totally unknown in the mainstream. Today, it is still mostly unknown, but at least, the word is out there. The economy really hasn’t changed a great deal, at least in the West. It would seem the rest of the world has joined the West in the economic guitar, if anything, so external factors have changed negligibly.
Could another E.U. country go under in the second half of 2016? Oh, sure! Spain, Italy and Ireland are next on the list of expected casualties to the failure scourge of the Eurozone. yet, these are bubbles, not catalysts for Bitcoin value change, in the long run.
In closing, am I expecting a $4000 Bitcoin next January? No, I am not. It wouldn’t surprise me if it hit $1000-1500, or so. Last year, BTC grew over 35%, beating the USD 4:1. I’m not a speculator, but I’ll take that every year for the rest of my life. I’m in Bitcoin for the long haul, not for its relative worth versus some piece of fiat, so I really don’t care about the price, a great deal. I’m in it for the fight, not the money. It represents my opposition to the global USD hegemony, propagated by the “banksters” and “The Man,” by giving true global and decentralized economic power to The People. Bitcoin isn’t business for me. This is personal.
My best advice is to buy BTC now, because this summer you may not be able to buy at all because Core, and the 1 MB limit, said so. I haven’t spoken to one person who agrees with the 1 MB concept staying in force for 2016 and beyond. Kind of like asking a first-grader to wear his kindergarten shoes. The kid will be in pain, and that’s where we as a community stand right now. In pain. If Bitcoin Core vs the Bitcoin Community goes down to the wire this Spring, stuck in neutral, you better put on your seatbelt, because it's gonna be one wild ride.