Bitcoin and Gold Rises For Different Reasons

Published / Last Updated on 26/06/2019

Bitcoin prices since the beginning of the year have risen by nearly 200%.  There are a few theories as to why this has happened, and one is called “the halvening”.   This means the rewards that Bitcoin miners receive are expected to be halved i.e. the supply of Bitcoin will slow down.

Currently, Bitcoin miners are rewarded 12.5 bitcoin.  This means they would see their rewards cut to 6.25 by May 2020.

Bitcoin miners have high powered computers and they compete to solve complex maths problems.  Whoever wins the race to validate the Bitcoin transaction is rewarded in Bitcoins.

'Satoshi Nakamoto' the person or people that created Bitcoin wrote a rule into the Bitcoins software to ensure this process took place every 4 years.  The total amount of Bitcoins that can be mined is capped at 21 million.  Approximately 80% has already been mined, but it could take another 120 years for the rest to be mined.

Traders could also see a good side to this process as once supply slows down, the price of the Bitcoin could rise again.

Comment

Gold prices are also on the up and hit over $1,400 an ounce, last week (its highest in 5 years) but this is more of a defensive move as many professional investors see this as a safe haven in a possible economic slowdown.

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