Bitcoin Halvening: What is it and will it affect your Bitcoin gambling?

One of the most significant events in Bitcoin's recent history is set to take place later in 2020. Sometime this coming summer, the world's number one cryptocurrency will undergo a phenomenon known as halvening or halving.

Experts agree that when halving does occur, Bitcoin's price will jump quite a bit. How far it actually jumps is anyone's guess.

If you are an online gambler who prefers to play, for example, Mega Moolah with BTC, pay attention to what experts are saying about the halving as we draw closer. How halving affects you depends on when it actually occurs, how Bitcoin prices respond, and the amount of BTC you have on deposit at each of your online casinos.

The one thing you should not do is panic. Halvening is generally seen as a good thing for both investors and casual BTC users. The chances of you suffering heavy losses are pretty slim. If anything, you might make a little money and more to spend on Mega Moolah and other great jackpot games!

Halvening in simple terms

Before understanding how halving might affect your online gambling activities, you should probably know what it actually is. In the simplest possible terms, Bitcoin halvening occurs when the reward paid to miners for the work they do is cut in half. Halving is a normal and expected phenomenon in the cryptocurrency arena.

For purposes of illustration, let us say you own a server farm that mines Bitcoin 24/7. Each of your servers is a node on the Bitcoin network. Transactions across that network invite your servers to process them by completing a mathematical equation related to the hashes they generate. Once transactions have been verified, they are added to the block currently being built. Each completed block is added to the Bitcoin chain.

The thing about coin mining is that you are only paid if your server is the first one to complete the next block in the chain. As such, miners compete aggressively for every new block. As for the reward, the winner of any particular block is rewarded in actual BTC.

Without getting into real numbers, let us just pretend that the current reward for completing a block is 2 BTC. Once halvening takes place this summer, that reward will be cut to 1 BTC. Miners will be doing the same amount of work for half the reward.

Why Bitcoin halvening was implemented

At first glance, it might seem as though halving is counterproductive to coin mining. Why would Satoshi Nakamoto build this into his code given that coin miners would be reluctant to do just as much work for half the reward? For the simple fact that halving tends to increase the value of a single coin.

Understand that coin mining is the process by which new coins are released into circulation. When Bitcoin was first created, it was created with a hard limit of 21 million coins. Nakamoto did not release all 21 million at once. To do so would have instantly made his cryptocurrency worthless. So instead, he designed a system that gradually introduces coins into circulation as blocks are mined.

This gradual release makes coins somewhat rare. Even so, releasing them at a constant rate would have diminished their rarity and led to all 21 million being released too quickly. Nakamoto's solution was halving. It was a solution that simultaneously proved effective and brilliant.

Halving slows down the release of coins every time it occurs. This extends the amount of time it will take to release all 21 million. The end result is that new coins become more and more rare over time. This has the intended effect of making BTC more valuable over time.

In effect, halving only diminishes the value of the work done by coin miners in the short term. Yes, they will earn less for the work they do in the immediate aftermath of halving. But a commensurate increase in Bitcoin's value will eventually offset the lower reward.

Less competition among miners

Halving has another effect on coin mining: it reduces competition among miners. To understand why this is so, you also have to understand the kind of work that goes into building blocks. Every BTC transaction is accompanied by a series of hashes that are key to Bitcoin's encryption. Those hashes have to be compared with the hashes generated by every preceding BTC transaction in the blockchain in order to solve the mathematical problem necessary to validate the transaction.

Also bear in mind the nature of blockchain. As a record, blockchain is permanent. Verified transactions cannot be removed or modified in any way. As such, the blockchain ledger that acts as a record of all BTC transactions continues to grow with each new block. That means miners have to do more work to build each successive block.

Over time, the amount of work necessary to complete a single block requires so much computing power and resources that small, independent miners simply cannot keep up. They eventually close up or sell their operations. This also means that, over time, there are fewer small-time miners competing for BTC rewards. Those that remain in the game have more opportunity to win the mining war because they have less competition to deal with.

This is the one downfall of halving. It is theorized that halving could eventually lead to a group of coin miners banding together in order to process 51% or more of all Bitcoin blocks. Any group capable of pulling that off would be able to take over and control Bitcoin moving forward. Though such a scenario is not likely to happen, it is theoretically possible.

Bitcoin halvening and online gambling

Moving on, let us talk about how this might affect your online gambling. We assume you are reading this post because you are an online gambler who deposits BTC to play Mega Moolah or something similar. If so, you are among a growing number of gamblers who prefer cryptocurrency to move funds in and out of their accounts.

Note that when you make a BTC deposits, the online casino might be using a payment processor as a go-between. That payment processor converts your BTC into fiat before transferring it to the casino. It is all pretty standard fare. Casino operators and other merchants do business this way to protect themselves against the price volatility cryptocurrency is known for.

If you are dealing with a casino that operates this way, Bitcoin halving will have little to no effect on either of you. Why? Because the payment processor ends up absorbing all of the BTC. You and the casino no longer hold it anymore. Where this gets tricky is when you are dealing with an online casino that does not convert BTC to fiat.

In such a case, your BTC deposit would continue to be represented as BTC at the casino. Every time the price of BTC goes up or down, it affects the value of your gambling account. Higher prices give you more money to gamble with, lower prices reduce your purse.

Halving will affect you for the simple reason that it is going to affect the price of BTC. Exactly how it affects you remains to be seen. There will be some activity in the run-up to halving, then the actual halving itself will have an impact on pricing. We will close this post by describing what you should be looking for.

In the run-up to Bitcoin halvening

If past history is any indication, large-scale investors will start buying up coins anywhere between 8 and 16 weeks prior to anticipated halving. The thing about halving is that we do not have a precise date for its occurrence. Right now, we can generally say it will happen sometime this summer. As we get closer though, a more exact date range will be possible.

Anyway, investors starting to scoop up coins in advance of halving is a strong indication that it's getting close. This is also the time to not make any new BTC deposits. Why? Because you do not want to gamble away your potential BTC profits while prices are rising. This is a time to hold, or hodl.

On the other hand, if we approach halving and investors are not buying up coins, that means they do not have a lot of confidence in a huge post-halving price jump. Their lack of confidence would suggest any anticipated price hike is not going to be monumental. It would also suggest that there is no reason to hold your coin. If you want to make another BTC deposit at your favorite casino, go for it.

Bitcoin post-halving prices

Finally, pay attention to Bitcoin's price in the days immediately following halving. Do not rush to make a withdrawal just yet. If the price falls in the short term, don't panic. A short-term price drop would be both normal and expected. It will not last long, if it does occur.

If you are planning to gamble with your BTC, that is the time to do it. In the event that you win more than you gamble, then stop. Let your BTC sit until prices rebound and start growing again. In so doing, you will be making a profit off your profit.

Bitcoin halvening is coming. It will not have a profound effect on online gamblers, but gamblers do stand to make lots of money when it happens. So pay attention and know when to hodl 'em!