Surprise Winners And Losers Of The Bitcoin Halving Like Runes, Polygon

If this is your first time seeing “The Halving” in your media stream, don’t worry. It’s not as complicated as you think. Simply put, it is a reward given to those who verify and verify Bitcoin transactions.
Blockchain is being cut in half. This occurs approximately every four years and is part of Bitcoin’s design, helping to gradually reduce the rate of adoption of the cryptocurrency to combat inflation.

This is the fourth halving event. The previous halvings took place in 2020, 2016, and 2012. Before this latest event, the reward for each Bitcoin block was 6.25 BTC. After that, your reward will be 3.125 BTC. In addition to combating the effects of inflation and maintaining scarcity, many expect Bitcoin’s price to rise as supply decreases. This incentivizes miners to continue validating transactions and making them immutable. Alternatively, and quite possible, a significant drop in BTC price after the halving could hurt miners and slow down the network, which has recently been running at record speeds.

There will probably be more half-lives in the future. It is expected that we will read about this event again in early 2028. At that point, the reward will be halved again to 1.5625 BTC per block. This will continue until around 2140 when mathematicians predict that the last Bitcoin will be mined. Because there are only 21 million Bitcoins, and there will never be more. Unlike the US dollar, Bitcoin is deflationary by design.

“The vast majority of non-Bitcoin people don’t understand what a halving is or the role it plays, said Danny Scott, CEO of crypto platform CoinCorner. independent person. “The halving will naturally increase prices due to supply and demand in the medium to long term outlook and will attract new people as prices will rise above their all-time highs. Therefore, indirectly plays a major role in shaping investor sentiment and market expectations.

Impact on the industry: Beyond Bitcoin

Given that Bitcoin plays a leading role in the crypto world, accounting for over 50% of all on-chain value, when something happens to BTC, the snowballing effect is almost always immediate. It’s noticeable. Bitcoin is often at the end of a chain reaction of external events that ultimately affect its price. The price then changes, creating a ripple effect in the market. There is a back and forth. Halving periods are different from typical price movements. Because for the first time in four years, the impetus is the very design of Bitcoin.

Altcoins, or virtual currencies other than Bitcoin, are set to experience the ripple effects of the halving. The correlation between Bitcoin and altcoins goes far beyond price correlation. The impact is much deeper than that.

A lot of relationships are about confidence and emotion. As trust in Bitcoin increases, money moves away from altcoins and into BTC, and vice versa. As we saw with the recent Spot Bitcoin ETF excitement, when people stock up on Bitcoin in large quantities, the entire market can benefit from inflows from new investors.

Tired of the price and sentiment correlation with Bitcoin, many layer 1 and layer 2 blockchains seek to avoid having their native tokens linked to BTC by design. These projects are designing blockchain networks and protocols differently, creating innovative smart contracts, and providing permissionless ways to support ownership and transaction settlement. Still, despite our best efforts, we will almost certainly be affected by the halving.

Beyond Bitcoin, or more precisely, in addition to Bitcoin, another influence could come from Rune. Launched by the creators of Bitcoin’s Ordinal Protocol (essentially an NFT on top of Bitcoin), Runes presents a new alternative token standard comparable to BRC-20. Rune DEX received $2 million Seed investment for their work.

“Rune represents a groundbreaking evolution in the Bitcoin world. Its intricate design and seamless functionality pave the way for a new era of digital goods in the realm of cryptocurrencies. “The runes are a testament to its enduring heritage” was cited as important. Jonathan Jungers blog post on LinkedIn.

As Bitcoin mining rewards are reduced, people’s attention will shift elsewhere. And I think Rune’s launch, set to coincide with the halving, is one of those strategically timed projects that many will be paying close attention to. When Ordinal is an NFT, runes are similar to regular tokens, except they are much easier to create and activate. Could they spark a wave of meme coins backed by Bitcoin? perhaps.

Casey Rodarmor, the brain behind Ordinals and Runes; listed in X: “The value proposition of cryptocurrencies is tokens, NFTs, and AMMs. Bitcoin now has an inscription that is a great NFT
Standard, and soon runes become a good token standard. There will soon be something better than AMM. ”

L1 and L2: collateral damage

Layer 1 blockchain is the core infrastructure behind blockchain technology.Bitcoin is the largest, followed by Ethereum
, Ripple. Layer 2 blockchains sit above L1. These typically act as a clever way to alleviate congestion on layer 1 blockchains and bypass transactions to save time, money, and energy.Some large L2s contain Polygons
the Lightning Network built on Ethereum, and the Dimension built on Bitcoin.
built on Cosmos.

Even though L2 is helping L1, it is now seen as an adversary or competitor. Layer 1 has different values ​​(security and decentralization) than Layer 2, which prioritizes scalability and cost efficiency. Additionally, Layer 3 goes even further, building specialized bridges on top of Layer 2 to further drive efficiency and customization for decentralized applications. This is where many of the most interesting innovations are happening right now, and it’s probably where groundbreaking developments are most likely to emerge. However, a halving poses a threat to survival.

If the halving causes a fall in Bitcoin, the price drop and selling pressure will destabilize most of the other L1s, weakening government bonds and impacting investment in the ecosystem. Network activity decreases, L2 becomes sluggish, revenue from transaction fees decreases, and finances decrease as well. In theory, a downturn in L1 and L2 leaves L3 hanging on a thread with little interaction, income, or interest.

Similarly, if Bitcoin’s latest halving starts another bull market and prices rise, funds could exit L1, L2, and L3 in favor of rising BTC. Still, this is a much better outcome as billions of dollars of new investment will flow into the industry and eventually when Bitcoin stabilizes or investors make profits, the funds will go back to L1, L2, L2. is. Great innovations can happen.

Halving is a critical moment for Bitcoin

The halving was a significant moment for Bitcoin, and the aftermath will show just how strong the other side of the crypto world is. We have seen altcoins and their blockchains account for around 50% of market capitalization and more than 50% of great ideas, pioneering developments, and talented workforces.

No matter what happens to the price of Bitcoin as a result of the halving, I want to continue to see new layers of collaboration, interoperability, and user-friendliness built on top of L1 and L2. Importantly, cryptocurrencies continue to evolve and become decoupled from the price of Bitcoin. The best way to do that is to continue building sustainably, solving problems, and growing our community. At the same time, I think we will see integration at the L2 and L3 levels. This might not be such a bad thing. This refocuses their talents and allows them to contribute to more viable projects.

Disclaimer: This information is for educational purposes only and should not be considered financial or investment advice.

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