Bitcoin halvening is approx 31 days and a few hours away. Its that event when the Bitcoin block rewards are cut into half or divided by 2, effectively reducing the speed, by which new BTC units are brought into circulation. On May 13, 2020 the Bitcoin rewards will be cut by 12.5 BTCs per block to 6.25 BTCs. This undoubtedly, as the previous two halvenings have shown, will have a positive effect on the price of Bitcoin (BTC), most probably causing it to rise higher than before, as seen in the previous two such events.
The crypto world is abuzz with the word of “Quantitative Hardening” to describe the effect, which will be caused by the halvening. However what is it?
Origin Of Concept – Quantitative Easing (QE)
Before understanding the concept of Quantitative Hardening, its vital to understand the origin of the concept, which comes from an unconventional monetary policy used by the central banks. The Quantitative Easing.
Simply put, the Quantitative Easing refers to the central bank’s action of buying selected assets, by printing more money, thus increasing the money supply and pumping the liquidity in the system. This has the effect of encouraging economic activity – namely lending and investment. However, due to the increasing supply of money and more money chasing a fixed number of assets, it has the unintended consequence of causing inflation. It expands the central bank’s balance sheet and with the new assets purchased to stimulate growth – the liabilities. This is usually carried out in times of hardship and low or stagnant economic activity.
So, What Is Quantitative Hardening (QH)?
Bitcoin is devoid of any central authority. It doesn’t have any office, any board of directors and policy makers. It operates under a fixed set of rules, policies and parameters.
Bitcoin total supply is 21M. Its block…