The value of Bitcoin is always fluctuating, but the latest market movement has sent shockwaves to the very core of the cryptocurrency community. Seven years after the virtual currency went live, there has been a reduction in the value of the reward Bitcoin miners receive.
In the early days of Bitcoin mining when the number of miners was relatively small, the reward for verifying a blockchain (i.e. a chunk of information relating to the send/receive process) was 50 Bitcoins. As the numbers increased, that reward dropped to 25 Bitcoins in 2012.
However, following an influx of Chinese mining companies entering the market, the price for verifying a chunk of information has now been reduced to 12.5 Bitcoins. Speaking to Reuters, Daniel Masters, who runs a Bitcoin hedge fund, explained that the emergence of Chinese mining conglomerates has made the “whole thing cheaper”.
More Ways to Spend Bitcoin Causes Price Increase
“Beer + Bitcoin” (CC BY-SA 2.0) by zcopley
Naturally, the latest decrease will hit companies who mine Bitcoins, but for users it shouldn’t alter the current accession of the currency. In recent years Bitcoin has boomed and it’s now a staple currency in a variety of industries from online betting to local travel.
Indeed, since July 2015 the value of a single Bitcoin has more than doubled. From a value of $309 on July 12 2015, it managed to hit $648 just months later and that’s thanks to the proliferation of Bitcoin-friendly outlets. Today, there are a myriad of ways to spend your Bitcoins.
For example, Vegas Casino is a dedicated Bitcoin betting platform that allows players to ante-up without using their native currency. Unlike standard online casinos, Vegas Casino allows players to open a Bitcoin account and play roulette using the cryptocurrency.
Regardless of whether it’s Common Draw Roulette, Zoom Roulette or French Roulette, players can use Bitcoins to earn a return on their investment. In contrast, traditional online casinos only allow players to bet in Euros or Dollars regardless of their native currency. Naturally, the benefits of this are clear as it creates a level playing field for everyone and, therefore, a more efficient playing process.
Miners in Trouble but Users Could Benefit
“Bitcoin Chart” (CC BY-SA 2.0) by Fabian Figueredo
Away from the betting industry, major commercial airlines are also now realising the potential of Bitcoin. Transatlantic flights aren’t cheap, so it makes sense for a company like British Airways to offer a payment solution that’s known to be highly secure. In fact, as well as being useful for international travel, Bitcoin is now offering a safe and efficient way for people to engage in local trips.
The highly successful Uber is now investing in Bitcoin technology and customers in Argentina can now use a Xapo debit card to pay for rides. This proliferation and mainstream popularity is the reason Bitcoin’s value has shot up in recent months, but could this latest news cause the market to crash?
While it’s certainly a possibility if some of the major mining outlets go out of business, the opposite could also be true. Discussing the situation with CNBC, Genesis Mining’s Marco Streng stated that the key to making money as a miner is efficiency – the more you can mine, the more you make. If this is the case, then companies will have to refine their operations and process transactions faster if they want to continue making a profit.
For companies and users, this should result in a more efficient ecosystem and, therefore, faster transactions. Of course, speed isn’t always of the essence when it comes to money, but we doubt there will be many users or companies complaining about slicker processing times.
(Title pic “Bitcoin mining” (CC BY 2.0) by Marko )
