The Bitcoin Halving and What it Means for Bitcoin Use in India

The global cryptocurrency market is now worth more than $1 trillion, and Bitcoin recently broke an all time high, reaching $70,000.

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Few forms of investments have gained quite as much publicity as cryptocurrencies in recent years. Digital assets like Bitcoin, which are traded for traditional currency at online exchanges, have experienced significant increases in value. The global cryptocurrency market is now worth more than $1 trillion, and Bitcoin recently broke an all time high, reaching $70,000.

(Photo by Kanchanara on Unsplash)

One of the main driving forces behind the recent Bitcoin price increase is the halving, which is coming up in 2024. The halving is an event which happens roughly every four years, affecting the mining process of the Bitcoin network and influencing the market. Following previous halving events, there have been significant increases in the value of the cryptocurrency market. Find out more about this and what it means for Bitcoin use in India below.

What is the Halving and How Does it Impact Bitcoin?

The Bitcoin network depends on a process known as “mining”, to verify and record transactions. When transactions are recorded, they’re added to a new block on the chain. High powered computers are used by “miner” to complete this process, and once a new block is generated, a reward is awarded to the miner. This reward is made up of newly minted Bitcoin.

However, even though miners are paid for their work through Bitcoin, only a set amount of the cryptocurrency will ever be created. The maximum number of Bitcoins is 21 million, so as the network becomes bigger and more widely used, the size of the mining rewards must be reduced. Every 210,000 blocks, the reward is halved.

The halving means that miners receive half the pay for the same level of effort, which results in fewer Bitcoin available for purchase on exchanges. It also affects how investors value the asset, with many seeing it as more valuable when it becomes scarcer. As a result, the price often increases after the halving. Most of the big price gains in the history of the Bitcoin have come within a year of the rewards being halved.

One of the core ideas behind the Bitcoin cryptocurrency is that there’s a limited supply. As a result, it’s a deflationary asset rather than an inflationary one, and therefore, the value should increase over time. Of course, the price is very much dependant on the market and investor behaviour. In addition, previous performance isn’t necessarily a guarantee that the price will always increase after the halving.

Bitcoin Use in India

Although there has been much talk about the Indian government banning cryptocurrencies like Bitcoin, it remains legal and widely used. In fact, India has the highest number of crypto users of any country in the world. An estimated 115 million Indians have reported that they own or use cryptocurrency, and Bitcoin is by far the most popular asset to hold. While it’s not recognised as a currency in India, many believe that the price will continue to rise.

More than half of crypto investors living in India also believe that cryptocurrency is the future of finance. Bitcoin was created with the intention of offering a new form of finance that isn’t controlled by banks and organisations. Instead, the power of Bitcoin is in the hands of the owners, as it’s fully decentralised. A lot of investors are therefore optimistic about the long term future of Bitcoin, despite the government imposing a 30% capital gains tax on it.

However, the majority of cryptocurrency investors are relatively young, with the 18 to 30 demographic making up the majority of the numbers. In addition, many people still feel unsure about cryptocurrency including which crypto they should invest in. If the market is going to continue to grow, more needs to be done to improve education and awareness of Bitcoin, particularly among older groups.

What the Future of Bitcoin Looks Like in India

It’s never simple to predict how cryptocurrency will change over time. If you had told investors just ten years ago that Bitcoin would reach a valuation of $70,000, most wouldn’t have believed you. Today, many investors hope that it will continue to rise. The upcoming halving could be a good measure of how likely that is, and the fact that there are now Bitcoin ETFs may help it grow faster than ever.

In India, adoption of Bitcoin and other cryptocurrencies will also likely grow. However, the government may still make further efforts to regulate and control them. Still, most experts believe that India will hold the title of the country with the highest number of crypto investors for the foreseeable future. This may also lead to widespread adoption, with Indian crypto users also able to exchange their Bitcoin for products and services.

It remains to be seen whether Bitcoin and other cryptocurrency will become the future of finance, but growing adoption will certainly help. If the upcoming halving leads to further price rises and more media attention, it’s very likely that investment into the market will continue.