The biggest crypto trends of 2024 | Part 2

Ed Prinz is co-founder and CEO of  Loob.io, a digital marketplace for blockchain assets, and chairman of  DLT Austria, a non-profit organization promoting blockchain technology. This is the second part of his three-part series on “Crypto Trends 2024”. 

In the rapidly evolving world of crypto assets, two giants are in focus: Bitcoin and Ethereum. These two pioneers have not only fundamentally changed the digital financial landscape, but also continue to actively shape the future of the crypto sector. In this article, we highlight the latest developments and challenges of both crypto assets, examine their role in the global financial system, and take a look at the upcoming innovations and updates expected in 2024. As Bitcoin establishes itself as a dominant investment and store of value assets and prepares for the next halving, Ethereum is focused on breakthrough technological advances to improve its scalability and efficiency. Both continue to have a decisive influence on the dynamics and progress in the crypto sector.

We start our analysis with Bitcoin, the most valuable digital asset, followed by a detailed look at Ethereum.

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Bitcoin: The Road to the Fourth Halving

Bitcoin has established itself as an important investment and store of value assets in the financial system since 2009. Its value benefits from limited availability, the most secure blockchain, and increasing adoption, making it particularly attractive in uncertain economic times. Technological advances like the Lightning Network and the Taproot update address challenges in scalability and efficiency.

The launch of the Bitcoin Spot ETF on January 10, 2024, and the upcoming Bitcoin Halving, expected around April 20, 2024, depending on the block time, mark significant events with potentially significant impact on the market. These milestones, complemented by regulatory developments, represent a turning point for Bitcoin that could encourage further growth and expansion in the financial sector.

Before we delve deeper into the main event, Bitcoin Halving, let’s take a closer look at Bitcoin mining.

Bitcoin mining and network dynamics

Bitcoin mining is a central process for generating new Bitcoins and securing the blockchain. Miners verify transactions and create new Bitcoins by solving mathematical problems known as “proof of work“. This activity ensures the integrity and security of the network, with miners receiving new Bitcoins and transaction fees as a reward.

Mining difficulty adjusts to maintain network stability, and the miner rewards halves approximately every four years, an event called “halving.” Despite the high energy consumption, there are efforts to use even more renewable energy for mining. There are concerns about the centralization of mining through large mining pools, but the network structure minimizes such risks.

Bitcoin mining companies face technical and economic challenges. Market volatility impacts profitability while increasing mining complexity requires higher computing and energy costs. Many companies are responding to environmental concerns through the use of renewable energy and energy efficiency initiatives.

Scaling offers opportunities and challenges but requires significant investment. Technological innovations are crucial to remain competitive. Ahead of the halving, which will halve rewards, companies are optimizing their operating costs and improving the efficiency of their hardware.

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Technological development plays a crucial role in Bitcoin mining, both in terms of increased efficiency and more environmentally friendly practices. Innovations in mining hardware and software, such as more powerful ASICs and advanced algorithms, increase overall efficiency and reduce energy consumption. The use of renewable energies and the use of waste heat are other important aspects. These technological advances are expanding opportunities not only in mining but also in other industries such as finance and supply chain management. Overall, these developments are of great importance for the digital economy by making mining more efficient, profitable, and environmentally friendly and opening up new areas of application.

The maximum supply of Bitcoins is set at 21 million units, of which approximately 19.1 million are in circulation so far. New Bitcoins are created through a process called mining, in which a new block is added to the blockchain every 10 minutes on average, with each block generating 6.25 Bitcoins. This results in around 900 new Bitcoins every day.

An interesting facet of Bitcoin is the phenomenon of lost Bitcoins. Estimates suggest that between 3 and 4 million Bitcoins have been irretrievably lost, due to various reasons such as losing private keys or forgetting wallet passwords.

In the future, when the maximum supply of Bitcoins is reached, there will be no new block rewards for miners. Instead, miners will derive their revenue from the transaction fees that users pay for each Bitcoin transaction. This transition represents an important moment in Bitcoin’s development as it represents a shift from creating new entities to maintaining and securing the network through transaction processing.

After the halving, market consolidation could occur, with efficient miners surviving and the Bitcoin price supported in the long term by the reduced supply. Successful companies in the mining sector are those that use challenges as opportunities and act in an economically and environmentally responsible manner.

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Bitcoin Halving 2024

A crucial aspect of Bitcoin mining and a significant event for the entire network is Bitcoin Halving. Approximately every four years, the block reward that miners receive halves, which has a direct impact on Bitcoin’s economic ecosystem.

Bitcoin Halving is a pre-programmed process embedded in the design of the Bitcoin blockchain. It reduces the rate at which new Bitcoins are generated and is a crucial factor in Bitcoin’s deflation mechanism, contributing to the asset’s value stability.

The halving has a significant impact on the supply of new Bitcoins, which in turn affects the market price. The reduced availability of new Bitcoins drives their scarcity and is often discussed in the context of stock-to-flow theory. Historical data shows that halvings often resulted in significant price increases, leading to speculative bull markets and increased public interest.

Each halving marks a turning point for Bitcoin in terms of market value and public perception. Historical pattern recognition shows that halvings were often accompanied by specific market reactions that resulted in similar chart patterns and price movements.

The next halving, expected in 2024, is highly anticipated and could trigger similar market reactions to previous cycles. However, it is important to consider current market conditions and external factors and not simply project past trends into the future.

Bitcoin mining and halving are two inextricably linked aspects of the Bitcoin network. While mining ensures the ongoing security and functionality of the blockchain, halving is a key mechanism that ensures long-term value stability and scarcity of Bitcoin. Both elements play a central role in the development and economic ecosystem of Bitcoin.

The Bitcoin Halving phenomenon, which occurs every four years, has proven to be a crucial turning point for Bitcoin, both in terms of market value and public perception. Historical observations suggest that each halving brings significant price increases and associated bull markets, as well as increased public interest.

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Halvings at a glance

In 2012, Bitcoin experienced its first halving on November 28th at block 210,000, with SlushPool…

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