World’s first decentralized digital currency, Bitcoin (BTC) has had a remarkable journey since its inception in 2009. Initially created as an alternative to traditional currencies, Bitcoin has gone through a roller coaster ride of unpredictability, attracting both avid supporters and staunch critics.

Over the years, Bitcoin has faced numerous challenges, including skepticism from traditional financial institutions, concerns about its volatility, and regulatory hurdles. However, despite all these obstacles, Bitcoin has managed to rise from uncertainty to a solid rally, becoming one of the most valuable assets in the world today.

Bitcoin Adoption

In recent years, the adoption of Bitcoin has increased rapidly. It is estimated that approximately 10% of the world’s internet users, 300–500 million, probably own some form of cryptocurrency.

An increasing number of countries and leading businesses are recognizing the potential of Bitcoin and are beginning to use it as a payment option. Companies like Tesla, Square, and Microstrategy have made significant investments in Bitcoin, while countries such as El Salvador and the Central African Republic (CAR) have taken a step further by making Bitcoin a legally accepted form of payment, boosting its legitimacy.

Bitcoin’s price, which had been on a meteoric rise in 2021, experienced a sharp decline in value from an all-time high of $64,000 in April 2021 to its seasonal low of $16,000 in December 2022. The crypto assets market was in a state of chaos as investors scrambled to sell their coins and move their funds to more stable investments.

Despite the dramatic decline in 2022, Bitcoin is making a comeback in 2023.

Rising BTC addresses

One of the key drivers of Bitcoin adoption has been the increasing number of Bitcoin addresses. These addresses are essentially digital wallets that allow users to send and receive Bitcoin. As more people have started using Bitcoin, the number of addresses has increased dramatically, from 32,745 in 2010 to 1.07 billion in 2023. In this period, the price of BTC has climbed up to $22,523 at the time of writing.

This suggests that as more people use Bitcoin and more addresses are created, there is an increased demand for the coin, which may drive up prices in the long term.

Bitcoin halving and its price effect

Bitcoin halving refers to an event that happens every four years when the block rewards for Bitcoin miners get cut in half. This reduces the supply of new Bitcoins by 50%.

Initially, Bitcoin miners have been rewarded 50 BTC per block to verify transactions. The rate at which new Bitcoins are created decreases by half every 210,000 blocks mined, or roughly every four years until all 21 million BTC have been mined. The last three halvings took place in 2012, 2016 and 2020 respectively while the next one is set to occur in 2024. In 2012, the reward for mining a block was reduced from 50 BTC to 25 BTC. Subsequent halvings dropped the reward to 12.5 BTC, and then to 6.25 BTC. The next halving will set the reward miners at 3.125 BTC for each block.

Thus by constantly reducing the supply of new coins, Bitcoin will remain a scarce commodity in upcoming years.

But what effect does it have on the price of a Bitcoin?

Bitcoin halving has its own benefits. In fact, halving is one of the reasons Bitcoin grows in value. Historically, the price of Bitcoin has increased in the 18 months following a halving. After the first halving occurred in 2012, Bitcoin hit a high of more than $1,000 in November 2013. In April 2012, before the halving, Bitcoin was trading at less than $50.

Because halving the block reward effectively doubles the cost to miners, who are essentially the producers of Bitcoins, it should have a positive impact on price because producers will need to adjust their selling price to their costs.

In conclusion, the price movement of Bitcoin has been impressive recently, rising from uncertainty to a solid rally in 2023. The increasing trend of adoption, the impressive growth rate in the last few years, and the positive predictions for the future all point to a bright future for Bitcoin.

Even though Bitcoin and the whole crypto market took big hits in 2022, the growing recognition of Bitcoin as a legitimate form of payment makes it a compelling investment option.