The coming drop in new bitcoins doesn’t guarantee a price surge

Here’s what we’re all hearing: The number of new bitcoins getting into circulation every 10 minutes will halve from 25 to 12.5 on July 12 at 00:20:18, and the bitcoin price will surge as a result.

Maybe it will surge a little. Maybe not at all. But it’s widely expected to rise. Indeed, many people are looking forward to seeing the value of their bitcoins grow by staggering percentages. Some are even planning to buy up additional coins as an investment before D-day.

The expectations go from modest to wild.

But is there a chance — even a slight one —  that people are setting themselves up for a major disappointment?

Let’s consider the possibility that bitcoin value could actually drop instead.

First, the number of bitcoins rewarded to miners is supposed to cover the costs of electricity and labor.

A halving of this reward will reduce the incentive to mine, and some miners might choose to shut down their rigs and their support of bitcoin, especially if bitcoin users don’t agree to add fees to transactions to cover the difference.

The result could be a reduced capacity and thus, slow confirmation of transactions, which might make the cryptocurrency less

Read more ... source: TheBitcoinNews