The bitcoin halving is upon us 🌓
🔸 Plus: Monopoly was invented by a woman and her idea was stolen by a man 🔸 There’s an airline for dogs 🔸 ISAs have a dark side 🔸
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Today’s 2-minute guide to demystifying money and making you richer
Why the bitcoin “halving” event is interesting.
The game of Monopoly was invented by a woman whose idea was then stolen by a man.
There’s an airline for dogs.
Super-wealthy “non-doms” are fleeing Britain.
Sotheby’s is floating “a pool of loans it provides to filthy rich art collectors.”
ISAs have a dark side.
Staff laid off from Citi were paid $214,000 on average.
The markets, year to date
S&P 500: 5,123.41 ⬆️ 8.02%
FTSE 100: 7,995.58 ⬆️ 3.55%
Bitcoin: $66,600.00 ⬆️ 50.77%
GBP to USD: $1.2465 ⬇️ 2.07%
GBP to EUR: €1.1699 ⬆️ 1.44%
Bitcoin is ‘halving’
We’ve previously told you to treat bitcoin with extreme caution because it’s very volatile and crypto assets routinely crash in a way that stocks and cash don’t. Crypto is too risky for people who are serious about becoming financially secure and independent.
Having said that, something unusual is going to happen to bitcoin on April 19 or April 20: a “halving” event.
It sounds spooky. Some people call it “the halvening”, to make it sound even spookier. It’s a pretty weird phenomenon. There’s nothing else quite like it in finance.
Here’s what it is: Once every four years (roughly) the code that controls bitcoin cuts the supply of new bitcoins in half to curb “inflation” on the blockchain and thus maintain bitcoin’s value.
A lot of people think it will juice the price of bitcoin
Here’s how it works, per Axios:
“Bitcoin entrepreneurs earn money by serving as the network's globally distributed accountants [or “miners”]. Users send them transactions, miners check their validity and then stamp those transactions onto the permanent ledger in "blocks."
… It's not enough to just log the transactions. Miners first have to encrypt the block using open-source software, then bust the lock on that encryption (the purpose of this exercise is to make malicious participation too expensive to bother with).
The first miner to succeed in doing this for each block of bitcoin gets to add the block, and they are rewarded with fresh bitcoin.”
At the next halving, the reward for creating a new block will fall from 6.25 to 3.125 bitcoins.
That’s going to make life harder for bitcoin miners
Lots of older, inefficient mining machines will be junked.
The network’s computing power or “hashrate” will drop.
Revenue will drop for miners.
Miners with more modern, powerful machines will gain market share.
Transaction fees might go up.
Currently, the network mints 900 new coins per day. After the halving that will go down to 450 per day.
Here’s a chart showing what has happened to bitcoin before and after the previous three halving events. Halvings seem to support the price of bitcoin in the long run:
Note the vertical axis is on a log scale: Bitcoin isn’t this predictable in absolute terms!
The question, of course, is whether that will happen again
Bitcoin recently declined from its all-time high of just under $74,000 to around $64,000 per coin.
For holders of bitcoin this is all very exciting. They’re asking themselves:
Will the restriction in supply push up the price?
Or is the halving already priced-in?
The answer: Probably a bit of both. While the maths suggest that halving the supply ought to double the price, the reality is that older holders will sell as the price goes up to take their gains.
That’s how you make money in crypto: You wait for someone else to come along who’s willing to pay more than you.
That’s why it’s so risky
The price of bitcoin represents nothing more than the difference between demand and supply. One bitcoin doesn’t entitle you to an underlying real asset the way cash, stocks or bonds do. Bitcoin has, at least twice in its history, lost more than half its value — suddenly, and for years.
So don’t spend any money on crypto unless you’re comfortable losing it all.
If you’re serious about building real wealth and financial independence, start by reading The Basics on our front page and stick with us at Moneyin2.
And for dessert …
Monopoly, the game, was invented by a woman and the idea for it was then stolen by a man. Lizzie Magie created “The Landlord’s Game” as an ideological tool to teach people about economics.
There’s an airline for dogs. It’s called Bark Air because of course it is. See photos here.
Super-wealthy “non-doms” are fleeing Britain. The tax break that allowed the rich to live in the UK but not pay tax on their foreign income is coming to an end so they’re considering moving to Italy, which offers the wealthy a flat tax of €100,000 a year.
Sotheby’s wants to borrow $500 million and is offering, as collateral, a “a pool of loans it provides to filthy rich art collectors,” according to the FT. Those loans are securitized by the collectors fancy art collections, which include Warhol and Jean-Michel Basquiat, the FT speculates.
ISAs have a dark side, apparently. ISAs are expensive (for the government, which funds them with free money for you via tax breaks) and ineffective (poorer people tend to not be able to save, so ISAs benefit those who already have money), according to the Resolution Foundation.
Staff laid off from Citi were paid $214,000 each on average. Nice work if you can get it.
More from Moneyin2:
The savings account with a 25% return that young people routinely ignore
Ignore financial influencers - the stats say they’re usually wrong
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Photos: Corine Bliek via Flickr; Amir Yalon via Flickr.